If you can’t manage every aspect of it, you don’t truly own it.
Recent conversations with a few retailers illustrate this challenge.
- One retailer shared that in the course of 4 months he unexpectedly lost the top salesperson in each of his two stores. Between them they accounted for approximately $1.8 million dollars in annual sales.
- In another conversation, the owner of a family apparel store in a small town whose nearest competitor was 60 miles away, offered that their biggest competition was the obituary column.
- Another store owner, dealing primarily in better, branded family footwear and apparel, defined the most important objective as getting people across the threshold in the face of eCommerce options.
Three real-world scenarios raise the questions: What is a retailer’s most valuable asset? And, what can be done to manage it?
A case could be made that the most valuable asset is “the sales team.” However, sales associates are an asset only as long as they are productively employed. A case could be made that “inventory”, is most important as a sales team needs to be enabled with the right product at the right price with enough quantity to meet store traffic demands. However, the real value of inventory – its profit generating (GMROI) potential – decreases with each day it’s in the store And the more of it owned the greater the risk of it hanging around well after the GMROI potential has eroded and it becomes a liability.
A store’s customer base emerges as the single most valuable asset:
- Even when salespeople move on, most customers can be retained.
- Unlike inventory, the value of each customer increases over time.
- Unlike inventory, a store can never have too much of it.
- Properly managed, customer relationships are a key driver of Owner’s Equity and perhaps the most valuable selling point when transitioning control or ownership of a store.
A successful store must maintain ownership of its customer base or risk losing it when salespeople move on. When customers move away or pass away no one magically takes their place – every new customer relationship must be nurtured to replace that business. If not given compelling reasons, personalized service, and a superior experience, customers will stop coming across your threshold – whether physical or virtual.
Simply identifying customer names with each sale is not enough. Customer mailing lists are not enough. Having associates with personal trade books is not enough. True management of customers is dependent on tools that enable the retailer to understand their customer demographics and shopping patterns, recording all customer contacts and results, and targeting marketing efforts that are personalized and tailored to each customer’s needs – even if it’s a one-to-one reach. Finally, tools must be provided not only to secure owner access to the information but to measure results to refine the performance of those efforts.