Yes, I could have saved these three furniture retailers!
It broke my heart when I heard about their bankruptcies! Each company had its strengths and weaknesses but had one important thing in common, they did not accurately measure their most important asset.
The thing they never understood was that some of their locations did exceptionally well and some stores had people that scared customers away; never to return. I tried to tell them that I could measure which stores were doing a great job and who was chasing away customers but they were too busy to listen. It’s as simple as accurately counting your customer traffic and learning your Revenue Per Guest. This is the dollar value of every opportunity that comes through the door IF THEY PURCHASE OR NOT.
This number was invented by John F. Lawhon, John was a genius and sadly we lost John recently. He was a good friend for nearly 20 years and if it was not for John and the education I received from him, my life would be very different. The bottom line is that this magic number would have shown each company immediately which stores were in the most trouble and which stores had great store managers; not just based on sales volume (as most people do) but based on the only two things a store manager can control. Average sale and how many people purchase (or do not purchase).
To demonstrate how cool this number is it can be calculated two different ways…
#1. By dividing total sales by the number of opportunities.
#2. Or by multiply closing ratio by average sale.
So they would have been able to easily compare the smaller stores to the high volume large stores evenly. For example out of the last 1000 opportunities for each store what was the performance? It may take a large store less than a week to see 1000 customers and a small store more than a month but the metrics are exactly the same! The playing field with RPG is completely level.
Typically you would find stores that were sometimes twice as good as other locations, in other words doing the same gross dollar volume with half the customers. This information is a gold mine in the hands of a good CEO.
It truly is a magical number that identifies problems in the first week and creates dramatic improvement almost overnight!
For less than 2K per store for our complete Customer Traffic Counting and Analytics Software, I know we could have more than doubled their profitability. TRAX also has new technology that guarantees extreme accuracy even if the dealer has an internet interruption.
It did not have to be this way!
Dave Mink Founder and CEO