PROFITconsulting BLOG Furniture Consulting

Think Profit!

2012-01-19T11:12:00.002-07:00

Published in Jan/Feb 2012 Issue of Furniture World Magazine

There is only one way to be successful in business. It’s to Profit.

There is only one way to build cash in the bank. It’s to Profit.

And, there is only one way to grow your business. It’s to Profit.

Profitability sometimes takes a back seat to sales. It should not. Sales volume is a critical and necessary part of the profit equation, but it is just a part. Cash is only accumulated through the consistent spread that is made after the sale of an asset. That spread, or bottom line, needs to be in the 7%+ area every year to nicely accumulate cash. Profit fuels growth. It is the driver of even higher sales and higher profit volume levels. This is because growth comes from investing in great people, inventory, facilities, systems, training, and marketing. The least expensive and least risky capital for this growth investment comes from equity in the business. And equity comes from either profit or an investor’s pocket. The alternate source of funds for growth is debt. I think you will agree that it is far more enjoyable to use profit to perpetuate business growth, rather than paying off loans.

In the real world of retail, I’ve seen thousands of financial statements: the great, the so-so, and the abysmal. One commonality is that businesses always have room for improvement. And also, the smallest improvements can have massive impacts on profitability. This article will cover the basics of how to analyze one of the three critical financial statements: the Profit and Loss (the other two not presented are the Balance Sheet and the Statement of Cash Flow).

CASE STUDY

At left is a sample furniture store P&L. This version of the Profit and Loss statement called a common-sized statement, enables analysis with past periods, with peer companies for performance groups, and with the industry as a whole

Company Background

Family owned and operated.
Full line furniture, no electronics or appliances.
One store operation with one detached warehouse.
Family owns buildings separately and business pays rent.
25,000 square foot showroom.
Eight salespeople, one sales manager.
Average sale = $1,350; traffic count for 2011 = 18,519; close rate = 20%.
$1,000,000 average inventory at cost.
Vendor merchandising - mid to upper.
Special order percentage = 50%.
Budgeted sales 2011: $5.26 Million.

Analysis & Ratios (Reference Red Numbers on P&L Above)

1. Sales to plan? 95%=($5.26M/ $5M). Sales fell short of budget by $260,000. This company needs to look for specific reasons why this occurred. Was the plan too ambitious? Were there operational factors? What can be done differently for 2012.

2. Sales per square foot? $200 = ($5M/25,000). This is a very average number. Many special order type operations selling medium to high end merchandise have results in the $400 plus range. This company needs to investigate merchandising mix, traffic counts, and the effectiveness of its sales force.

3. Number of customers per salesperson per monthly average? 193 = (18,519/12/8). This number indicates that the business is understaffed and can make improvements in sales management. Special order type operations that focus on sketching, room planning, and home design operate in the area of 100-140. This alone could be what caused sales to underperform to plan.

4. Inventory to sales? 20% = ($1M/ $5M). This business is on the verge of being over-inventoried. Efficient operations will typically hold an average inventory of 15% of sales. That accounts for $250,000 less in stagnate asset purchases. Inefficiency also contributes to lower sales numbers and a higher expense structure. This company should implement better inventory management systems. Examples are open to buy purchasing systems, merchandising systems, and mark down systems.

5. Gross margin is 44% of sales. This company is outright throwing away 3-6 percentage points. This could be rectified through a variety of methods which may include: special order pricing guidelines; better and more creative price pointing; a quicker turning mark down system; variable commissions on gross margin; improving warranty, fabric protection, and mattress pad conversions; more appropriate cost multipliers on vendors and categories; package and group pricing.

Underperforming margins are the easiest problem to fix unless the operation is extremely over inventoried (25% Inventory/Sales).

6. The occupancy and advertising expense combined percent of sales? 15% = (8%+7%). Look at these two figures together because higher occupancy cost correlates positively with high traffic locations that require less advertising expense. Conversely, a destination location requires a greater advertising expense to pull people in. Whatever the situation, the combination of the two can never go above 15% of sales. That usually indicates that a retail operation is not viable unless gross margins are 55%. This operation is on the cusp. Details of the rent paid to the owners and marketing expenses need to be evaluated if this current sales level continues.

7. Are proper selling incentives and pay for performance programs in place? Almost 9% of sales is okay if the business is hitting sales targets and producing a healthy bottom line. This business is not. The company should consider putting a program in place that leads to higher margins and a faster turning inventory.

8. Service percent of sales? 1%. This seems at least half a point high. Are vendor credits getting processed? Perhaps there are excess damages because of higher inventory levels or some other operational issue. They should investigate.

9. Delivery percent of sales? 1.76%. It’s a good policy to offset delivery charges against delivery expenses. If this is being done, then the charges will sometimes cover the expenses. There may be opportunity of up to 1.5% in the delivery department through either charging proper setup and delivery fees or utilizing delivery staff and resources better.

10. Total operating costs as percent of sales? 41.96%. At 44% gross margin, this leaves only 2.04% in profitability before interest expense and taxes. That’s not much to work with. 37% is an EBIT (earnings before interest and taxes) that operations should strive to achieve.

11. Earnings before taxes (EBT)? 1.54%. As far as the industry is concerned, this is low to low average profitability. Growth will be difficult at this level as there is only $52,000 in cash that is generated from operations that will go into equity for the year after taxes are paid.

Consistently operating at this level can cause liquidity issues in the short term and solvency issues in the long run if there is ever a sudden down turn.

The numbers used in this article are similar to a real furniture operation. In the past year I’ve seen businesses like this that have improved to a double digit bottom line before taxes.

You might ask, “So, what would happen to the bottom line of this company if the right improvements were made?”

Great question! First, they need to be 100% committed and invest in the proper help. They could then improve their selling system to reach their sales target, take inventory management actions to get gross margin to 47%, and make slight adjustments to their merchandising, service, and delivery departments. Doing this would produce an Earnings Before Taxes of over 13%, or more than $700,000. The after tax net income would be close to 9%, or over $460,000! That’s why it is worth it to “Think Profit!”

David McMahon is a Management Consultant with PROFITsystems and a Member of the Institute of Management Accountants. If you would like him to do a similar analysis on your financial statements so you can increase profits, you can contact him at davidm@profitsystems.com.

Ways to Increase Sales and Become Remarkable

2012-01-17T10:20:00.002-07:00

Here are the slides to a webinar I delivered in the Summer of 2011. This webinar strikes at the heart of what most business people want – to increase sales! The key I believe to making this happen is to becoming Remarkable.

I give a whole bunch of practices and ideas that people can use to make this happen. I focus on using PROFITprofessional software as a sales management tool. As well, I give many ideas beyond software systems.

"Advertising is a tax that you play on being unremarkable."

What this really means is that businesses should seek to differentiate themselves in advertising AND that advertising is NOT a be all end all solution for increasing sales. Becoming remarkable is!

Ways to Increase Your Sales Webinar Slides Summer 2011

Cash Flow Flags

2011-12-19T15:21:00.000-07:00

Published in the WHFA Magazine November 2011

Read the Article: Cash Flow Flags

iPad and App Revolution Coming To Furniture

2011-12-06T17:45:00.003-07:00

Published Article in Furniture World December 2011
by David McMahon

I bet that 99% of you reading this article either have an iPad, an iPhone, or will have an iPad or iPhone in the next year. I also bet that your customers are like you.

This is what I've noticed happening in the past year: small business owners started appearing at trade shows and in their businesses with iPads. I realized that these were the same people who couldn't be tied to their PC's for more than 15 minutes at a time. They were the first in line to sign up! It's really amazing how a group of people who were arguably the most technically challenged and data phobic became the embracers of innovation.

The Brick by Imagiu - take a picture of a room and place furniture
in that room. Browse inventory items. See the latest promo.

This is what the Internet was like 15 years ago. Everyone at that time was talking about getting a website (and every 3 years they still talk about getting a new website). What is happening now is that apps are becoming similar to websites.

Let's think about this for a moment. What are websites? They are gateways to your business.
They are gateways that run on the Internet platform. My belief is that the Internet platform is metamorphosing. It is changing because of the devices that consumers and business owners are now using: mobile devices, iPads, iPhones, Android devices. People have made it loud and clear that they don't want to be tied down and wired in. They want to be free, wireless, and connected through the cloud. Apple and Google have led the way and it's not stopping. iPad and Android devices are the new platforms. The Internet is just their invisible platform - their cloud.

I'm going to make another prediction. Within 5 years, 99% of you reading this will have your own app. I think that you can see what I'm seeing now, right? If you and your customers are using these new devices and platforms, you will want your customers to be able to reach you on them. You will want their iPad to connect to your business instead of your competitor’s business.

Apps: The New Gateways

But apps aren't web sites. Apps are simpler. They are faster. They are more focused on tasks and results. Amazing. To me that sounds like what a website could only dream of being. You may ask, "People can go to my website now on their iPad just by using a browser; why will I need an app?” That is true; they can. And it is also true that people prefer apps. For news, someone could just go to CNN.com on their iPad, right? Well, they don't. They download the app for CNN and interact with that. When furniture or kitchen shopping, people could go to ikea.com on their iPad but instead they are downloading the Ikea catalogue app and interacting with that. americanleather.com is still on the Internet, however, the app is beautiful and functionally superior on the iPad. Why navigate a site when you could interact with an app?

Now, I'm not asking you all to run out and spend thousands of dollars on creating your own app today (well at least not until you are educated about what you need). What I do suggest is that you invest in an iPad if you don't have one. And then, learn about the various apps that are currently available to you. Think about how you can make your business better for everyone involved - for you, for your customers, and for your employees.

So, to get your creative juices flowing, here is a sampling of business productivity apps that my consulting clients and I are using:

Pages - word processing by apple. MS Word compatible. Cloud storage.

2X Client or Jump Desktop RDP - control your PC on your iPad and access your Macintosh or Windows-based software system from anywhere. There is no longer a need to ever leave your customer.

PDF Reader - easy to read and present PDF based documents. Cloud storage.

Facebook, LinkedIn, Twitter - the leaders in social media.

Yelp - customer reviews. By the way, encourage your customers to post here.

Sketchpad - sketching is proven to increase average sales; iPads are proven to grab consumers’ attention. Combine the two.

Icovia - room planning on the go. Free your salespeople. Empower your customers.

Pandora - if you control the music, you control the mood of the room.

Measures - take a picture of a room, note the measurements, and send an email.

Calculator - when you need this app a sale is just around the corner.

The Brick by Imagiu - take a picture of a room and place furniture in that room. Browse inventory items. See the latest promo.

Maps - don't get lost.

Roambi - this is a business intelligence (BI) app that I use to help clients view their critical metrics from anywhere. This puts your key sales, inventory, and financial figures literally in the palm of your hands.

BSC - balanced score carding is an app that I use to help clients set strategic objectives and smaller goals to help them achieve their objectives.

InFlowchart - ever wonder if there was a more efficient process? This is an app that I use to create and display custom business operation charts for clients.

American Leather - see what innovative manufacturers are doing.
Square - take a credit card payment anywhere any time.

FaceTime - free video and teleconferencing between iPad and iPhone devices.

There are too many others to mention. The speed of app download is like a rocket. Apple sells over 30 million apps per day. Consumers have spoken. The iPad has changed the way business is done. All aboard?

The Non-Computer Year End

2011-11-30T10:04:00.002-07:00

David McMahon, Senior Business Consultant
Published in November e-Communicator

The end of a year really has no meaning in itself when applied to business. It is just a point in time on a calendar that signifies that we have made yet another lap around the sun in 365 and a quarter days. It can really be at any time in the year.

This is what year end really means in business:

It is about reflection on the past 12 months.

It is about awareness of the present.

It is about preparing for the future.

Reflection. There is really only one use for the past when it comes to business. It's there to learn from. People and businesses learn from success and failure. In fact many say that success is built upon failure. The end of the year presents a time whereby you can stop and reflect. You can tally up what worked over the past year and what did not. Here is a exercise that we often go through with our consulting clients.

List your top 10 vendors in terms of inventory investment
List the top 5 in terms of GMROI (gross margin return on investment)
List the bottom 5 in terms of GMROI
Do the same thing with categories
Ask, "What made the best work? And how can we make the worst better?"
Rank all salespeople by sales volume
Then look at average sale, number of ups, and close rate
Ask, "What made our best people work and how can we help the other team members improve?"

The Present. This is a gift you should give to yourself. You can learn from the past but present time is where the seeds of success are sown. I advise my clients to focus on where they are now with respect to these top business success drivers:

Break even sales volume
Gross margin
Inventory mix - both level and type
Profitability
Cashflow

You have two options here: know where you are currently in all the above drivers - good, fair, or bad, at all times. Or, be ignorant of the present and leave your money on the table. The gift of the present is a vital part of your future. Embrace your numbers.

The Future. Do you think anyone arrives at their destination if they don't really have a destination? How can they arrive if they don't know the way to get there?

Year end is a great excuse to organize your plan for the upcoming year. This plan needs to be quantitative. You should consider the core business indicators and then document the plan in the form of a budget. These are key elements that we consider while financial planning with our consulting clients:

Sales levels, average sale, close rates, and traffic
Gross margin
Administrative expenses
Occupancy expenses
Marketing investment
Selling expenses
Warehouse and delivery income and expenses
Finance income and expenses
Profitability
Variable and fixed expenses
Break even
Inventory levels and purchasing
Asset purchases
Loans
Payable levels
Cash flow projections

After we discuss each area, we ask, "Where do you want to be? What is realistic?" Then the steps to get there are set. The path is laid out.

If this sounds like a lot to do on your own - we can help you. Our business consultants at PROFITsystems provide a CFO service that can be your guide.

This year, try doing a non-computer year end as well.

Don't wait for another lap around the sun.

Flexible Budgeting For Furniture Retailers

2011-11-21T18:43:00.002-07:00

Published in Furniture World
October 2011 Issue
by David McMahon

We have all heard the saying, “A failure to plan, is a plan to fail.”

Most home furnishings retailers don’t have a plan. I did say most. The best operators do plan. They use budgets to help them react faster to unforeseen situations in the future. A quantifiable plan is a budget.

To introduce you to the value of budgeting, this article will show you how you can use a simplified “Flexible Budget” to assist with your operational forecasting.

This process is called “Flexible” because your planned level of sales may change due to unforeseen factors. For example, if your local economy is dominated by a large employer that suddenly lays off half of its work force, there may be a spillover effect on your business. Flexible budgeting allows you to prepare better for the unknown. Read the full article in Furniture World.

CFO Outsourcing is now available!

2011-07-25T18:57:00.001-06:00

To help small business owners get the high level of financial expertise that big corporations can afford, we are now providing CFO Outsourcing.

In the past 15 years, after visiting hundreds of operations, we have seen that small businesses, for the most part, have "questionable" financial information. In many cases, their financial statements are ignored all together. For those that do produce financials, very often they have "materially misstated" information. Businesses wait for their tax accountant to prepare their annual return. By that time – it’s far too late! The prior year is long gone.

Do you agree that no one can properly run their business successfully for the long term like this?

If you think that your business is at risk, then we can help you.

To schedule an appointment at the Las Vegas Market to discuss CFO Outsourcing, contact Wayne at wayne@profitsystems.com or David at davidm@profitsystems.com

Click the link below to view some frequently asked questions:
CFO outsourcing FAQ.

If you are not going to Las Vegas this market, and would like to discuss, please send us an email.

Retail Break Even Analysis

2011-03-21T17:02:00.000-06:00

Lower your breakeven point and hang on to your cash reserves.

Financial Management by David McMahon

Article in April Issue of Furniture World Magazine

During the recent recession, high exposure to risk forced lots of good retailers to go out of business. The culprit in many instances was high fixed costs relative to total costs. When consumer spending suddenly slowed, businesses were unable to respond in time. These retailers simply fell uncontrollably and quickly beneath their break-even point of sales. Losses were incurred, and eventually their cash flow dried up

Many businesses did survive the recession and remain profitable. They are the businesses that have a greater proportion of variable costs (lower fixed costs), and, therefore, shoulder less risk. You see, businesses with more variable costs in lieu of fixed costs are less susceptible to sudden changes in sales volume. Variable costs rise and fall in proportion to sales and result in a lower break-even point of sales. This gives retailers an advantage over their competition in that they have more time, or room, before their cash reserves are depleted during a sudden sales slump.

This article will demonstrate how to calculate your break-even point of sales. It will also provide some real world examples of ways smart retailers are reducing their break-even points. Finally, at the end of this article is an offer to get a free break-even calculator that you can use to improve your business.

So, what is the formula for break-even sales?

Article in April Issue of Furniture World Magazine

Check out this video presented by one of our Kaizen group members

2011-03-01T12:24:00.003-07:00

e-tail Management

2011-02-19T15:28:00.004-07:00

Published in Furniture World Magazine - Jan/Feb 2011 Issue

It’s a path to success!

Operations Management by David McMahon

About a year ago, my wife decided that she wanted to redo our kitchen. The first stage was dreaming and visualization. To get help, she googled “kitchen planning”. She chose to use Ikea’s Home Planner as it seemed the best for her needs. As her design progressed, she started to source specific items. These included appliances, cabinets, flooring, lighting, wall tile, furniture, countertops, and trades people. She googled many hours into the night.

Her product search worked basically like this, she started general and then got specific. At first she browsed broad categories of merchandise (online and then in-store). Then she narrowed it down to specific vendors and exact models or styles. Once she found her favorite items, she googled vendor model numbers. Local lists of retailers that carried these items appeared on Google. She visited these sites and signed up to receive their e-newsletters. She then checked each piece to determine the best price and availability of merchandise. When she needed more information, she either used live chat or called the retailer’s customer service number.

Now she was ready to buy. She bought from several different retailers. In some cases, she visited their physical stores to make some purchases. In other cases, she bought directly from the web site for convenience. The majority of her purchases came from local retailers where both their merchandise and prices were listed on their web site. However, two appliance purchases were made from a retailer based in New York. All items shipped directly to our home in San Diego for a total of $59 in delivery charges.

This example is typical of the shopping behaviors of 30-something home goods consumers. It illustrates why your web inventory strategy should be the most important part of your overall advertising program because it will determine your future traffic and sales success.

Google should be your most important advertising network.
Getting your product listed on Google quickly is vital. It increases the chance that consumers will visit you when they are ready to buy, increasing your traffic.
Consumers know how to use room planners. You need one and you need to learn how to use it.
Consumers do shop online before they visit a store.
Consumers search for specific vendors, models, features, and styles. An up-to-date catalog of the merchandise you carry needs to be on your e-tail site. Your customers may get lost on your site (and disappointed) if you display merchandise that you no longer carry.
Your customer will be comparing you to your competitors who carry the same models.
Consumers will buy online and offline. However, in many cases, they will find you first online.
There is little loyalty to brands or retailers. Top customer service, availability of product on your site, fast delivery, and great prices are all expected. If you do not deliver that, consumers will use Google to find someone that does.
So, how can you take advantage of these lessons, beat your competition, and capitalize on higher traffic that leads to better sales? By executing the 5 SMART steps.

Click for Full Article

Pay For Performance Webinar

2011-01-20T11:01:00.004-07:00

Thank you for attending today's webinar.

For those that attended you can email questions to davidm@profitsystems.com.

Per the request of some attendees, I've posted links to my slides. Here are you go:

PFP Webinar
PFP Example Worksheet

Happy New Year 2011 !

2010-12-31T09:14:00.003-07:00

I’m sure that you are like me and are looking forward to a very rewarding year in 2011.

I want to help you get off to a great start.

Knowledge is power. It can be motivating. It can lead to fantastic ideas. It can be a catalyst for success. Building it is a gift.

With the gift of knowledge in mind, I compiled some of my favorite articles that I wrote for various industry publications. I’m passing them on to you.

Please let me know if an article or this post spawns an idea that you wish to put into action. Or, just let me know if you want some direction in helping you reach your 2011 goals.

I wish you the best in 2011!

Sincerely,

David W. McMahon

Business Profitability Consultant - "Keep learning, innovating and advancing"

PROFITconsulting, PROFITsystems

davidm@profitsystems.com

Select articles for you:

Let's Simplify Your Inventory – Part 1

Let’s Simplify Your Furniture Inventory - Part 2

Pay For Performance!

Get a better handle on your cash

Eight Techniques to Boost Profit

The Family Factor in Small Business

You Can Harness The Power of e-Marketing – Part 1

Harness The Power Of e-Marketing - Part 2

Financial Management Tools, Techniques, and Lessons from Super bowl XLII

Why Some Businesses Prosper Even in Slow Times – Part 2

Steps to Increase Vendor Credits

Relationship Marketing

What is Bar Coding REALLY Worth?

Dynamic Inventory Management - Part 1

Dynamic Inventory Management - Part 2

Dynamic Inventory Management - Part 3

Why 20% Inventory to Sales is TOO MUCH! (Web of consequences)

Modern Ways To Maximize Your GMROI - Part 1

Modern Ways To Increase GMROI - Part 2

Add 250,000 Gross Margin $$ Without Raising Prices!

Retail Efficiency Ranking

Pay for Performance - It’s a path to success!

2010-12-13T10:38:00.000-07:00

Published in Furniture World

“My bottom line is 14%.” That was what a member of one of our performance groups modestly reported recently. “Wow!” and “How?” That was the reaction from the audience.

In a time when businesses with decent profitability are reporting around 5% net income, this company is at the top of their game. Are they just lucky? Are they an anomaly? I think not. I’ve seen similar break out performances many times – in ALL economies.

It comes down to this: to win you must create a business environment that breeds success – everywhere.

You see, a prime reason why top performing companies outperform their average performing peers is they pay extra when their people achieve better results. These successful businesses align their self interests with their employee’s self interests. They have a well executed Pay for Performance strategy (PFP). They understand that everyone deserves to make money – especially when they make the business money.

In this article we will look at how to create a winning PFP strategy for your furniture business. Be sure not to miss Chart #1 on the following page. It provides detailed examples of how you might implement your strategy.

The goal with PFP is to reward performance on the upside, above normal performance levels. This is not intended to replace your regular salaries or bread and butter sales commissions. It is intended to focus people’s attention on helping you accomplish certain business objectives. PFP costs you nothing if executed correctly since you only pay when productivity is increased. Best of all, it gives people a vested interest in your success by focusing their attention on your organizational goals. There are five basic steps to implementing a winning PFP strategy:

Step #1
Set Performance Objectives

“I don't care how much power, brilliance or energy you have, if you don't harness it and focus it on a specific target, and hold it there you're never going to accomplish as much as your ability warrants.” ~ Zig Ziglar.

Goals and micro-goals are the basis for PFP. You must know specifically where you need improvement to establish proper goals. Furthermore, you must know specifically how to make that improvement. For example, suppose you realize that your warranty close rate averages 10% on sales that can have product warrantees. Knowing that the best performing operations can close over 90%, it tells you that this is an area of opportunity. Set a performance objective to improve warranty sales. If you achieve this micro-goal, your bigger goals of increasing sales and gross margin could also be realized.

Step #2
Determine The Payment

Once you have your target set, you need to define the motivating element. Define the “carrot” for the “rabbits” to chase. This should be customized to your situation and your people. It could be money, paid time off, merchandise, dinner vouchers, sports’ tickets; you name it, and don’t be afraid to be creative and fun. Let’s say that you interview your sales associates and find that cash should be the “carrot”. And just for fun, let’s make this a team PFP program. After working the numbers, you decide to pay $1,000 per quarter to all sales associates for a 10% increase in the warranty close rate over the previous quarter’s close rate.

Step #3
Define How It Works

Keep it simple. Have the performance metric and term of measurement clearly defined whether it be a month, quarter, or year. Have the people that are responsible for performing, track and measure the metric that you are trying to improve every week. This will keep you moving toward your target. By measuring along the way, you can see if changes in strategy, methods, or further education are needed. When it comes time to assess the final measurement, you will already know if you have obtained the result that you were seeking. In our example, at the end of the quarter, if a close rate of 20% is reached, the team gets to split $1,000. This is all to the up side. There is no loss to the business. Everyone is happy. If not, try again next quarter or make a change to the program.

Step #4
Add, Drop, Change, Replace

Like merchandise, like employees, like vendors, like all things, some PFP programs will work better than others. If you create one that everyone likes, performance clearly improves making it easy to manage. You’ve got a winner. Let your winners run. On the other hand, if you have a PFP program that is not producing the desired results, change it if the metric is important. However, don’t be afraid to drop and replace programs to change the focus of your goals as your organization changes. Let’s say that you get your warranty close rates up to 70% on a consistent basis and you are happy with that; the effort that it might take to get it up to 90% might not be worth the time. Instead, you may decide to discontinue that program and replace it with a PFP that focuses on increasing average sales per individual. Keep your PFP strategy dynamic.

Step #5
Set The Rules

Think of it like a game. Be creative. Keep it simple. Keep it fun. Let others keep score. Results are reported to you – pay when your goals are realized. Cheaters are penalized.

Include Everyone

One important thing to understand when creating your PFP strategy is ALL departments and business partners should be included. Don’t leave anyone out. Improving sales metrics is not the only factor that contributes to increased cash flow and profitability. Every area, from purchasing to accounting, should be considered. You should even consider giving a bonus to your vendors and customers for exceptional performance.

To stimulate your creative side, check out Chart #1 below. You can take these ideas, customize them for your business and people, and get started on producing a PFP strategy.

David W. McMahon is an inventory management and operations expert. Questions about any aspect of retail operations management or for help implementing the 5 SMART Steps in your business contact David care of FURNITURE WORLD at davidm@furninfo.com

Get a better handle on your cash

2010-11-12T12:34:00.001-07:00

Here is an article that I wrote that was published in the latest issue of the WHFA Retailer.

We’ve all heard the saying “Cash is King”. That is very true. The level of liquidity that an organization can maintain determines the ability of that organization to operate each day and to succeed in the future. High liquidity allows organizations to reinvest in themselves to boost efficiency and sales. This reinvestment is the catalyst for expansion which generates even greater cash flow. On the flip side, low liquidity forces companies into cut- backs, tightening of operations and an eventual downward spiral.

Recently some business leaders asked me for advice on figuring cash flow with respect to actual versus money in the bank. They also wanted some specifics on using software and spreadsheets to assist in getting a better handle on their cash flow. With this in mind, I recommend four prime actions:

• Reconcile the bank account

• Generate a Statement of Cash Flow

• Forecast future cash levels

• Track key cash and liquidity metrics

Full Article: Getting a better handle on cash

Five SMART steps to making money with inventory – Part 2

2010-10-05T14:20:00.002-06:00

Let’s Simplify Your Furniture Inventory - Part 2

Published in Furniture World Magazine - Sept. 22, 2010

In the June/July issue of FURNITURE WORLD Magazine we looked at the first two SMART inventory steps, “Spotting Winning Items” and “Maintaining Them in Stock a Higher Percentage of the Time”. The premise is simple. Furniture retailers need to carry more best sellers because these items make more sales. And, to do so, you must buy as much new merchandise, as often as possible, in order to find new best sellers. What is not obvious to many managers is that you cannot just keep buying new merchandise without getting rid of non-performing items (dogs) first: the dogs. This brings us to the final three SMART inventory steps which will be the topic of this article. Continuing to buy new while not getting rid of the dogs leads to over-inventory, higher expenses, reduced profits, and cash shortages. Companies with record sales have become insolvent due to this reason alone. Don’t let it happen to you.

SMART Step #3:
Auto-identify and Take Action on Dogs

Auto-identifying your dogs means using your computer system to help you find your dogs. I know what some of you are thinking, “I know my dogs. I don’t need a computer to tell me what items are not making me any money.” That thought can only be true if you either carry under $200,000 in inventory or have a team of people tracking each single SKU on a daily basis. Operations with over $500,000 in inventory can have thousands of SKUs, cover twenty merchandise categories, and have ten to twenty primary vendors. You need to query your merchandise data base to flush out non-performers to enable you to take quick action and increase turns. Here is how you can do it:

Set up an inventory aging schedule (or markdown code) on your
inventory items.

Create up to six aging periods in the schedule.

For each aging period, assign a number of days aged and a desired markdown discount. A typical markdown aging for normally inventoried home furnishing categories is every sixty days. Six periods would be 60 days, 120 days, 180 days, 240 days, 300 days, and 360 days.
• Query your inventory data once per month for all merchandise that are not best sellers. This will allow you to auto-identify your Dogs.

Once you have the information, take action. The Dogs are not going to disappear just because they have been identified. In Example #1 you can see suggested actions to take once merchandise drifts into subsequent aging levels. Actions can be discounting, spiffing the salespeople, a marketing opportunity, or a combination of actions. As the merchandise gets older, take increasingly decisive actions. If, you had a piece of merchandise on the floor for a year, would you return it to the vendor if you could? One hundred percent of clients answer, “Yes!” So, selling a small minority of inventory at or below cost is the same thing and – a customer will be getting a fantastic deal!

The next question I get is, “How do we maximize our margins?”

SMART Step #4: Reward High Gross Margin Sales

One system of paying commissions stands above the rest - variable sliding based on gross margin percentage. This system aligns the goals of profitability for the company with the salespeople’s goals of making the most commission.

Businesses that move from another commission method to one that pays at a variable rate based on gross margin percent experience an immediate 3%-8% jump in gross margin percentage overall. That translates to a huge increase in bottom line profitability.

So if you currently pay out the same percentage of sales regardless of the margin the merchandise is sold at, this will be the fastest and easiest way you will achieve a greater return on your inventory. Your GMROI will sky rocket. This is also true of operations that supposedly don’t discount. So here is how it works:

If a salesperson sells an item at a higher gross margin percentage, you will pay a corresponding higher commission percentage.

If a salesperson sells an item at a lower gross margin percentage, you will pay a corresponding lower commission percentage.

If a salesperson sells an item at an average gross margin percentage, you will pay an average commission percentage.

Moving to Variable Rate Commissions

1. Figure out your percentage of commission on the sale for an average margin sale. By doing this, if nothing changes, everyone gets paid the same and your expense is the same. Refer to Example #2. Note that if an item is sold at a 45% gross margin, there is a 5% commission paid. So, for a $1,000 item, $50 is paid in commission. Very average. Nothing really changes.

2. Set a high gross margin percentage and related high commission percentage. Selling an item at 55% produces a 9% commission, or $90 for a $1,000 item (Example #2). The salesperson will be pleased because they make an extra 4% commission. Your company will by very happy because it makes an extra 10% in GM and extra 6% in profits!

3. Set a low commission percentage and related low commission percentage. The range between the top commission and the bottom commission needs to be at least 5% for variable sliding to work because the incentive is not as strong with anything less than that. In the example, the low commission percentage is 3% at a 40% gross margin sale. If you have a working markdown system in place this will be a minority of items. The salesperson is less likely to discount. They will also STOP bugging the sales manager to lower the price, saving you, the salesperson, and the customer time. Instead of price selling, salespeople will start to use better customer room selling techniques.

4. Set it up right. Do your math right. Make your schedule easy to understand. This is important so everyone fully understands the schedule.

5.Roll it out. Don’t be scared. Tell your salespeople you want to make them partners in your profitability and share more of the gains with them. This is a profit sharing plan. It is a raise! And, for those of you who want to test it first, tell your salespeople that you will run the new system in conjunction with the old way of doing things. Then tell them you will pay them on whichever way makes them the most commission. That will most likely last for one month and the old way will be ancient history.

So, now you know how to spot best sellers and maintain them better. You know how to get rid of dogs faster. And you are going to make a higher gross margin overall doing it!

To gain the biggest benefit you need the highest traffic possible. If you can increase traffic, while practicing the first four SMART steps, you will maximize the impact that the SMART steps have on your overall profitability. The greatest cash flow will be achieved. The final SMART step helps you increase traffic while managing your inventory better. Smart Step #5:

Target Customers in Your Database

The SMART Steps presented so far, cannot be implemented properly without solid retail traffic. The 80/20 principle states that the high majority of your revenue is produced by a minority of your customers. This is not an assumption or guess. Analyze your sales for the past five years and rank them by customer volume. You will likely see the same thing.

That is why knowing your best customers and treating them like gold is so important to any inventory management scenario. They are, in fact, a gold mine. This step is about properly mining the great customer gold mine for repeat business.

First off, this elite group must be treated extra special. Don’t just blast advertise to them. Your best customers should be part of your “VIP club” and receive special notices, gifts, birthday cards or emails, and invitations to private functions.

Segmenting this group separately from the bulk of your database will allow for better communications practices. If you have 50,000 people in your database and you want to have a cocktail party to introduce a new product line, do you want to send out 50,000 invitations? I say no. With this type of event, it is not all about traffic numbers. It’s about the right traffic. You will be better off sending 1,000 personal emails gathered from your salespeople. When your best customers come to the private event, you will actually be able to spend some time with them and properly determine their needs. That’s better than a showroom full of discount seekers, right?

Other than hosting a private VIP sale, there are other key targeted messages that should be sent via email, text, or snail mail to your customers. The purpose is to touch your customer more often with a real reason rather than just the same old holiday weekend discount. Remember, these messages should not go out to your entire data base. You must segment for relevancy. Here are some examples:

Thank you for visiting our store. Do you have any other
questions?
- This message can be sent to anyone who gives you their information, whether they bought or not. It encourages customers to think of you first while they are shopping around.

Price quote and special information attached.
- Send a message after a quote has been written up with all the necessary information. This is a great follow-up tool. The more quotes you give, the higher your sales will be – if you follow up.

Thank you for your purchase – here is a copy
of your sales receipt.
- This message should be sent after each sale. This gives customers a contact name and number should they have any questions or need something else.

Special order update inside.
- Every customer wants to know the status of their order. Send them a message like this and it will save them time and make you look like you are really taking care of them.

Your merchandise is ready. Open to request delivery
or pick up.
- Many customers now prefer to do business via email rather than telephone. People don’t like wasting time with telephone tag. Give your customer the gift of convenience.

Delivery reminder with date and time.
- Send a reminder that goes right into your customer’s smart phone. They will see that you are an innovative business.

Take our Satisfaction Survey and get a gift card.
- After the delivery or pick up, send them a three question survey. You will build valuable information over time. Don’t forget to ask them: “What is your next home furnishings project?”

Help for your next project.
- So now that you have some information on their next project, contact them to give them some ideas. And don’t forget the telephone! It’s still one of the most underutilized direct media devices.

Mattress ideas for your new
bedroom set.
- You should contact people that bought bedroom sets and did not buy mattresses, for example.

Some area rugs that will make your new living room amazing.
- You can contact those who bought living room sets without area rugs offering purchase ideas for their new living room.

We miss you – here is a gift!
- Search your past purchase information by last date of purchase.

Locals night only.
- It may be a local community that brings people together. Divide your audience by their zip codes and send special messages.

Room planning demonstration.
- This may be one for your VIP list. Why not teach your customers how to use your online room planner. Guess what? If you do this, you will have some customers who are better at it than you! You can even host a free design webinar for your customers.

Free workshop: How to
accessorize your home.
- Another one for your VIP list. Offer workshops on home style and décor.

Fans of Italian Furniture – Have a glass of wine or cappuccino and view the latest introductions from Milan.
- You may be surprised at the following that some vendors have.

Happy birthday gift!
- Most people love to be remembered on special occasions. It’s pretty much a guarantee open.

One common question, I get is, “Isn’t this too many messages?” No it isn’t. If you target properly and do it professionally, it will work. Touching your customers more equals higher traffic. On the flip side, if you send these messages to everyone, they will appear to be blasts and get fewer results. Be relevant.

Bottom line: Get to know your customers. Use targeted mediums such as email, the telephone, text, and direct mail to do so. Mass media is advertising. This is relationship marketing. Targeting allows you focus on developing long term relationships on a more personal level with the right people. When a customer becomes a friend then they become a customer for life.

Passport to Profit - New Service

2010-06-16T10:17:00.004-06:00

PROFITsystems Launches "Passport-to-Profit"

- Home Furniture Business, June 7th, 2010

Furniture retail automation vendor and consultant Profitsystems Inc., Colorado Springs, Col., has launched "Passport-to-Profit," a new program designed primarily for new clients with the goal of getting them up to speed on their business' key metrics. The program is open to current clients as well.

Passport-to-Profit kicks off approximately three months after a client goes live on the software, or existing clients can participate any time they feel the desire for additional help. One of Profitsystems' customer satisfaction representatives works with the client to gather reports that provide baseline metrics on the business. The metrics include things such as GMROI, sales per square foot, and inventory to sales ratio. A senior consultant reviews the reports and metrics and formulates a plan specific to that particular business. The consultant and the client meet to review findings and provide the client a list of concerns and opportunities for the business. The consultant also makes recommendations as to where the owner and manager concentrate their efforts. After six months, the process is repeated to monitor results and offer new insights to keep the client's momentum going.

"We are in a unique situation where we not only have software to help manage a business, but a consulting department that can take a client to the next level, what ever that may be," said Profitsystems COO Shelley Parlin . "Many retailers come to use our software because they are either not able to make the profit that they should, or just can't grow their business with their current tools. Our new Passport-to-Profit project is exciting because from day one we can help them focus on the area where their business needs the most help, and we can provide them the expert advice that will get them there quickly."

In working with retailers to develop the program, Profitsystems found that many business owners know where their trouble spots are but just don't know the best way to overcome them. Others know that they have room for improvement but just can't step back far enough to see what they can change. Often, they have done things a certain way for so long that it doesn't even occur to them that it might not be the best way to do things now.

"Our mission is to make retailers more profitable and our software has incredible tools that do exactly that," said Profitsystems CEO Jeff Niskern . "We also know that owners and managers get pulled in so many directions by the day-to-day operations of their business that effectively tracking everything they have to do is extremely difficult. This new project gives us a great opportunity to step in and help executives look at their businesses with fresh eyes to see what opportunities they have to impact their bottom line."

For more information on Passport-to-Profit contact Wayne McMahon by e-mail.

e-Marketing Flash Demo - now online

2010-05-26T19:14:00.016-06:00

Increase traffic!
Use value added, targeted email campaigns from your PROFITprofessional database.

Watch the 10 minute Demo

Flash Demo #1: PROFITdelivery

2010-04-26T09:38:00.013-06:00

We have added a flash demo section to our blog. On the right side column we will post product demos that run automatically in your browser. They are audio as well as video (so make sure your volume is turned up).

Our first is PROFITdelivery. This is our routing and mapping service that interfaces from PROFITprofessional.

The difference between a high profit operation and an average operation with respect to the delivery department is 1% of sales. You will save at least 10% on fuel costs alone!

Watch the PROFITdelivery Demo

21 Profit Pointers:

2010-04-19T13:04:00.001-06:00

Document Specific Goals. Get weekly metrics. Report to the team. Offer incentives.
Improve All Departments. Sales. Administration. Advertising. Warehouse. Delivery. Service. Finance.
Create Contribution Margin Statements. Monthly. Automatically. Improve break-even. Improve profits.
Implement CCC (Customer Care Center). Track sales metrics. Improve sales performance. Elevate customer service.

Click HERE to get all 21 Points

How's Your Customer Experience

2010-03-31T09:03:00.002-06:00

Latest Blog post from HFB Magazine.

Growing Great Talent

2010-03-21T14:40:00.001-06:00

Sunday April 18, 2010
2:30 PM - 3:30 PM
Growing Great Talent
Plaza Suites, NHFA Retailer Resource Center, Plaza Suites, 1st Floor
Presented by: Phyllis Zaepfel, PROFITgroups. Searching for, finding, cultivating and retaining extraordinary employees who love what they do and excel at their jobs can be a challenge. Join us for this seminar where you will learn best practices in recruiting and hiring the right people for the right job. We will examine training methods to grow, mature, nuture, and ripen your staff. You'll discover what is needed to retain them so your best employees will not want to look for greener pastures. www.profitsystems.net. No charge/no registration to attend.

PROFITgroups Colossal Presentations

2010-03-16T23:32:00.002-06:00

It was great to see the motivated business people that attended our PROFITgroups Colossal event last week. I believe that they all have identified some new goals, reinforced some long term goals and are ready to take action. It's all about constant improvements that lead to a greater future.

Our consultants, Wayne, Chris and David are here to help implement any of the business advancements that were discussed.

Thanks!

Wayne, Chris, David

Links to Presentations:

SEO

Capture Your Design Trade

Are there any areas that you would like to learn more about or do you wish our assistance in implementing?

Colossal Presention on Recovery

2010-03-14T22:40:00.003-06:00

Here is the link to download the Updated Recovery Presentation for the Colossal Conference in Colorado Springs. Contact us if you have any questions. Thanks!

DOWNLOAD Updated COLOSSAL PRESENTATION

Recovery! Presentation

2010-02-08T06:34:00.007-07:00

Click on the slide below to download a .pdf of my Recovery! presentation at the World Market Center.

Las Vegas Market Seminar Invite

2010-01-25T12:06:00.002-07:00

Wednesday February 3; 10:30 – 11:30 a.m.

RECOVERY!

David McMahon, PROFITsystems, Inc.

Now is the time of opportunity — don’t miss it. Let David show you how you can maximize cash and profitability while you ride the bumpy road up the mountain of economic recovery. He has traveled throughout North America and around the world helping operations like yours and has witnessed the most innovative and proven methods of creating cash, in any economy. Come and see how you can make amazing gains by executing various strategies that can affect your entire operations.

WHFA Site

Las Vegas Market RRC Schedule

"What Are You Seeing Out There?" -- Retailer

2009-11-05T14:27:00.003-07:00

This is one of the most common questions that my consulting clients ask me. They want to know: "What is happening with the businesses that I visit around the world? How are other operations doing in this economy now? How are consumers responding? What is working and what is not working? Are people buying? Is the general feeling up or down?"

Here is what my experiences are telling me now:

This has undoubtedly been the worst recession in America since the great depression. It is the biggest that I have experienced in America in my career. (Although the Asian banking and currency crisis was just as big in the mid-90's when I was working there). The primary U.S. stock market (Dow Jones Industrial Average) fell from a high of 14,500 to 6,500. Trillions of dollars have evaporated. Along with this, unemployment rose steadily as consumer spending plummeted.

Independent retailers sure have felt their fair share of this loss and I really believe they were the hardest hit sector in the U.S. economy. We can all name numerous companies that have gone out of business in the past two years. For those companies that have hung on, I've seen some with 50% drops in sales from their "glory days" and 20% declines have been commonplace.

That said, there were bright spots. Select operations have managed to bust their butts, work smarter, and innovate to avoid declines. Some have even had increases in sales.

But there is something more important than sales: PROFITABILITY! That is a prerequisite and determinant of sales growth. During the recession, I have seen that the most profitable companies were still the most profitable companies, regardless of what has happened to their traffic and their sales. Great businesses have remained the same great businesses in the recession as in the boom.

In my opinion, a great business is defined as businesses with people that embrace learning, innovation, efficiency, self-investment, integrity, and respect for all. They mandate excellence and high profitability. They can make quick decisions, manage professionally, and execute their strategies. They enjoy the process of getting better at what they do.

So, what's next?

The recession is over. Recovery has begun. The economy and retail sales have stabilized. Revenues have stopped declining. That means, and I will repeat, THE RECESSION IS OVER!

Smart companies have restructured themselves during the downturn and are seeing decent profitability levels again. Just look at the earning reports on CNBC. Even though sales are flat and definitely nowhere near peak times, in most cases, earnings are good.

Across the U.S., retailers that we work with are doing the same. They are becoming efficient at their new sales levels through maintaining proper inventory mix, capturing appropriate gross margin, changing marketing methods, and investing in expenses that add rather than take away from their businesses.

It is extremely important that you have decent profitability at this point in the economic recovery. First, it will determine whether you will survive the bottom that we are currently in. Then, this efficiency will allow you to reap the maximum benefits in the future when consumers return in larger numbers.

If you are not maximizing your profitability now, do so quickly. To do it right, and as fast as possible, you should contact us and we will help you as we have helped others.

Advice:

Don't worry about the PAST. It does not exist. It does not matter if sales once were double where they are now. What matters is NOW!!! Get your business in order NOW. Turn your fixed expenses into variable expenses NOW. Build your productivity and profitability NOW. Your future will thank you.

Good luck!

Warehouse Case Study on Client: Sherman's Furniture

2009-10-21T10:16:00.005-06:00

Here is a great article about a great company. Dan Bolger writes about the Sherman's distribution center and their management's commitment to efficiency and excellence.

"The bottom line summary is that the lines of communication are short at Sherman’s and the management team moves quickly to resolve issues. Their attention to customer satisfaction will continue to serve new and existing customers while providing additional opportunities for their employees." --- Dan Bolger

Read the Article

Furniture World Article on using GMROI and IGMROI

2009-10-14T17:47:00.004-06:00

Track this inventory metric to understand your customer’s buying patterns, establish a more relevant product mix, satisfy more people and sell more.

by Daivd McMahon

Consumers’ tastes and the economy are constantly changing. Some vendors and categories that were once popular are not anymore. You cannot control your customers’ tastes or the economy, least of all, through general advertising. This is impossible. If you agree, ask yourself, “What can I control?”

In this article, you will discover how to listen to what your customers want in order to make more informed purchasing decisions. If you can manage a process, you can influence and control it. So, by better understanding your customers buying patterns and establishing a more related product mix, you will satisfy more people and sell more.

First, take the guessing out of the equation. There is only one group’s opinion regarding the desirability of purchasing your products that matters. It’s not your buyers, your reps, suppliers or your competition. And, it’s not you or me. It’s your customers!

Buying is analytical. You need to know what your customers are purchasing and what they want to buy from you in the future. With any top industry Customer Relationship Management (CRM) software, this data should be readily available to you.

Read the full article in the latest issue of Furniture World

Five Common Questions about Inventory Management

2009-10-06T10:05:00.001-06:00

by Chris Millet, Business Coach

As I work with clients on proper inventory management techniques, I encounter some common questions and concerns. I thought we may have other clients who have the same questions, and decided to share them with you. Most of these concerns stem from a perspective, which has caused improper inventory management in the past. Our inventory management techniques are time-tested and proven, but, as with any new technique or process, inevitably there is a resistance to change and a fear of the unknown. The following is a list with responses to five of the most common concerns, expressed to me recently.

1. In today's economy, customers are looking for inexpensive items and immediate satisfaction, which many times causes me to sell my floor models. How can I nail my best sellers to the floor and still satisfy my customers?

Click here to read the full article

Web Summit 3.0 Presentation - From Las Vegas World Market Center

2009-09-14T17:18:00.005-06:00

Thank you for all those that attended. Download the pptx, or the .pdf.

Web Summit 3.0 Live or On-Line - Register Now

2009-09-09T11:54:00.008-06:00

Web Summit 3.0 - Live or On-Line

Is your online strategy struggling? Do you even have an online strategy? The third Industry-Wide Web Summit will unite home furnishings retailers, manufacturers, representatives and suppliers.

Monday, September 14, 2009 | Opening day of the Las Vegas Market

Building C | 9th Floor | Room C976 | 1:00 pm - 4:00 pm

You will leave the Web Summit with practical, real world information and implementation strategies for all areas of electronic media and web for the furniture industry. Seating is limited. Registration is required for this free event.

How to Implement Email Marketing and Social Media for Results

David McMahon | PROFITconsulting

Throw Web-Based Marketing Into Your Mix

Ron Carpenter | Strategic Marketing Solutions LLC

Demystifying the Online Furniture Shopper

David Lively | The Lively Merchant

Create an Engaging Website that Brings Your Brand to Life Online

Renee Loper | aspenhome

For additional information, please email consulting@profitsystems.com

How to Make Your Website Really Sell - Entrepreneur.com

2009-08-25T12:00:00.005-06:00

This article echo's what we are doing with our new web product: e-Showroom.

This is a good introduction to the tactics, tools and features that have consistently worked for entrepreneurs:

Site functionality
Site aesthetics
Tech tools
Capturing customer information
Follow-up communications
The Mystery of Metrics

How to Make Your Website Really Sell - Entrepreneur.com

The best advice for converting visitors to your company's website into real revenue.
By David Port | Entrepreneur Magazine - September 2009

...It also features a quote form one of our partners: David Lively

Common Characteristics of Profitable Furniture Businesses

2009-08-22T22:29:00.005-06:00

Furniture World Article
by David McMahon

Truly, the families in the home furnishings industry are some of the most gracious, fun and down to earth people. This is my personal experience for all good, average, and poor business operators.

If you have been reading Furniture World for a while, you can see that our Editor’s main agenda is to help the people in this industry succeed. When preparing for my first article a few years ago, he said to me, “I want you to write about what people are asking you in the field. Write about common challenges or questions that they have.”

This month, after writing three completely different draft articles for this issue, I refocused on that original request after visiting a business with a ton of potential. This made me think of the two most common questions that I get asked by business owners:

“What have you seen the best operators do?” and “What common mistakes do you see in poor operations?”

Everyone wants to know what is working, right? And, of course, you all want to avoid the pitfalls.
The heart and soul of the furniture business is comprised of independent family operations. At one time I thought that would change. Now I believe that this will remain the norm for some time. That said, only some independents will prosper. These are the ones that operate as true professional organizations that leave any dysfunctional family issues at home.

The most profitable businesses have family members that work well together and complement each other’s skills. They act with intelligence and professionalism in their jobs. And they never stop pushing themselves to become better than anyone that they could hire for the same money that they are paying themselves.

On the other hand, family businesses that don’t adopt this business ethos or stagnate, have lower profitability. They are reactionary, and manage by “the seat of their pants”. These businesses need to improve their ability to survive the next decade as legacy does not extend into the future.

Now, back to the best. Another trait of successful operations is the owner’s ability to innovate. They implement the most current systems so that they can keep a constant finger on the pulse of their businesses. If sales go down, they know why and can adjust quickly.

They don’t just complain that “It’s slow”. That means nothing in itself. If cash flow is up or down, they know exactly why. The best have positive cash flows, even during recessions. Poor businesses take excessive loans (from banks, vendors, and customers) even in the boom years.

Innovation flows through all aspects of great operations. They implement the best procedures first, and try new ideas.

Read the full article

The Importance of Proper Daily Procedures and Data Analysis

2009-08-13T14:10:00.003-06:00

Chris Millet, Business Coach

It is amazing how often proper daily procedures are not followed when using PROFITprofessional. Whether you are a long time user or just getting started, I often find a multitude of ways in which clients process their daily work. Many times these processes include manual procedures to handle "outside of system" tasks and reporting. These outside processes essentially add up to "double" work as much of the same information is also entered into PROFITprofessional. When asked why manual systems are employed, the standard answer is, "This is the way we have always done it". The cause of this situation stems from many sources including lack of training, misunderstanding about system processes, and a lack of knowledge regarding system capabilities. In short, many users "don't know what they don't know".

Click for full article

Thank you for attending the webinar!

2009-08-05T16:12:00.003-06:00

We hope that you enjoyed the PROFITinnovation Webinar and will implement one or more of the 21 Best Practices. Your profitability will surely increase!

To take your next steps and receive additional information please click here.

We are making the presentation available to you in your choice of format. Simply select and download.

Audio Presentation

Complete PowerPoint

PowerPoint Presentation in .PDF

We look forward to bringing you more education events in the future.

If you have any questions or require any further information, please email or call us.

PROFITinnovation Webinar - Wednesday Aug 5th 12:00PM Mountain

2009-07-29T19:27:00.009-06:00

Complimentary Webinar

21 Best Practices Used by Innovative Retailers

Discover the secrets that only the most profitable furniture retailers utilize.

PROFITconsulting Senior Consultant and Furniture World Contributing Editor, David McMahon, will be presenting 21 innovative practices that help retailers maximize profits and cash flow. From this webinar you will not only learn what highly successful retailers are doing, you will also be given proven strategies to get the upper hand on your competition.

There will be a question and answer period at the end where you can ask how you can apply any of the practices.

Date: Wed. August 5th, 11 a.m. PDT, 12 p.m. MDT, 1 p.m. CDT, 2 p.m. EDT

Duration: Approx 40 minutes plus question and answer period

Join us for this Webinar on August 5

Space is limited.
Reserve your webinar seat now at:
https://www1.gotomeeting.com/register/361477657

After registering you will receive a confirmation email containing information about joining the Webinar.

Recommendation from the NHFA Retailer of the Year

2009-07-21T10:27:00.004-06:00

We encourage all businesses to have a profit maximization analysis (PMA) performed on their operation.

The purpose of our PMA is to study and report on your most important business metrics, so that we can provide you with recommendations on improving your profitability and cash flow.

A long term client of ours, Kent and Beckey Waldrop of Miller Waldrop Furniture, recently were awarded the NHFA Retailer of the Year. Kent stated:

"PROFITconsulting has helped us take our business to another level. They work with us in implementing best practice operations and procedures, financial management, sales management, bar coding, and e-Marketing. I recommend that if you wish to improve your profitability you contact them. A great way to start is to have a PMA (Profit maximization analysis), prepared by PROFITconsulting."

Please download a sample of a PMA report and you will see the value. There is nothing like it in the industry.

If you interested in a profit maximization analysis on your business please email us at consulting@profitsystems.com

PS. - we are now posting best practice tips on Twitter at: http://twitter.com/profitcoaches. It's easy to join and follow. And, as always, you can get our latest presentations and articles on our blog at: www.profitconsultingblog.com.

Thanks!

The Business Coaches at PROFITconsulting, PROFITsystems

Follow Us for Tips that increase Cash Flow

2009-07-16T14:27:00.007-06:00

We are now posting best practices on Twitter. We encourage you to join and follow.
It's easy, fun, free and educational. And --- You need to learn how to do this properly (provide value, interest and relevancy) to communicate with your customer too. The new wave of communication advancement continues...

http://twitter.com/profitcoaches

By the way, we will be assisting retailers with social networking implementation, complimenting our integrated e-Marketing package.

Importance of Profits

2009-07-10T20:24:00.004-06:00

This presentation on the Importance of Profits has been developed for the PROFITgroups Visionaries meeting, being held in Ft. Wayne, IN July 13-15, 2009.

2 great new articles in Furniture World

2009-06-30T10:01:00.003-06:00

Here are 2 articles posted by colleagues and partners of PROFITconsulting:

The Absurdity Of Family Business Decision Making

"If you are making business decisions based on a consensus to avoid familial discord, you may be setting the stage for trouble."
- David Lively

Can You Embrace Meaningful Change?

"A commitment to change is necessary for home furnishings retailers that hope to relate to consumers in the post recession period."
- Joe Capillo

Modernizing Inventory Control, Management and Analytics

2009-06-16T11:47:00.009-06:00

Here is a 5 minute video I found on YouTube. It shows how an independent retailer uses technology to propel his business to reach profitability and to grow.

The owner says (at 3:30 min.), "We look at it as an opportunity investment (over $50,000k / year) that helps us grow our business, not as an expense".

Campaign Ideas

2009-06-09T17:59:00.006-06:00

Who participates in e-Marketing in your organization?

Everyone on your team contributes. It all starts with the salesperson interacting with the customer. The salesperson must be trained to acquire the information to follow up which increases be-backs and sales. The information is entered into PROFITprofessional, your CRM (customer relations management). Queries are extracted and emails are sent by your office or marketing person. The emails are personalized and signed by the salesperson automatically to add a personal touch.

Click here for some targeted campaign ideas

Evaluating Employee Profitability

2009-06-02T12:48:00.001-06:00

Last month I wrote about evaluating the profitability of customers. This month, I want to discuss employees.

First and Foremost: The Right People
In the book "Good to Great", Jim Collins wrote that in great companies the leadership made certain that they got the right people on the bus, and more importantly, the wrong people off of the bus. People need not only to be the right fit but they have to be in the proper seat. How do you determine who is right and the seating arrangement?

At zappos.com (a company that went from zero sales 10 years ago to a billion dollars in sales of shoes, fashion accessories, and clothing last year), they have a very unique way to get the right people on the bus. Not only do they train each person for four weeks in all departments, regardless of what position they are being hired for, they offer each trainee $2,000 after the first week to quit. In 2007, the offer was $100 and 3% opted out. In 2008 the offer went up considerably and only 1% took it. Tony Hsieh, the CEO, explains the biggest benefit comes from the people who don't take the offer. They are more committed and engaged after turning down the cash. The other important factor is that those who decide to leave are not a drain on the company's training resources and culture.

Measurable Metrics
You can't improve what you do not measure! Determining ratios for sales by employee is simple to calculate and should be looked at regularly. NHFA and PROFITgroups benchmarks are available for sales by all employees, by salesperson, warehouse staff, and administration. Revenue per up is another important factor in measuring productivity for salespeople. Expense per employee is a little more difficult to determine, but it can be done with some basic estimations and calculations: Income - (cost and expense) = employee profit or loss.

Too many times we see employees hold employers hostage for imaginary reasons. A top sale writer that causes problems and affects the morale of other employees is probably one of the most frequent scenarios heard. In family businesses, there may also be others in the organizations that have worked there forever and a sense of allegiance becomes the issue. Of course, quite often there is also the family member or two that doesn't pull their weight. With measurable metrics, leadership can begin to address the productivity issues with emotional detachment and begin to create an empowered staff of quality people.

Increasing Profitability
Leadership is always responsible for increasing employee productivity. I am not suggesting you fire all your unproductive employees without first working with them and counseling them to increase their personal productivity and improve the bottom line of the company. Should you however, have to rid the organization of an unproductive employee or two you, will most likely find others who will soar in height from cutting out the excess dead weight.

Once you determine if you have the right people in place, you need to learn what motivates them. For some it is monetary incentives, but more often than not, people want to be recognized for the effort and contributions they make. It is not one size fits all when it comes to incentives and rewards. Acknowledge your profitable employees. It doesn't have to be costly but rather should be personalized for each individual.

FHTRB
In our PROFITgroups meetings, we address - Finding, Hiring, Training, Retaining, and Building employees. You have heard the saying, "People are our most important asset". Well, that isn't completely true, only the right people are! In future articles, we will look at each of these components for building a better team.
If you want to learn more about how successful and profitable companies staff for greatness, check out our PROFITgroups program. For more information or if you have questions contact Phyllis:
Via email at phyllisz@profitsystems.com
By calling 800.325.2018
By visiting us on PROFITgroups Facebook
By following PROFITgroups on Twitter

e-Marketing Version 3 Released

2009-06-01T11:58:00.005-06:00

We are pleased to announce some exciting new features which are now available. The latest version, 3.0, now includes these and many more great features that will further assist your targeted marketing efforts.

Surveys & Forms are available, without cost, for the balance of this year.

Use these for :

- product & service evaluations
- asking prospects what they are interested in
- on-line applications and forms
- follow-up surveys on deliveries, sales performance & events

Ad Templates

-A great selection of ad templates has been provided,
through our partnership with The Lively Merchant.
-There is a nominal cost for these templates and complimentary marketing
programs are available.
-Easy to use in your marketing campaigns.

Newsletter Content

-Also available is a great choice of informative articles, which
can be selected for inclusion in your next e-Newsletter.
- Gets you started fast!

Increase your "Be-Backs"

-To further enhance your ability to follow-up on prospects,
recorded as a CCC Opportunity, we have added the capability of
pulling the "reason for no purchase" and the "category of interest".
-This will allow you to follow up with very targeted emails, which
will greatly improve your be-back and sales closing rates.

Greater Delivery Confirmation Capability

- Now you can pull un-scheduled deliveries, so that you can easily follow up by email, to confirm a delivery date.
- This will assist in improving your cash flow and GMROI.

INNOVATION – What sets some retailers apart from the crowd

2009-05-21T12:46:00.005-06:00

A global survey conducted by a great new magazine, Monocle, found that the single most important element you need to get consumers excited and stimulate spending was a passion to constantly innovate.

This gave me an idea for a presentation (and possible webinar) that I will be creating. I'll show you what forward looking and creative retailers are doing in the Home Furnishings Industry and beyond. And also, how you can REALLY listen to your customers and then provide them what they want.

My goal is to help you breathe new life into your operation and change from doing things the same old way.

Set your self apart from the crowd - INNOVATE.

I'll let you know when my presentation is ready or let us know at PROFITconsulting if you want to start innovating now.

Shift To Modern Media: The Power Of e-MARKETING - Part 2

2009-05-05T08:59:00.008-06:00

Furniture World Article Part 2:

Three critical tips to make email marketing work

Operations by David McMahon

In the January/February 2009 issue of FURNITURE WORLD Magazine we looked at four techniques that are essential for the successful execution of an email marketing strategy.

First, you must think of value when contacting your customers.

Then, ask for your customers’ permission.

Next, introduce new media partners to your marketing mix.

Finally, start to reallocate your marketing budget to bring it into alignment with how today’s consumers want to be reached.

Read the full article in the April Issue of Furniture World

Miller Waldrop named 2009 NHFA Retailer of the Year

2009-04-28T09:54:00.006-06:00

Congratulations to our long time clients and friends Kent and Beckey Waldrop of Hobbs, NM.

I have seen first hand their commitment to training and hard work to enable the success of their business. Over the years they have sought to continually improve themselves with respect to business operations, and the management of their financial, inventory, sales and marketing systems.

They are leaders in their industry.

Read the Furniture Today Press release.

MillerWaldrop.com

The Definition of GMROI

2009-04-16T09:59:00.008-06:00

by David McMahon

GMROI is your gross margin return on your inventory investment. This is how much money you receive after the sale per dollar of inventory invested. So if you have $1 million in inventory and your gross margin dollars are $1.9 million for 1 year, you produced $1.90 GM per $1 in inventory.

GMROI is the single most important metric that an inventory carrying business can track. This is my opinion because it is tied directly to 3 major forces determining cash flow.

The first is gross margin. Gross margin determines what you have left to pay for all your business operating costs. And after all operating costs are covered, what remains is your net income. That net income is the first line under your starting cash on your cash flow statement. Profit is NOT optional.

The second is inventory. Inventory is the biggest current asset on many companies balance sheets. When it goes up, GMROI goes down and so does cash. If it is increasing, so must your gross margin dollars.

The third is operating costs. Most of the operating costs of inventory burdened businesses are due to carrying inventory. These are called inventory carrying costs. In many instances they are above 30% of sales. These costs come in the form of warehousing, people, distribution, financing, shrinkage, supplies and equipment. The higher the inventory, the higher the operating costs, the lower the profit. Vise versa, the higher the turns, the lower the inventory, the lower the operating costs, the higher the profit and cash flow!

So here are some ways that we have helped business all over the world increase cash by increasing their GMROI:

· Increase Sales by tracking and improving the sales equation

o Traffic x close rate x average sale

o Increasing best seller in stock days via better purchasing practices

o Increasing fabric protection ratios

o Sketching and house calls

o Correct staffing levels

o E-Marketing as a Follow up tool, increasing be backs!

o Nail downs of new and best sellers

· Increase gross margin dollars

o Pricing techniques for new items and best sellers

o Special order

o Price point tracking

o Markdown systems and strategies

o Variable commissions based on margin

· Increasing turns and getting inventory to an efficient level

o Open to buy rules for new merchandise

o Faster merchandising

o Faster delivery scheduling

o Category and vendor analysis

· Customer service improvements

o Better customer service

o Less damages

o Less complaints

o Greater VCB’s

· Decreasing inventory carrying costs

o Analyzing with respect to NHFA and best practice operations

o Setting budgets and financial forecasting

o Implementing actions!

I encourage you to schedule a free demo and consultation so that you can improve your GMROI. A 10 cent improvement in GMROI is worth and extra $100,000 to a business with $1 million in inventory.

Direct Marketing to Account for 53% of US Ad Spend in 2009

2009-04-06T15:03:00.008-06:00

Remember, proper e-Marketing (Direct email and web marketing) is about targeting a specific audience for new and repeat business and providing valuable contact. It’s not e-blasting and far less interruptive than old print or broadcast media...

Some Notable Points from Direct Marketing Association's 2009 Report in this article:

* Sales generated from direct marketing should continue to rise in 2009 and are forecast to grow by 4.5%, to $2,150 billion.

* Higher Return on Investment: For 2008, an investment of $1 in direct marketing advertising expenditures is predicted to return, on average, $11.63 in incremental revenue across all industries. This exceeds the $11.56 achieved in 2007 and is expected to improve further to $11.74 in 2009.

* Growth for Interactive Marketing: Expenditures in the newer online media will maintain significant growth in the coming year. Commercial email will continue to claim the top growth ranking for 2009, while internet advertising will claim more than 15% of all direct marketing advertising dollars in 2009.

* “Direct marketing’s integration of multiple sales channels and highly targeted offers means that businesses utilizing direct marketing typically outperform their competitors, even when sailing into financial headwinds,” Peter A. Johnson, PhD, DMA’s VP, strategy, analysis, and planning, and lead author of the report.

Full Article

- See also: Direct Marketing Association

Presentations at the Denver NHFA Manager's Workshop

2009-04-01T17:36:00.010-06:00

I recently spoke at NHFA's 2009 Retail Manager's Workshop in Denver. Thank you to Nicole at the NHFA and to all the companies for inviting me. I enjoyed it. Follow the below links to download my seminar presentations.

Financial Management---Inventory Management---Sample Analysis

For a personal consultation email me at davidm@profitsystems.net

Editor of Furniture Today Echo's E-Commerce Strategy Webinar

2009-03-26T14:25:00.003-06:00

After delivering a webinar to representatives of businesses all over North America, I picked up the latest copy of Furniture Today. My favorite parts of this weekly newspaper are the editorials. In this issue, Ray Allegrezza, Editor-in-chief, wrote an article titled "Are you really connecting?". Wow! He echoed the exact opinions expressed in our webinar.

Do you think this topic is timely?
Ray wrote, "It's always a good thing to be connected to your customers — current and potential.

But in this current economic climate, being disconnected from your customer is not just risky business, it can be deadly business....

... She's out there and she's looking for you. This is not the time to play hide and seek."

- Ray Allegrezza, Editor-in-chief, Furniture Today

This is exactly what we are doing! Helping you connect to your customers – Current and Potential!

To the many of you who attended our webinar – you are moving forward in the write direction! You are educating yourself and seeking out those that can help you. We are here to help you succeed in the new media economy!

For those of you who were not able to attend, we can still get you up to speed with the others.

The next steps are: Schedule a Free e-Marketing Demo and Web Site Needs Analysis. Please contact Wayne McMahon at wayne@profitsystems.com or 719-332-9824 to organize. You can also take the survey, HERE...If you are already a user of e-Marketing we are also available to help you improve.

As well, so that you all can become familiar with what is going on now and what we provide the Furniture industry, here are links to download the webinar content:

Complete audio presentation

Complete PowerPoint

PowerPoint Presentation in .PDF

Sample script to assist in obtaining email addresses.

We look forward helping you reach your customers and to bringing you more education events in the future.

Thanks!

David McMahon

Webinar! We are your integrated source for e-Commerce Strategy

2009-03-25T14:19:00.008-06:00

Thank you for attending our webinar.

PROFITconsulting in partnership with The Lively Merchant offers the most complete and integrated web solutions for Furniture Retailers. Today we focused our our email and website design, and marketing components.

Your next steps are to schedule a Free, one on one, e-Marketing Demo and Web Site Needs Analysis. Please email wayne@profitsystems.com to organize.

Most of the content you saw today was from current clients.

You can download (about 30 seconds) and view the presentation by clicking the below picture.

e-Strategy Webinar #1

2009-03-11T15:17:00.007-06:00

You are invited to attend an Important Webinar on your e-Strategy! e-Strategy Webinar #1

Date: March 25th, 2009
Time: 3 p.m. Eastern, 2 p.m. Central, 1 p.m. Mountain, 12 p.m. Pacific
Presenters:

David McMahon, Business Coach and Director of e-Strategy, PROFITconsulting
David Lively, CEO, The Lively Merchant

Price: Complimentary for Blog Readers

Topic Information: Following up on the success of the 1st Industry - Wide Web Summit in Las Vegas, David McMahon and David Lively will continue to review the critical components of a complete e-Strategy. This time, they will use a condensed webinar format. Through this webinar, they will help you better understand:

The basic workings of the various parts of a complete web solution

Customer Relationship Management Systems (CRM)
Email Marketing (e-Marketing)
Website - e-Commerce
Social Media
Search Engine Management (SEO/SEM)

Describe what this means for your business
Provide details of two of the key components:

Email Marketing
Website - e-Commerce

Explain how you can get started on the road to building your business for the 21st century consumer

Space is limited so, click here to register.

Retailer Manager's Workshop

2009-03-09T09:00:00.000-06:00

The NHFA is holding a managers workshop in Denver at the end of this month. PROFITconsulting and other industry experts will be delivering seminars on topics like Financial Management, Inventory Management, Distribution, Marketing, and Customer Service. There are still some seats available. If you are interested follow this link or contact Nicole at the NHFA.

E-mail nfilippo@nhfa.org or call (800) 888-9590 ext. 6151 for more information.

Sunday, March 29, 2009 - Wednesday, April 1, 2009

Renaissance Denver Hotel, Denver, Colorado

Be around in 10 years!

2009-03-03T13:08:00.007-07:00

Here is an article that highlights the behavioral patterns, NOW, of consumers...and how some Home Furnishing companies are finally seeking to give their customers what they want.

Years After Internet Boom, Some Furniture Companies Embrace Web

By Mary Ellen Lloyd Of DOW JONES NEWSWIRES

After years of shying away from Internet sales, Bassett Furniture Industries (BSET), Ethan Allen Interiors Inc. (ETH) and other traditional home-furnishings powerhouses are launching major efforts to beef up their Web sites.

And the moves can't come quickly enough, say analysts and consultants. The $115 billion U.S. home-furnishings industry is desperate to generate sales, given the impact of the housing crisis and weakening U.S. economy on big-ticket, discretionary purchases. Yet it lags behind other industries when it comes to selling products online or simply using the Internet to bolster sales in manufacturer- or dealer-owned stores.

"If you're not converting to commerce at your Web site, I don't think you'll be around 10 years from now," said Ed Stevens, chief executive of Shopatron. His San Luis Obispo, Calif., firm provides e-commerce applications to manufacturers so they can fulfill online orders taken on their own Web sites through their dealers. It is a growing business, especially within home furnishings.

Read the Full Article

The Break Up - of the Consumer and Advertiser

2009-02-18T09:36:00.016-07:00

David Lively, our partner at The Lively Merchant, found this video on YouTube and included it his presentation at the recent Web-summit in Vegas. It is very relevant to what is occurring in society. This supports what I (David McMahon) have said repeatedly, "The Consumer is now in control. They choose which marketers they will give a chance. If they are interested in you they will find you on the web and decide if you are worthy. If they want to hear from you they will sign up for your emails. They choose whether you are giving them value or spam. They will dump you at a moments notice, too, or stay with you forever. Now, marketing is about RELATIONSHIP BUILDING!"

Live from Las Vegas - Web Summit

2009-02-13T17:51:00.003-07:00

Thank you to all who participated in the first Industry-wide Web Summit. We sure enjoyed it!

As promised, here are links to all the presentations as well as audio and video. Let us know if you have any questions.

Thanks!

David McMahon
info@profitconsulting.net

Presentations:

New Media - Rick Doran
PPC and SEO - Mark Phelps
e-Marketing - David McMahon
e-Commerce - David Lively

Audio Files:

New Media - Rick Doran
PPC and SEO - Mark Phelps
e-Marketing - David McMahon
e-Commerce - David Lively

Pictures

Article in latest issue of Design and Decor

2009-02-13T01:00:00.003-07:00

RETAIL STRATEGIES Live from Las Vegas Market: How to have a successful e-mail campaign
On the eve of the Las Vegas Market, home furnishings retailers joined together to try to figure out how to tackle the problem of marketing in a new digital age.

Organized by the Retail Marketing Alliance and The Lively Merchant, the Industry-Wide Web Summit was held in the Las Vegas Room at Harrah's Las Vegas Hotel and Casino and featured seminars from various experts on everything from social networks to sending messages to people's cell phones.

One of speakers was David McMahon of Profit Consulting, who offered 10 Tips to Step into the Modern World of Customer Relations. McMahon said the first step to developing a good e-mail relationship with your customers is to make sure that you are keeping track of your customers through a Customer Relations Management system, which can be as simple as an Excel file. Next, make sure you have online publishing software that interacts with your customer database. "How those two interact determines how well you can do e-mail marketing," McMahon says.

Here are McMahon's 10 tips for successful e-mail marketing:
1. Deliver Value: Everyone wants to deliver e-mail blasts, but if your e-mails aren't relevant to the specific customer who receives it, it's borderline spam. "You need to send messages that seem as if they've been written specifically for the person who receives it," McMahon says.

2. Get e-mail addresses: Keep it simple and easy, but very prominently on your site should be a place to sign up for a VIP list. Use contests and special offers.

3. Segment your database: Who bought a bedroom set but not a mattress? There's a good marketing segment. It's all about following up with specific e-mail campaigns based on purchasing patterns.

4. Show style and substance: It's not about pasting names into Microsoft Outlook. Think of the e-mail as the stationary you're going to use. Use images, but understand that they also have to work as just text -- a lot of people open their e-mails on Blackberries, so if you're relying on a .jpg, a lot of viewers are never going to see it.

5. Speak to your customers, not yourself: Make sure your e-mails speak to the recipient's interests, not your own (at least not obviously). They'll opt out quickly, and McMahon notes that you only have, by law, 10 days to honor someone's opt-out, and then you're considered spam.

6. Write engaging subject lines: You really need to consider the "subject" and "from" lines when drafting e-mails. If they are not well thought-out, no one will open the e-mails in the first place. Here are some examples of good e-mail subject lines:
-- Order confirmation: #35274864637
-- Special event for San Diego Customers
-- Preferred Customer Card for David
-- Happy Birthday on Dec. 10! An audience member at the seminar -- Devin Kinsella, CEO of Etailer Solutions -- said he knew of one retailer who sent out an e-mail to customers inviting them to an after-hours wine and cheese party to see new products.

7. Teach your customers something: Content should be a learning experience for readers. If your e-mail isn't of value to them, they won't open them (and will eventually opt-out).

8. Tailor your message: Transactional e-mails (emails that reference a specific interaction between the recipient and the store) have high open rates.

9. Track results: What are the open ratesfor your e-mails? Which e-mails bounced (i.e., didn't deliver)? Were any e-mails forwarded to a friend? Did customers opt-out? Opt-out rates are just as important as click-through rates, and if they're much over 1 percent, the quality of your list might not be very good.

10. Start now: Waiting a couple of years to start e-mailing your customers is not an option. You need to get this up and running before your competitor does.

How to Use the 80/20 Principle to Improve Your Business

2009-02-10T19:35:00.007-07:00

e-Communicator - Feb 2009 Issue -By David McMahon

The 80/20 principle says that a high percentage of results, or outputs, are produced by a low percentage of the activities or inputs.

So, why is this important?

Because time is a very limited resource! It allows you to focus more on what is working, or not working, so that even greater results become possible. For example, if you run a sales analysis by category, you will notice that on the bottom of the page there is a summary. It tells you how many best selling items you have and what percentage of the inventory they represent. Then it displays how many margin dollars those items produce. In almost every case of the 193 companies I consulted with, 20% of the items produced over 80% of the results. Amazing!

Now, knowing what those items are allows you to focus and take action. Your goal should be to maximize the best seller in stock day percentage (also in the summary section). This will maximize your margin dollars. FYI: Operations with double digit profitability usually have their best sellers in stock over 95% of the time!

Click Here for the full article

Furniture Today Coverage of Las Vegas Web Summit

2009-02-09T19:59:00.004-07:00

Web Summit: Furniture industry needs to connect

Clint Engel -- Furniture Today, February 10, 2009

LAS VEGAS — If there was one takeaway from the Industry-wide Web Summit here, it was that furniture customers are now connecting online in a multitude of ways.

And if industry players aren't doing the same, they'll soon be left behind.

Click Here to Read Entire Article

Google Presentation from Market

2009-02-04T07:27:00.005-07:00

Here is a presentation that was given to me by Michal Lorenc of Google on the Furniture Industry Marketing Mix (click to download):

Presentations for PROFITgroups & The Industry-wide Web Summit

2009-02-04T07:02:00.010-07:00

These are presentations form New Orleans and Las Vegas (click to download):

You Can Harness The Power of e-Marketing

2009-01-24T19:57:00.011-07:00

Four tips to strengthen customer relationships.

As Published in Furniture World Magazine January 2009

Operations by David McMahon

There is a shift that is occurring in the advertising world. Resources from newspaper, yellow pages, TV, cable, and radio advertising are being reallocated to web sites, internet search, email media, and mobile media. This change has just started to occur in the furniture industry. New media is uncharted territory for many furniture retailers, but with a bit of knowledge you can be one of the first in our industry to do it right.

The big guys such as Rooms to Go, IKEA, Thomasville, Ethan Allen, Nebraska Furniture Mart and many independents are aggressively collecting and using customer and prospect email addresses to help build customer loyalty and keep their best customers from shopping in other places (like your store).

Some of these companies collect email addresses from shoppers, buyers and on the internet and then they follow-up with various levels of customer contact. Most send a general monthly or semi-monthly email promotion that is totally advertising focused. This is a start, and it is easy to do.

A few provide value driven content-based e-marketing newsletters targeted to their customer’s interests. This is even better then emailing a promotional message because it provides value to current customers / prospects and helps to build long term relationships.

I define e-Marketing as permission- based marketing and follow up done through interactive media such as the internet. It can be done through web pages, search engine optimization (SEO), mobile short message services (SMS), or email. In this article we will largely focus on using email.

Even as e-Marketing is on the rise, most independent furniture retailers hang on desperately to old guard marketing. They see change as a risk, and decide to stick with what and whom they know. Traditional media has worked in the past for them and they hope that their customers will come back. They hope that just by changing the mix of traditional media, buying smarter and tweaking the message, they will attract more business. To a degree, this strategy can work, especially with retailers that have made poor media buys, neglected to quantify results, and run tired advertising that fails to differentiate their store brand or motivate customers
Those of you who have been following Leslie Carother’s excellent FURNITURE WORLD Magazine series that covers e-marketing and social networking (posted to the furninfo.com article archives) have seen that there is an opportunity to connect with customers in a substantial way at low cost by using new media. Furthermore, it can be done in a way that other retailers in your market probably haven’t even considered.

New media enables independents to compete on a similar playing ground locally as a national or regional powerhouse! It is far less costly than traditional media as it is driven by brains, creativity, and knowledge of the virtual world. You may not be able to match Ashley Furniture’s newspaper insert budget, but you can connect with customers and give them targeted information that supports your brand, boosts retail traffic and sales.

Consider these points:

Most stores get the majority of their sales from within a 30 mile radius of where their customers live or own a property.

There are usually several shopping choices in that 30 mile area.

The majority of your store sales come from the top 20% of customers.

Your top customers are also someone else’s top customers.

Many of your younger customers and virtually all of your future customers demand Modern Media – they grew up with it.

This is your window of opportunity. You will eventually need to embrace modern media, so why not do it before your competition? Change is hard, but playing catch-up is harder. Trying to come from behind has put the nail in many coffins.

Click on the cover for the first 4 tips To harness the power of e-Marketing

Can You Imagine?

2009-01-20T05:28:00.001-07:00

An entire generation of Americans is growing up with no newspapers and very few catalogs. They might not even know what a phone book looks like.
Scary stuff for an old retail fart like me!
This group is more concerned about value than privacy. They’ve never believed they had privacy, anyway. How to pay for something is often more important than how much something sells for. Possibly, this is a holdover view shared with their over-extended parents.
They live lives online and offline. Spending 6-plus hours a day in the cyber world is not uncommon. SecondLife, MySpace, YouTube and avatars are common place.
Other generations remember new fangled inventions like TV, microwave ovens and ATM machines. This generation has never lived without internet. Their worldview is different.
You’ll only keep their attention for nanoseconds. They are capable of doing three things at once. They prioritize time and money differently than previous groups of consumers. They even think buying software is old fashioned. (Can you believe it?)
Do you want to be in business in twenty years? You’d better see the world through their eyes.
These “digital natives” have laptops, cell phones, IPods, Black-berry, DS, digital cameras, DVD burners. They are connected, and they are on the prowl for more.
They are working in nearly every retail setting already. If you want to keep up you ought to be hiring more of them at every turn.
I’m not suggesting picking them while alienating older consumer groups which have a lot more spending money. I am suggesting, however, that technology today allows us to talk to different consumers in their language. But you must know their language in order to speak it. The BS meters of this group are well tuned and waiting to pounce
Now don’t go running out half-cocked thinking you’re going to dominate this group. Don’t, however, wait with your head in the sand for them to choose you when they have the money, because by then it will be too late. They will already have chosen your competition.
Are you spending your advertising money and recruiting people the way you did five years ago? If the answer is yes to either of these questions, then please change. If not, don’t say you haven’t been warned.

Poker, Furniture, and Life...

2009-01-13T06:40:00.002-07:00

From the 1998 Matt Damon and Ed Norton movie “Rounders,” about the underground poker world of Boston, we can take to heart one of the best business quotes of all time: “A lion survives by being a lion and a mouse by being a mouse.”

It seems lately during almost every conversation this quote jumps to the sketchpad of my mind. Why? Because many independent business owners, feeling the pressure of the difficult economy, are flailing around looking for the miracle cure to what they believe ails them.

Joey Knish, the movie’s card-shark philosopher, was trying to explain to Mike McDermott (Damon’s character) that the only way to win at cards and in life is to be who you were designed to be.

You didn’t become the dumbest person in the world overnight just because your sales are down. However, the flip side of this coin means you probably weren’t the smartest person during your last growth cycle.

Assuming you haven’t changed policy, procedure, product, or promotion of your company just before business got tough, I for one will say, “It must be some outside forces causing this decline.” Great. It’s not your fault. But the bank, your employees and your customers still want what they want and expect you to continue to deliver it.

Which leads me to what I believe is the single biggest problem facing independent retailers all of all types: inventory control. Inventory management in the furniture business (my area of expertise) is so out-of-whack that many store owners and merchandise managers have apparently forgotten the old adage that cash is king.

I know dealers who are over-inventoried by more than 20%, who have decided to cut their advertising, turn off some of their showroom lights and lay-off employees rather than do whatever it takes to reduce this inventory!

When offered consulting services that will cost $10-20k over a twelve month period of time focused exclusively on trading $275,000 of excess inventory for the same amount in cash, I’m told, “We can’t afford it.”

Back to Rounders. Knish explained to Mike, “In a heads up match, the size of your stack is almost as important as the quality of your cards.” This lesson could easily be rephrased, “The size of your cash reserves is more important than the size of your inventory.”

A little more sage advice from Rounders is this, “Throw in your cards the moment you know they can’t win…fold the hand.” For those of you who ARE NOT GOING OUT OF BUSINESS, I would tell you not to lay down and get you head beat in during this downturn! If you’ve decided this isn’t worth the work, then contact me to discuss how to get the most out of your going out of business sale.

The last bit of advice from Rounders comes from a conversation between the two lead characters, Mike and Worm, as they discuss the fallacy of a lifetime, that is, “People insist on calling it luck.” Winning at cards or making money at retail is almost never about luck!

Would You Like An 11% Increase in 2009?

2009-01-10T13:49:00.002-07:00

“If you’re not converting to commerce at your Web site, I don’t think you’ll be around 10 years from now,” said Ed Stevens, chief executive of Shopatron.

Mr. Stevens was talking directly about the furniture business when he made this statement.
Online furniture sales are already at $12.3 billion. By 2012 Forrester Research, Inc. estimates sales will reach $26.7 billion!

This is a gut busting 46% increase in the next 3 years.

I’m not saying it will be easy. I’m not saying it will come without failure. I’m not saying it’s for everyone.

I’m saying if you aren’t doing something about this situation right now, you are throwing money down the toilet!

Remember all of those friendly vendors that “want to partner with you?”

The ones who give you little or no CO-OP, but will gladly provide free flyers promoting their brands - NOT yours.

These companies are now your competitors.

Since LZB, Ethan-Allen, and Bassett are selling online how long do you think it will take for Ashley, Broyhill, Lane, and Thomasville to follow suit?

We have been working for over two years on solutions to these questions.

We can and want to help. Will you let us?

The 1st PROFITconsulting Webinar: Recession Intervention

2008-12-03T22:21:00.006-07:00

Thank you all for attending. We had a huge turnout!

We look forward to assisting you in our 3 recession beating initiatives:

High Impact Sale
e-Marketing
Inventory Management

To download the presentation, click on the above slide.

To get started on increasing your cash, NOW: email us at info@profitconsulting.net or call us at 800-888-5565.

Thanks!

Modern Ways To Increase GMROI - Part 2

2008-11-26T13:36:00.005-07:00

Part 2: Old school ways to increase this critical measure are just not enough anymore!

By David McMahon

Editor’s Note:

In the last issue of FURNITURE WORLD Magazine, the first part of this series discussed ways to boost GMROI by applying technology to improve business at the point of sale, in purchasing and receiving. Part 2 will conclude this discussion by looking at additional GMROI boosting strategies.

Delivery & Pick Up

Delivery scheduling should be fast. Typically, operations rely on a delivery clerk or the salespeople to call when they “feel” it is time to call the customer. Or, worse, they wait for the customer to call them. Messages are left and phone tag is played. This is a waste of time for both customer and retailer. The process can be improved by using modern tools to manage the process more effectively.

The first tool is to implement automation software to proactively send your manager a list of customers that need to be contacted immediately for scheduling. Don’t wait for someone to print your “complete for delivery report” once a week. Have this important info sent without a thought. Take the people factor out of running major reports.

Once you have the information, email and call your customers. This is more professional, more convenient, traceable and a huge time saver. In the age of online shopping, Blackberry’s, and IPhones, your customers expect this. They feel more comfortable shopping with businesses that are technically “up with the times.”

Finally, the best retailers use routing systems so that they can fill trucks faster, maximize the number of stops per day, save on fuel, and wage costs, by taking an efficiently set route. Once the route has been established by the manager the data can be uploaded to GPS devices, or maps can be printed. This can result in a 20% delivery cost savings!

Customer Follow-up

One of the most pressing issues for home furnishings retailers is the customer follow-up process, especially on special order merchandise. Salespeople, on average, have poor follow-up skills. Whether it’s bad information, being afraid to call the customer, or just plain old laziness, follow-up rarely gets done professionally. Customers deserve better. They expect it.

Online purchasing has raised the expectation bar. Most of your customers are experienced internet shoppers. When they buy anything online, they immediately get an order acknowledgement with an ETA date, a receipt, and a thank you email. When the merchandise is shipped, they get another email so that they know exactly when to expect their order, along with a link to track its progress. Finally, after they receive the product, customer satisfaction surveys are emailed. This is done by the retailer online for a fraction of the cost and time of traditional calls and letters.

Guess what? This is the standard of proactive communications you should hold your business to. Proper execution will increase your GMROI by lowering cancellation rates. And – additional sales will be generated via positive word of mouth amongst your customer’s peers.

If you are a traditional brick and mortar store with a sizable customer direct mail data base, you will need to focus your efforts on adding emails as well. Similar to accessing your database for a direct mail campaign or with special order follow-up letters, you should be able to extract specific customer data to be used for email follow-up. By mapping your data to an online email marketing agency, you can now send special order updates, thank you’s and shipping notifications professionally via email.

Click for More. Thanks for Reading!

Recessionary Thinking By Salespeople

2008-11-20T12:54:00.006-07:00

By Joe Capillo

Steven Covey wrote that "Sometimes, the way you think about the problem, is the problem".

This fits right in with the principles of "The Secret" and the Abraham-Hicks teachings that you get what you think about. In other words, you actually create your own reality.

As hard as these things are to grasp, I believe they are real.There's no doubt that our economy is a mess. There's no doubt that fear is keeping a lot of shoppers out of retail stores. However there are still people shopping in furniture stores every day, just fewer of them, and those people seem to have overcome their fear and are concentrating on their need - which hasn't changed because of the economy.

Apparently, these are people who still have money to spend on things that are important to them - like making their homes more beautiful, comfortable and pleasing to them and their families.The way you deal with these customers is all important and should be no different than the way they always should have dealt with them. If the need is so intense that it overcomes all of the bad news we see every day about retail sales, you need to be more focused on serving them than ever before.

For years I've told you to deal with the room - the greater issue - where the problems that furniture buyers struggle with lie. You can't solve a problem you don't understand, and you can't become connected to customers when you are only trying to sell them something, to close the sale.

You are dealing with two kinds of shoppers, two different psychological views of buying. There are transactional shoppers and relational shoppers.

Briefly, transactional types are very price and "deal" focused. They've made up their mind what to buy, and are just shopping for the best price or "deal" which may include availability and financing. These people do not value relationships with either stores or salespeople as much as they do getting the best deal. If you win with the transactional types, they are likely to tell everyone they know about the great deal they got at your store, so they can be a source of referrals.

The problem with transactional shoppers for retailers is that, because they shop so much, you see them a lot of times, so your per-visit close ratio is low for them. Also, transactional shoppers think of each purchase as a separate issue and don't return to the same store for the next purchase automatically. They follow the deals.The other type of shopper, the relational shopper, is different. They don't like shopping all over the place, and are seeking a relationship with someone they trust and a store they trust. These people want to have a "friend" in the business and consider their current purchase one of a string of future purchases as their need dictates. They need more help, and are open to the kinds of consultative selling I espouse - dealing with the greater problem of the room rather than just the item their shopping for today. These people will value this extra help, and are more likely to purchase more now when that kind of help is provided.The thing about all this that's sometimes confusing is that most of us exhibit attributes of both types depending on what we're buying and the long-term consequences of the purchase.

Now, in our late-2008 economy, I think all shoppers have become somewhat transactional - they're all looking for the best deal and will not part with money easily. Still, I believe in the thinking of successful military leaders that no battle was ever lost because too much force was used. I don't think sales are lost because too much service is provided, but that the opposite is true. Even though transactional shoppers have price and "the deal" high on their priority list for where to buy, they, too, struggle with the same design and decorating issues that the relational types do.

Who's to say that providing a broader understanding to them of the design consequences of their purchase won't bring out some of the relational side of their nature?

This is a time to value every shopper, every customer opportunity you get, by slowing down (heaven knows you have the time) and upping your service level to everyone. Service first, closing later. You do, of course, have to attempt to close every sale, and in these tough times, you cannot get to the higher closing rate you need to maintain your income by treating these few shoppers the same way you did when there were two or more times as many opportunities.

It's time to change your tune and your thinking.

History does repeat

2008-11-18T21:15:00.002-07:00

491 years and 18 days ago, the 95 Thesis was nailed to the door in Wittenberg. In its day, this was the means of inviting scholars to debate important issues. Not a single person took the challenge.

A decree condemning the views was issued. The decree was later burned. The rest is history.
Eight or so years ago Christopher Locke, Doc Searls, and David Weinberger bought their 95 Thesis to the marketplace in The Cluetrain Manifesto.

I’ll not force feed 95 points down your throats.

However in dealing with some important copy writing today, the kind that has family’s lives hanging in the balance, I was moved by how little some have changed.

Clearly we continue to miss the main idea from these authors, who wrote, “Networked markets are beginning to self-organize faster than the companies that have traditionally served them. Thanks to the web, markets are becoming better informed, smarter, and more demanding of qualities missing from most business organizations.”

Here are only a few of their thoughts. If you would like to see all 95, you can read them here. Surely you can find the time.

#4 Whether delivering information, opinions, perspectives, dissenting arguments or humorous asides, the human voice is typically open, natural, uncontrived.

#11 People in networked markets have figured out that they get far better information and support from one another than from vendors. So much for corporate rhetoric about adding value to commoditized products.

#14 Corporations do not speak in the same voice as these new networked conversations. To their intended online audiences, companies sound hollow, flat, and literally inhuman.

#15 In just a few more years, the current homogenized “voice” of business—the sound of mission statements and brochures—will seem as contrived and artificial as the language of the 18th century French court.

# 24 Bombastic boasts—”We are positioned to become the preeminent provider of XYZ”—do not constitute a position.

#61 Sadly, the part of the company a networked market wants to talk to is usually hidden behind a smokescreen of hucksterism, of language that rings false—and often is.

#75 If you want us to talk to you, tell us something. Make it something interesting for a change.

#91 Our allegiance is to ourselves—our friends, our new allies and acquaintances, even our sparring partners. Companies that have no part in this world, also have no future.

#95 We are waking up and linking to each other. We are watching. But we are not waiting.

I beg you in the most human of voices to hear this mad man’s voice from the wilderness and respond. Call me, email me, snail mail me, or comment right here on our blog.

Please join this conversation. Your business life probably depends on it.

To Increase Sales, Please Read On

2008-11-03T19:44:00.006-07:00

By David McMahon, Business Coach

Let me ask you a couple of questions:

How important are your best customers to your future business? Would your best customers ever shop somewhere else? How important are your salespeople’s continued relationships with their customers?

Your answers should be:
HUGE!
Of Course!
Vital!

Good, we agree so far. Now, do you want to blow your mind?

Go to your management system and run a sales report to rank your customers by volume for all your salespeople for the last five years.

What are your observations?

I have found in many companies that I’ve visited recently to implement our e-Marketing package that there are a huge amount of customers that are being virtually ignored. My reasoning is that there is a large part of the customer database that lists under salespeople who have left.

The all important customer/salesperson relationship is severed when a salesperson stops following up or leaves your business.

General direct mailers or emails are not as effective as receiving a note or email from someone that the customer knows. Simply put, the person who owns the relationship owns the customer. If there has been no relationship, than there is no guarantee of that customer coming back.

Can you afford to have that customer starting a new relationship with your competition?

Of course not! No one can.

Increase sales = increased traffic via be-backs through better follow up + increased average sales through expanded trust + increased professionalism and response via a customer relations management system.

Here are my recommendations on what to do next:

Professionally implement customer relationship systems. We have several database integrated options: e-Marketing, Customer Care Center, Next purchase, Past purchase, and CHARISMAselling.
Get into the customer/salesperson business: doing this along with excellent inventory management will make you a super retailer, and super profitable.
Help your salespeople automate follow-up as well as keep a personal touch: use e-Marketing to easily segment emails and direct mails by salesperson for opportunity follow, thank you notes, delivery confirmation, surveys, next purchase, and private events.
When a salesperson leaves, re-assign their customers to a new salesperson to continue that relationship.
Manage professionally: nothing works without management team expertise: get training.

Above all, DO NOT WAIT! Your competition is starting to do this. I invite you to contact me to discuss beating them and saving your customers by DOING IT RIGHT.

Thanks!

David

Toughing it out. Keeping it together. Making ends meet.

2008-10-23T12:38:00.002-06:00

The language of the left brain is logical. The educational system in the United States has effectively taught generations of left-brained thinkers.
However, studies have shown that children loose a large percentage of their creativity between ages 5 and 7. Things like storytelling, art, music, drama, and design become second class subjects at this young age.
Leap forward and you’ll find that TV, radio, print, bill boards, yard signs and point-of-purchase messages all sing the same sound in the mind. Sales, discounts, two-for-one, buy-one-get-one and lowest price of the century are lyrics of the left-brained limbic system.
But your consumer is living in her right brain. “Keeping it real” has replaced “being cool.” Authenticity rules the day. The old saying, “Say what you mean, and mean what you say,” applies. People know when your offer is crap!
Your dreams didn’t change Just because business tightened up. It might have changed your focus. Deep down, in places we’re too embarrassed to talk about, the dream goes on.
So go ahead and hunker down. Count pennies. Save scraps. But, remember that imagination, perception, and faith are as fundamental as math, language and spelling.
They are simply the languages of the other side of your brain.
Creating interesting and compelling copy costs the same as the dull scream-and-shout hype of the last 50 years.

Relationship Marketing

2008-10-20T07:08:00.010-06:00

Improve the way you do business, strengthen the bonds with your customers, and sell more - with email!

October Issue of NHFA Retailer Magazine - by David McMahon

How much do you spend on advertising every year? Most stores that I visit spend around 5% or 6 % of sales, at least. Wow – that means that if you do $5 million top line you are putting $250,000 to $300,000 toward media costs. Ok – that’s fine if that produces increased or even a stable number of leads. However, many businesses have experienced declining traffic and sales over the past 2 years while advertising dollars have remained constant. This has forced the ratio to go up over 7% of sales in many cases!

Old world marketing methods, traditionally embraced by retail furniture stores, are simply not producing the same results, as when the economy was on the up swing. Like in Spencer Johnson’s famous novel, Who Moved My Cheese; the cheese, which could represent consumer behavior, has moved. It is my opinion that it is time for the industry to try new marketing methods – methods that have proven successful in many other industries. It’s time to adapt to the change that has occurred.

Your customers are very busy and have more choices then ever before. They don’t need to open the junk mail, to look in the yellow pages, to listen to the local radio channel, to watch TV commercials or to read the local newspaper. They get the info that they want, when they want it, ON DEMAND. They go to their favorites on the internet or use Google. They subscribe to e-Newsletters from various businesses that interest them and that GIVE THEM VALUE.

It is the best time in human history to be a consumer!!! Choice – on demand.

Click here for the full article...Thanks for reading!

Visit us at High Point Market

2008-10-09T19:43:00.006-06:00

(Click to Enlarge)

PROFITconsulting Welcomes The Lively Merchant

2008-10-07T22:10:00.006-06:00

Meet our new partner and blog author: David Lively!

Western Reporter Featured Article - What REALLY matters!

2008-09-13T10:35:00.017-06:00

I know. I know. I know. Business is down. This is true for the majority of businesses in the retail sector. During this downturn I have been visiting at least two stores per month. And do you know what I see? Funny enough, there are still operations with good profitability, those that are average, and those that are weak.

I believe that downturns are good. They weed out the weak, and they make room for those committed people, those that are smart, hard working and willing to adapt to change.

I’m straight up. Unless you are all of the above, or hire people who are, it is difficult to make it long-term in retail.Now, those of you who are committed to long-term prosperity keep reading — this is about you! Click for the entire article...

Release "The POWER of e-Marketing"

2008-08-31T13:44:00.011-06:00

Here is David McMahon's July 2008 Presentation (pdf) to the Visionaries PROFITgroup in Morehead City, NC.

This modern marketing approach strengthens long term customer relationships and is proven to produce HUGE events though these campaigns....

Email David at davidm@profitsystems.net for a demo.

E-mail Sale Produces $138,460 for Charlotte-Area Ashley HomeStores

2008-08-19T17:54:00.005-06:00

Excerpts from Home Furnishings Business Magazine

"The Charlotte-based operator of eight Ashley Furniture HomeStores said a July “Secret Sale” announced only via e-mail and text messages generated $138,460 over four days."

“Using e-mail and SMS (text messages) as digital marketing channels has really impressed us out of the gate and shown us a clear path to offset declining response rates and poor ROI in some of our other forms of advertising,” said Charlie Malouf, co-owner of Ashley Furniture HomeStores of Charlotte, which operates stores across a region that includes Upstate South Carolina. “The success of the Secret Sales proves just how effective digital marketing can be, and we plan to expand such programs in the future.” To quickly build its database of e-mail addresses and text message numbers, the chain ran contests offering prizes that included a $500 shopping spree and free gas giveaways. For the sale, more than 34,737 messages were sent—including 6,000 texts—on the morning of the sale to announce the four-day event.

Malouf said, “We’ll not only use e-mail and text messaging as a means to drive business, but in the future, we’ll also use these forms of new media as a way to effectively communicate directly with our customers,” he said.

The Power of e-Marketing

2008-08-08T08:02:00.005-06:00

Article in August Issue of e-Communicator

"10 Tips to Step into the Modern World of Customer Relations"

I was recently invited to present to PROFITgroups. The Visionaries Group of retailers wanted to know how they could use new tools and techniques to develop better relationships with their customers. I say better relationships because BETTER CUSTOMER RELATIONSHIPS = BETTER BUSINESS = BETTER CASH FLOW.

Over the next ten issues of our e-Communicator I will give you one tip.

Tip #1: Deliver VALUE to your customer and get value for yourself

Email marketing is permission marketing. If you do it right your customers will reward you with more traffic to your website and store. Done right, the ROI on this type of marketing has been proven over 800% better in cost per lead. On the flip side, if you do it wrong, you may be labeled as a spammer and could loose customers.

Your campaigns are opt in. That means that your customers want you to contact them. It's about communication and doing business more effectively with a mass audience. Professionalism and style are expected. Many of your customers have shopped at places like Lowe's. They are used to getting e-Newsletters that deliver valuable information that helps them improve their homes and lifestyles. They also expect to receive special promotions as preferred customers. It is through this continual deliverance of value that loyalty is established.

Your monthly newsletter is the core of an e-Marketing Strategy.
It needs to be stylish, informative, interesting, and consistent. You can advertise your product in it of course but, remember the main objective is to strengthen the bond between you and your clients. Hopefully, that's what I am doing with you!

There is a HUGE opportunity now for independent retailers. Not many small businesses have started e-Marketing. And of those that have, very few are doing it right.

Get on board now, the right way, and you will have a head start on your competition!

Remember VALUE!

If you want to know more about my presentation, "The Power of e-Marketing" or our e-Marketing package, send me an email at davidm@profitsystems.net.

Click for full issue of our e-Communicator. Thanks for reading!

Why Some Businesses Prosper Even in Slow Times - Part 2

2008-08-02T10:53:00.005-06:00

Inventory Management Best Practices

NHFA'S HOME FURNISHINGS RETAILER - July Issue Pages 56-61; www.nhfa.org

In my previous article, I discussed how best-practice financial management helps businesses evaluate their performance and set goals for improvement. Now, I will focus on improving cash flow by becoming more efficient with your largest asset: your inventory!

Understanding the practice of inventory management is simple: carry as little inventory as possible, sell as much from it as possible, and achieve the highest margin possible.

Well, if it were that easy, then we would even have more competition in the marketplace today.

Obviously, inventory management is a HUGE challenge!

Click for the full article. Thanks for reading!

7 Steps To Easily Reduce Fuel Costs

2008-08-02T10:00:00.001-06:00

Here is a great article by warehouse management guru Dan Bolger. Guess who he is talking about in point 3?

Now is the time to look at your delivery systems, in-home service/ sales calls and driver education.

Warehouse Management by Dan Bolger

Yesterday it took $50 to fill the tank on my fuel efficient Honda. While I was putting in $4+ a gallon gasoline at the Flying J where I go, the truckers were fueling at $4.70 per gallon and spending $600. It reminded me of the recent Rocky Balboa movie. Rocky wants to get back in the game and tells his son that it’s not how hard a hit you can give; it’s how hard a hit you can take and keep moving forward. The Economy Hit and the Fuel Hit are combined brutal punishment for everyone. So what are we going to do to get back in the game?

Click for entire article

3. Use routing assists to plan your routes to save 10% or more. Check software options. One excellent software package can link to the inexpensive Microsoft Streets and trips as well as the higher end products like Descartes RouteView. There are options like PCMiler that are specifically designed for truck routing that can be linked to retail software systems or stand alone. Every major retail software vendor has routing solutions available..

Click for entire article

Info on PROFITdelivery To visit Dan's Site

e-Marketing to be Unveiled at Vegas Market

2008-07-26T13:19:00.009-06:00

For PROFITsystems clients, we are pleased to announce that we have created a cutting edge marketing package called E-Marketing. This allows you to:

Massively improve your advertising ROI. Increase traffic at a fraction of traditional media costs.
Strengthen customer relations by providing VALUE ADDED services and information that is RELEVANT to specific needs.
Export your email database (with 1 click) in segments to specifically target your customers (Newsletters, Customer Type, Opportunity Follow-up, Salesperson, Next Purchase, Past Purchase, Zip code, even - Birthdays!).
Import and create custom searches on your database audience (you can separate audiences depending on the demographic or campaign, for example).
Create stylish, professional email campaigns (not spam) that benefit your best customers. (you can personalize and merge your data with our easy and powerful online publishing software)
Edit, proof, test and send to mass audiences.
Track your results and improve. You will know how many customers received your emails, who opened them, and what they clicked on.
Learn how to properly build a permission based email database using PROFITprofessional. Quality rules! Manage opt-outs automatically and have automatic sign ups.

Click for email marketing campaingn announcement! Thanks!

Modern Ways To Maximize Your GMROI - Part 1

2008-07-14T14:43:00.001-06:00

Furniture World: July/August Issue:

Part 1: Old school ways to increase this critical measure are just not enough anymore!

By David McMahon

Editor’s Note: This article will discuss ways you can boost GMROI by applying technology to improve your business at the point of sale, in purchasing and receiving. The October/November issue of FURNITURE WORLD will conclude this discussion by looking at pickup/delivery, customer follow-up systems, website and advertising considerations.

The economy has changed. Buying patterns are dynamic. Technology is rocketing forward. Some retailers are keeping pace. They are the innovators. They quickly adapt and take advantage of the changing economy and give customers services that match their buying patterns. They do this by embracing the same technology that brought about the changes in the first place.

Click for entire article. Thanks for reading!

Why Some Businesses Prosper Even in Slow Times - Part 1

2008-07-02T19:49:00.013-06:00

"Financial Management Tools, Techniques, and Lessons from the New York Giants"

NFHA Retailer - June 2008 Issue by David McMahon, pg. 47-53

Did you see this year’s Super Bowl game between the unbeaten Patriots and the wild card 10-6 Red-hot Giants? Fantastic, right? It was one of the most exciting displays of perseverance in recent memory. Both of these great teams displayed traits that that are key to champions – they faced huge opposition, they were prepared as an organization, they worked as a team and they executed their strategy with grace under pressure. This lead to a close 17-14 game won by the comeback NY Giants. In my opinion both teams were winners.

The reason why I am starting my 2 part article with this example of organization excellence is to highlight the primary reasons why some prosper even in the face of huge adversity.

Click to read or download the entire article. Thanks for reading!

A Mastermind Group

2008-07-01T15:52:00.000-06:00

I was reading an article today from Keith Ferrazzi the author of: "Never Eat Alone." The subject of the article is near and dear to my heart: Professional Advisors. Ferrazzi spoke about having trusted advisors who hold him accountable as being essential to his success. "Sometimes others see what you can't see. They keep you honest, because you won't want to disappoint them by blowing off your goals."

He went on to discuss the downside of having professional Attention Deficit Disorder (ADD). I had to laugh as I sometimes wonder if a dose of Ritalin might work wonders for me. In the quest to be the best, we sometimes find ourselves losing focus on the goals we are currently working on, because a new idea or project seems so much more enticing. Working to complete goals that may be long-term and those requiring more focus and energy, can sometimes be easily set aside. This especially tends to happen when what appears to be the next "BIG" idea, or opportunity comes across ones desk, or is touted by someone as a "Gotta try this" revelation. That old boring and monotonous goal is now not much fun, or very exciting.

Does this sound vaguely familiar? You come up with an idea or goal you intend to attain, you put time and energy into it, hoping it will prove to be successful, but after a few weeks you don't see the results you expected, so you move on to something else. The new idea took precedent over the other goals you had been working on, right? When the new idea became hard to complete you turned your attention back to what you were working on in the first place. Rinse and repeat.

A reader responding to Ferrazzi's Blog commented further on the topic. He noted that one should seek out a "Mastermind Group" for support, accountability, inspiration, etc. I like that, a "Mastermind Group"! We have those at PROFITsystems; we call them PROFITgroups . I looked in the thesaurus and found some of the related words to describe mastermind, and they depict those who belong to our groups. It refers to brains, architects, organizers, planners, and engineers. It describes one who devises, instigates, and conceives. It denotes intelligence. In my association with the members of our groups they encompass all those traits. So I think we might rightly call our program the PROFITsystems Mastermind Performance Groups. I like the word mastermind. It accurately defines who our groups are made up of.

Are you associated with masterminds that are willing to advise and coach you? Do you have someone who holds you accountable? Do you hold someone else accountable for their goals and behaviors? Do you have someone you can count on to say "See I told you so", when dumb ideas are just that, or will they ask the hard question; "Is this idea or project really something that will make a difference in your business?" If an idea or goal can take months to see results are you willing to put in the work to see it to the end? Do you have someone to challenge you?

If you can answer yes to all the questions above; good for you. If you can't you might consider participating in a performance group, utilizing a business coach, or surrounding yourself with trusted advisors. Never forget that while you may be intelligent and successful, there is always someone smarter and more successful from whom we could learn a thing or two. One of Ferrazzi's advisors explains; "If you can find people whom you can trust, you will go out of your way to live up to their expectations." Our group members become like a surrogate board of directors for each other. The level of commitment they have to one another increases every time they meet to assist one another in being the best they can be.

PROFITsystems associates with many masterminds through PROFITgroups, PROFITprofessional, PROFITconsulting, PROFITuniversity, PROFITfreight, and PROFITservices. These business units offer best-practice solutions designed to maximize cash flow and profitability. Questions can be sent to Phyllis Zaepfel at phyllisz@profitsystems.com or by calling 800.888.5564.

Losing Sleep, Over Bedding Sales?

2008-06-10T14:36:00.001-06:00

Are you losing sleep over your bedding sales? From my experience in working with many home furnishings dealers, I find that bedding is more of an afterthought than a focus. Bedding is considered an add-on sale which promotion, training, and retail space is little to none. Many dealers that claim to sell bedding even have mattress sets covered by linen ensembles and salespeople forget or have difficulty presenting this product to clients. Click HERE for full article.

PROFITsystems Announces e-Showroom and Preliminary announcement of e-Marketing!!!

2008-06-03T23:16:00.005-06:00

By: Furniture World Magazine

PROFITsystems, Inc., a leading software provider for the home goods industry, has announced the completion of phase one of e-Showroom, which links a retailer’s merchandise to their Website. “This is just one more area where we have increased our service commitment to our clients. Our e-Showroom enables our clients to establish brand awareness and increase their traffic levels from an audience they might currently be missing. In today’s economy, shoppers are educating themselves on-line before they even hit their first furniture store. Retailers need to maximize their advertising dollar and what better way to do this than to put their inventory on their Website – a second store without the building expense. By using this incredible marketing tool, we are making it easy for our clients to help their customers,” said Jeff Niskern, President of PROFITsystems. Read full announcement!

Building Blocks to Success

2008-05-28T19:19:00.006-06:00

David McMahon, Chris Millet, David Lecher and others are presenting at the 2008 NHFA Management Development Institute!

A four-day program, this educational opportunity prepares high-potential managers who are assuming responsibilities in their organizations for the leadership challenges facing the home furnishings industry. MDI focuses on the latest retailing techniques and strategies as well as teaching time-honored principles. The Management Development Institute is held every other year. The next program will be held July 13-16, 2008 at the Renaissance Denver Hotel in Denver, Colorado. Click for more...

Advantages of Direct Marketing to Your Customer Base

2008-05-23T11:58:00.003-06:00

Selling to existing customers is far cheaper and easier than finding new ones, thus making your customer database one of your most valuable assets.
Targeted
You can focus your resources on the very best prospects (customers who have already purchased from you) for your particular products and services. With direct marketing, you communicate one-on-one with your target audience. You control who receives your message, what the message communicates, when it's delivered, and how many people you reach.
You address the specific concerns and needs of your customers.
Cost Savings
With mass marketing one spends a great deal of money trying to reach 'everyone' within a marketplace, direct marketing to your customers allows you to only spend what is needed to reach this specific target group. The 2007 PROFITgroups average for advertising per up was $18. You won’t use the majority of your budget trying to influence people who have expressed absolutely no interest or need for your products or services. Using this type of target marketing, you can generate a much higher response rate at a much lower cost. (There is a very low cost factor to test this if you are not thoroughly convinced)
Immediate Results
Not all marketing campaigns are designed for immediate results. At times the campaign is simply a hope that the marketing will make a positive impression on the listeners and create awareness for the future. (Brand marketing)The purpose of direct marketing to your customer base is to generate prospects and repeat business NOW. A larger percentage of this audience will respond to the offer immediately. When a special offer is sent to the customer list, recipients as a rule will respond within a few days or prior to the offer date. Direct marketing produces immediate results.
Foreseeable Results
Direct marketing is a numbers game. By running a few simple tests, a direct market campaign can determine a close estimate of what percentage of your customer base will respond to offers. If one knows that one can get a 1%-5% response from the customer list, one knows that one will get 10-50 responses for every 1,000 customers presented the offer. This reliability allows one to plan and budget appropriately. Other marketing strategies don't give you this predictability.
Once again; there is a very low cost to test this!
Benefits to Your Customers
The biggest benefit of direct marketing to customers is the fact that they can receive specific offers on just the right kinds of products and services that interest them, i.e., the category of items that they have purchased previously. An added benefit is; your customers receive preferred customer treatment and special offers from the company (you and your sales associates) they have bought from before.
Thank you letters, next purchase follow-up and discontinued item notification provide additional opportunities to contact you customer base.

WHFA Articles by David McMahon & Phyllis Bosco Zaepfel

2008-03-28T20:41:00.007-06:00

Furniture Business Briefing is a quarterly eNewsletter for WHFA members tailored to meet the needs of busy home furnishings professionals and managers. Look to Furniture Business Briefing to find ideas on how to improve your operations and bottom line in a quick, easy-to-read format.

Get Your Sales Back! Modern Media Package with Selling System
David McMahon, PROFITconsulting

Are you relying solely on your advertising to drive sales? Learn about the challenges of traditional media and how to implement a Modern Media Package. (Read full article).

What Is The Best Way To Implement a New Process?
Phyllis Bosco Zaepfel, PROFITgroups

"What is the best way to implement a new process," is a question we frequently hear from our clients. First we must understand that no one likes changes. It is uncomfortable. We are scared the new way won't work as well as the old way and it feels like switching hands when writing or eating. It all just feels very awkward. Find out how networking will help you implement new processes in your store. (Read full article).

Add 250,000 Gross Margin $$ Without Raising Prices!

2008-03-20T22:14:00.001-06:00

Furniture World Publication - March 2008

Clearance sales may have their time and place, however, there are many other more productive ways to increase GMROI. You can do this without increasing prices or holding inventory clearance sales. ...more

GET YOUR SALES BACK!

2008-03-13T20:02:00.003-06:00

Modern Media Package with Selling System

I was analyzing the traffic data of a home furnishings store recently. I compared this data with their advertising data. Over the past three years I observed that their traffic had significantly declined while their advertising expenditure remained constant. This resulted in a similar drop in sales. Over the span of these three years they saw this trend and reacted by searching for a promotion that would hit big. Occasionally they found one, but not on a consistent basis.

What was happening and how could they turn it around and benefit from it?

This retail operation, like many throughout the country, was relying on traffic as the sole driver of sales. If their traditional TV, newspaper, and radio advertising ads brought in the same number of people each time they had a promotion, then their sales would be relatively similar. Their close rate and average sale did not fluctuate much.

They thought if they advertised more, sales would increase. That would have possibly worked, if it was not for two major occurrences: increased competition and media on demand. Increased competition through manufacturer and national branded chains brought an increase in inventory and retail space to their area - so their customers had more options. Population did not go up significantly, but more stores were advertising to the same audience.

At the same time, traditional media was becoming less effective due to media on demand: radio now has satellite, TV has TiVo, newspaper and the yellow pages have search engines, direct mail has eNewsletters, and they all have the internet. People get their media when and where they want it now.

Old result: Declining in-store traffic = declining in-store sales (if relying on sales through traffic that is only generated by traditional means).

This is: a how to benefit from these challenges. What can you check off?

¨ Analyze your current marketing strategy and determine if it is right for your 21st century customer.
¨ Implement a complete Modern Media Package (MMP). This includes elements such as web pages that work (ie. brings traffic to your store), Search Engine Optimization (SEO) that is right for you and your customer, a blog that provides valuable and current lifestyle information, newsletters that are creative (and not spam or blasts), a message board for customer relations, and real-time text messaging for customer assistance.
¨ Reallocate funds in marketing budget: shift from traditional media to MMP and non- traditional (word of mouth/viral marketing) methods.
¨ Change your business model to REALLY focus on customer service (use technology to save time).
¨ Define your selling system. What is your working TEAM process from lead generation to sale completion?
¨ Get metrics, because you cannot improve what you do not track: track traffic, average sales, and close rate (SALES = AVERAGE SALE x CLOSE RATE x TRAFFIC).
¨ Get the right people on your team and the wrong ones off.
¨ Focus on increasing average sales and close rate (not just traffic).
¨ Ensure your sales manager is capable and on the same page as the owners.
¨ Follow-up with all customers - sale and no sale, as much as possible. Make it easy for your customers and your people to communicate and do business together, follow-up via email for all sales and future sales (part of your selling system).
¨ Sketch, as much as possible (part of your selling system).
¨ Room plan, electronically, as much as possible (part of your selling system).
¨ 90% of salespeople/designers are performing house calls (part of your selling system).
¨ Analyze and track everything so that you can make changes fast and improve more quickly that your competition.

Executing all of these elements will allow you to provide a SUPREME level of customer service, achieve a higher average sale and close rate, and yes, increase traffic.

New Result: Increase Sales (by focusing on modern media packages, average sales, and close ratios).

This is now. There are two choices: Jump in, change with your customers and enjoy the ride, or cut costs and try to wait it out. The choice is clear - have fun with it!

Jerry Epperson - on GMROI

2008-02-10T20:09:00.000-07:00

I've been preaching the value of tracking and improving GMROI for years...Some listen and take action - they have decent cash flow. And the other's ???...Listen to what industry legend Jerry Epperson said in his Jan. 28 editorial, An insiders' view, in Furniture Today:

"GMROI: To fail to ask about extended terms, quick-pay discounts, quick-ship programs and methods to keep your inventory levels as low as is practical is like giving away cash. Please understand that most furnishings that are available at a deep discount are that way for a reason. Ask why."

--- I could not agree more with Jerry --- David McMahon, Author of SMARTinventory, the fastest way to improve GMROI.

Link to Presentation and video clips

2008-02-03T14:27:00.000-07:00

I had a fantastic time at the Vegas Market and PROFITgroups Colossal conference. The quality of businesses that attended the Colossal seminars, are truly exceptional. Everyone that came out to learn and improve themselves are the "Bright Future of Small Business." Click HERE to down load my presentation. Consistent improvement is the KEY!

The videos are not imbedded but you can watch them by following these links:
Biography Channel: Home Depot Clip
Inventory Management Clip: David Comeaux, AFD

Retailer Request - Job Description for Office Manager

2008-02-01T21:48:00.000-07:00

A friend of mine who owns a fantastic and growing bicycle and triathlon store, Moment Cyclesport, in Point Loma San Diego asked me for a job description of an office manager.

A great person in this position is vital to processing daily business properly and relieving the much needed time for the owner. Basically, a competent office manager allows the owner to focus "ON" the business rather than be swallowed "IN" the business. Click to download.

If you need any other job descriptions or ideas in how to find great employees send me an email. Cheers!

David McMahon Presents for the WHFA/NHFA

2008-01-26T18:15:00.000-07:00

"The Bright Future of Small Business"
Las Vegas Wednesday January 30, 4:30-5:30: RRC Educational Seminar Schedule World Market Center, Building B, 16th Floor

David McMahon is one of PROFITconsulting’s finest Business Coaches. David has worked with hundreds of operations around the world and holds degrees in Business and Economics. His goal is to deliver his wealth of knowledge to you to improve your LIFESTYLE! In his spare time he also continues to pursue and learn from his other passion: Ironman Triathlon.

The goal of this presentation is to highlight “the bright side” of business and help you prosper well into the future. Using his “8 Best Practice initiatives” he will share what the most profitable stores do to succeed now and his vision of what they will do in the future.

Link to WHFA/NHFA Seminar Schedule

2008 Product List Released!!!

2008-01-24T18:24:00.000-07:00

We are pleased to announce an expanded product and service list for Jan 2008. New to this year is "CRM Training", "Delivery Routing and Mapping", "Power Tools", and "Enhanced efficiency" programs.

All our traditional business services continue to be delivered including the popular "Roadmap to Profit Increases and Financial Forecasting", "Inventory Management Systems", "Sales Management Training", and "Customer Service Systems".

These are all used designed to make your business and life better.

Download Link

Customer Complaints

2008-01-16T20:23:00.000-07:00

When was the last time you logged into the Better Business Bureau’s website to look at your company’s report? Are you aware of the other internet sites set up exclusively as a forum for consumers to express their disdain with sellers? Ripoffreport.com, thesqueakywheel.com, and others abound. Go to one of these sites and search on “Stainsafe”. You might be surprised how many people are frustrated with this product. Are you aware of what your customers are saying about you in cyberspace? If not, you are missing the boat.

Many company owners or primaries have assigned one person to handle communications from consumer agencies, as well as letters from customers, or they choose to handle tough complaints themselves. Like many busy owners who rely on their staff, they assume all matters of this nature are resolved in a timely and satisfactory manner. I also would imagine that each complaint that reaches the designated contact is dealt with to a resolution. My real concern is how many complaints have escalated to this level?

What do you feel is an acceptable number of customer complaints to be referred to the Better Business Bureau or some complaint forum? I would argue that one is too many. It is true you can’t please all the people all the time, but the objective should be to try.

In doing the research for this article, I took a random sampling of six furniture stores that are current and past members of our PROFITgroups and I looked up their reports. What I found was, of the six companies I looked at, the number of complaints processed by the BBB in last 36 months and the results were: 0, 0, 3, 5, 15, and 33. These are companies that have volumes of $8 million or more and the volume of business is not indicative of the highest level of complaints received.

So, what does this tell us? When I confronted one of the companies with these findings, he told me the Better Business Bureau wasn’t credible. He even said they were out to get him. It should be noted he didn’t continue to participate in the program and last I heard his store was struggling. The other owners whose stores had more than one complaint had no idea of the number of accumulated complaints they have received. All of these stores proclaim to be committed to offering the highest level of customer service to their customers and I believe they sincerely think they are. There is however more opportunity to stay on top of escalating complaints.

Customer complaints are opportunities to improve the customer experience your store provides. Complaints should be looked at as lessons learned and should be the motivation to promote better customer service within the organization. Customer service issues are just one of the topics we deal with through our PROFITgroups program. We discuss and assist in developing systems for our group members to deal with real issues that they face in their desire to better their operations and thus increase profitability. If you are interested in learning more about customer service processes and procedures, call PROFITgroups or one of our business coaches at 800.888.5564.

Peer Pressure

2008-01-16T20:11:00.000-07:00

In a past issue of Western Reporter, a letter from the then president of WHFA, David Harkness, Harkness Furniture, caught my attention. The WHFA, like the NHFA and IHFA are respected organizations in our industry. I usually find I enjoy reading these letters as much or more than some of the articles. The letters are generally very interesting and contain information relative to current concerns and issues facing home furnishing retailers.

The letter described in detail what Mr. Harkness contributed his store’s growth and success to over the last several years. He talked about how late one night while vacationing with another retailer, Giff Gates, they sat in the hallway of the hotel and compared financials until 2 am. It must have been quite insightful for them to see how their businesses compared to one another. I can visualize them sitting there asking questions all night; Why is that you can get by with payroll of 18% and mine is closer to 23%. How is it your advertising is 5% to sales and mine is 9% when we seem to have about the same traffic. Look at this, my utilities are 2% and yours less than 1%. If I could get my percentages closer to yours in this category alone that would mean huge profits to my bottom-line. The conversation must have been riveting for them.

Can you imagine their excitement when they later discovered they had the opportunity to engage in this same type of conversation with an entire group of retailers? I am fortunate I get to participate in this type of conversation several times a year. The discussions of this nature are invaluable to those that seize the chance to participate in them.

The letter goes on to describe the other elements of their group’s activities; Store critiques, best practices, operational processes, personal goals, all intended to increase profits, encourage growth and educate one another and assist in making each participant a better retailer.

I will have the good fortune of meeting with a group of 25 retail owners engaged in the type of comparisons and having those same conversations those gentleman had those many years ago.

If you recognize how important a group of this nature can be for your business and what an impact meeting with other retailers can have on your business, or would like our experienced business coaches to share best practices they have learned meeting with successful retailers, please call 800.325.2018 or email phyllisz@profitsystems.net.

Are You Thriving or Merely Surviving?

2008-01-16T19:51:00.000-07:00

Would you agree our industry is changing? I think most would. I had the pleasure of sitting-in on a seminar Connie Post presented on the subject of innovation. The presentation included reference to an article “Get Creative” published in Business Week magazine. The article noted, “The Knowledge Economy as we know it is being eclipsed by something new called “The Creativity Economy.” The basic information presented in the article was this; what was once central to corporations -- price, quality, and much of the left-brain, digitized analytical work associated with knowledge -- is fast being shipped off to lower-paid, highly trained Chinese and Indians, as well as Hungarians, Czechs, and Russians. Increasingly, the new core competence is creativity -- the right-brain stuff that smart companies are now harnessing to generate top-line growth. The game is changing. It isn't just about math and science anymore. It's about creativity, imagination, and, above all, innovation.”

When Former Staples CEO and VC expert Tom Stemberg was asked in a recent interview- What makes the strong retailers stand out today? He responded: “They're perpetually focused on the customer”.

We know customers are a businesses life’s blood. You need them in your stores and you need them to buy the goods and services you sell. So how do you get them and better yet keep them from patronizing the competition? I believe the answer comes by being innovative. Remember the old saying; “That and 50 cents will buy you a cup of coffee”? Well, not if you buy your coffee at a Starbucks. Would any of our parents believe that we would one day spend $3.50 or more for a cup of coffee? How about bottled water, multiple times a day, at $1.70 plus a bottle? Why are we willing to forego a regular cup of coffee and a glass of tap ice water and pay the price for premiums? It makes us feel better, that’s why.

So what is it you can do in your stores to make our customers feel better?

Sales trainers and coaches, tell us it is not about furniture, it is about rooms. They preach levels of service, (aka, experience) not just peddling furniture. Service is something I have been touting for decades. I however recently have replaced the word “service” with the word “experience” and it is easily interchangeable. A “Customer Experience” department makes more sense to me, because that is what you provide, an experience. One can be much more creative with the experience offered than with tangible products.

There are many inventive retailers out there that get the whole “innovation” concept. I am fortunate to get to meet with them regularly through our PROFITgroups program. I hear so many amazing, creative ideas that are discussed in the course of our performance group meetings and roundtable sessions. Same day delivery or 7-day a week delivery, restaurants in stores, theater seating in front of big screen TV’s playing children’s movies, (Where the kids can play and be occupied while Mom’s shop), cappuccino and espresso bars, room planning tools in every department, chair massages while waiting for finance approval or a will call, okay, I made the last ones up, but why not?

I’m presenting this to you this because we should all be challenged to thrive. What will you do to create an experience for your customers that they will remember? What innovative ideas can you come up with?

Look to your own organization. When was the last time you had a brain-storming session? I would bet you are surrounded by people with great ideas. Ask for those innovative ideas. Use the premise that no idea is too crazy or too extreme. Take the list, approach all of the ideas with an open mind, and then create that unforgettable experience.

If you need more ideas or you want to try time-tested innovative ideas that are a sure thing, consider joining our premier performance group program or utilizing our world class coaching team today. Call PROFITgroups or PROFITconsulting at 800.888.5565 or email; Phyllisz@profitsystems.net