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Retail Transaction Matrix



Kirjoittanut: Sunita Kumar - tiimistä Crevio.

Esseen tyyppi: Akateeminen essee / 3 esseepistettä.
Esseen arvioitu lukuaika on 11 minuuttia.

This is a straight forward understanding of my read of the 2 books on Retail sales and matrix named The Retail Sales Playbook: Battle Tested Strategies for Selling to Retailers by David Happe and Retail Revelations: Strategies for Improving Sales, Margins, and Turnover by Ritchie Sayner. Sales has always been my weakpoint but recently I tried to overcome this challenge and what better way than reading good authors. Though I do not excel in retail transactions, I present here what I understood from my read. Maybe the understanding is from the surface level but I do realize that retail influencing factors are vast and sales is a very personal experience which improves with practice.

INTRODUCTION

Retail transaction information contains an unbelievable prosperity of data about numerous aspects of a retail enterprise. From this data, a retailer can derive customer behavior, employee and store-level performance, promotional effectiveness, profit drivers and many other significant factors.

 

UNDERSTANDING RETAIL BUSINESS DRIVERS

Prior to talking about the retail business drivers, let us initiate with the technology driver. What are drivers? Drivers are the factors that drive the business or trade or sales. The factors that are the cause for the sales, or business, or trade, happening in the particular industry. What are the drivers for the retail trade? One can list number of Drivers for the retail trade, among them the major ones are as follows:

1) Strategic Drivers: These are very important drivers of a given retail business or showroom. As these need to be well defined at the start of the business. The better defined and focused theme is the more effective they are in driving the desired traffic to the store. As each of these drivers is well explained in other sections of the course, hence, they are not defined over here.

2) Resultant Driver: We saw that walk-ins is the result of the strategic drivers like Brand Positioning, Store Positioning and Target Consumers which help in generating traffic to the store because of the target customers finding the brand meeting/ accepting their requirement and fulfilling their needs both from the consumption point of view as well as aesthetic point, thus Walk-in is the Resultant Driver.

3) Tactical Drivers: In generating enough walk-in to the stores retail companies have to resort to Promotion and Advertising schemes which act as both parts of Strategic Drivers as well as Tactical Drivers. But it must be noted that Tactical Drivers act always as sub-part of the Strategic Drivers as they always have to be in alignment with the Strategic Drivers.

Thus we saw that drivers need to be understood in the right context to understand their respective importance and roles. The above discussion brings us to Transactional Drivers which are under direct control of the store management. Let us understand more about the transactional drivers through the method of Transactional Matrix.

 

Understanding of Key Variables which is to be used in the Transaction matrix.

The Transactional Drivers form the parameters or basis of measurement for the Transactional Matrix. The transaction matrix is used to measure the performance of the business on a store-2-store, day-2-day basis. By monitoring the transaction matrix, we come to know the extent to which the store potentialities make best use of the customer entry into the store.

The parameters measured in the matrix are meant to be used by ALL retailers – whether small or big.

Key variables to be measured for the matrix include:

Conversion Rate: It quantifies the ratio of potential shoppers that have decided to buy. Kate varies considerably by retail format, time of year, promotional activity. All these are measured with reference to a specific time frame.

 

Conversion

  • How many customers out of 100 who enter our store leave with a purchase.
  • Measures how well we convert “Shoppers to Buyers.”
  • The higher the conversion rate the better

This is the driver which finally decides whether the business is going to be successful or not, and hence, its importance in the Transaction Matrix. If the store management is not effective and efficient in their overall handling of customers then naturally the conversion will not be the desired one, even though the company has been able to drive the traffic or enough walk-ins to the store. Hence many stores have the practice of monitoring this driver on daily basis to understand the effectiveness of its store personnel inside the store.

 

What are the influencing factors?

 Let us understand what influences this driver. Some of the important factors that influence this driver are:

 Appearance and Quality of the employee – For the kind of brand position, store position and target consumer we need to employ staff who can match the needs of the brand in terms of physical appearance, grooming level, and educational qualification. The overall standard of the employees working in the store adds to the ambience of the store as well as acts as part of the first impression formed by the consumers entering the store. Hence, in International Brand stores lot of attention is given to the appearance of the staff, his/her grooming level, communication skill and accent, inter- personal skills, question/objection handling, attitude etc. This is a necessary aspect of their branding and store positioning as their customers belong to high profile category and may include foreigners.

Communication Skills – As we have seen in other sections covering communication skill, we know that communication is not only how one speaks the given language, but it involves the two-way process of also carefully listening to the customer and understanding fully well the customer requirement. It involves the way the customer is welcomed to the store and then guided through the store and its product range. There are various aspects to communication skills which need to be well understood by all the staff that must deal with customers/consumers.

Practical Understanding of Consumer Psyche –This aspect of understanding consumer psyche comes through years of experience and training and dealing with different types of customers/consumers. It has to be understood by the front sales staff that each customer comes with certain peculiarities and needs. The well experienced sales staff understands these peculiarities through initial questions asked to the customer and observation of the body language of the customer. Certain consumers may like the sales staff who are very interactive and conversational while certain consumers want their own space and time to go through the collection before they need sales personnel’s help. So, the sales staff must be able to correctly judge each customer’s personal likings.

 Product Knowledge – It must be understood by all store managements that without a proper understanding of the product knowledge the concerned front sales staff will not help in making the conversion of the shopper into buyer. Of course, the level of product knowledge the salesperson needs to have depends upon the profile of the consumers, the brand position and the store position. The higher the level of these factors the higher the need for product knowledge requirement of the sales staff. A consumer who wants to buy high priced product says apparel which is priced at Rs10000 will naturally need to know every aspect of the product. Hence, the product knowledge of the salesperson needs to be of the highest level as compared to that of the sales staff that has to sell apparel which is priced at Rs 200. When we discuss about product knowledge the kind of details the sales staff needs to be aware of for say a Garment are as follows: Product Content with content percentages, Special Texture or Features if any, Accessories Details if any Trims have been used, Embellishments if any like embroidery/print/other hand-work etc., Colour Names, Styling Details, Type of Fittings for wearable, Any other value additions. Besides the sales staff needs to be aware of wash-care instructions and need to guide the customer on this aspect carefully to avoid a dis-satisfied customer after the sale.

Closing the Sale -This is the most important aspect after the customer is taken through the range and is convinced on product quality and the reasonableness of price. The closing of sale needs utmost care at the sales staff level. He or she has to ensure that once the customer is nearing to make a choice his/her attention need not be diverted to something else in the same collection thereby again creating a state of uncertainty in consumer’s mind. Sometime the sales staff plays a deciding factor while finalizing the choice of the customer by aiding the customer in making the right choice by making some subtle suggestions on colour or texture of the material or about the styling or cut of the garment which will suit the customer’s body feature.

 

There by gaining customer confidence and expediting the choice making process for the customer. must be understood that each customer does need reinforcement of their decision-making process to make him/her feel satisfied about the correct choice made. After the choice is finalized then there may be opportunity for doing cross-selling, again it must be done in a suggestive manner without appearing to be over- bearing, Finally the customer needs to be guided to the billing counter with sales staff helping the customer with his/her baggage of personally carrying the product to the billing counter and facilitating the billing /payment process. The sales staff should also make an effort to get customers fill in their details or comments in the visitor’s book. The customer mandatorily needs to be wished good-bye by the sales staff and invited to come to the store in the near future next time. This helps in living a lingering feeling in the customer’s mind and also a feeling of importance and satisfaction. Thus, creating a loyal customer for the store, for a long time to come.

 

How to calculate Ticket Size.

Average Transaction Size

Let us try to understand the second important factor in the transaction matrix as it determines the level of business achieved per customer bill. Thus, we shall define Average Transaction Size or Cash Memo size as:

  • How much does the average customer spend in the store
  • Average transaction size Sales / Number of transactions (cash memos)

This is a critical number as it measures our ability to sell more of what we have to customers we already have in the store. This figure should always be improving as then it will indicate the ability of the sales staff to upgrade its existing customers who are regular buyers in the store to new category of items of higher value or expose the buyers to items of different features and qualities.

 

Influencing Factors for Achieving Higher Ticket Size

While the factors like Appearance and Quality of the employee, Communication Skills; Practical Understanding of Consumer Psyche; Product Knowledge, and Closing the sale will continue to be important influencing factors besides this the sales staff will have to be equipped with the following strategic selling processes, so that he/she will know what strategic approach he/she will have to take in case of new or existing customer walking into the store. For this purpose let us understand the following Product-Customer Matrix. This is a matrix that helps in determining the line of action the business needs to take when it has to consider expansion of the current business. It provides different options the business has for expanding its existing line of business and thus, it acts as a basic guiding business model. Let us try to use this model in dealing with transaction factors for helping in

Increasing the Transaction Size. Let us try and understand each of the cell’s A, B, C, and D in Product-Customer Matrix.

  1. Sell more current products to current customers.
  2. Sell current product to new customer.
  3. Sell new product to current customer.
  4. Sell new product to new customer.

As we can see from above explanation of cells it is clear that while Cells A, B. C and D will help us to create better conversion ratio; Cells C and D will specifically help in expanding the current ticket size to a reasonably bigger size by inducing the customer who has bought certain items to buy something more. Thus, the front sales staffs need to be trained on strategic thinking and selling techniques by the management while dealing with customers who enter the store.

 

Up gradation to Higher Priced Items

This is another important technique that help us in improving the ticket size. For this the front sales staff must be well equipped with a psychological understanding of customer needs as well as superb product knowledge. The sales staff must know at what stage he has to initiate this process without creating any type of confusion in the customer’s mind. Thus, many well experienced sales staff plays a safe game by first identifying the style, cuts, colour etc. of a particular item and keep it aside for later selection, while suggesting the customer to identify something similar in basic features but may be in better material or with different embellishment features, while explaining their salient features, thus helping the customer to upgrade its choice. So the customer being assured about the choice made of earlier item he/she is now shown some improved features or options with somewhat increased price or with smaller price increase, thus tempting customer to go for product with better features. In the whole process suggestive technique with subtle convincing will manly help.

 

Management Action Require

For improving ticket size, the most important action from the management size is to recruit right kind of sales staff to match the product and branding profile. Besides this the training of sales staff in psychological understanding of customer needs as well as superb product knowledge need not be further emphasized. The training of sales staff in handling strategic thinking and selling techniques as explained in the earlier part will also help.

 

Items per Ticket

This is another important factor in the transaction matrix as explained here below:

  • It measures how many items the average customer purchases It tells us how we are performing in suggestion selling.
  • It should be increasing as it indicates the strength of it sales staff in selling more items to the same person as well as strength of its product range in convincing the customer why it should buy more number of items from the same store.

 

The Influencing Factors

Again, all the factors which we discussed earlier like Appearance and Quality of the employee. Communication Skills; Practical Understanding of Consumer Psyche; Product Knowledge and Closing the sale will continue to be important influencing factors as without these factors there will be no conversion which is the first stage before the sales staff tries to influence customer to buy a greater number of items from the same store.

Besides these factors the sales team will also go back to Product Customer Matrix. In order to increase the number of items per bill we can use Cell C which allows us to sell New Products to Current Customer, Cell B by selling Current Products to New Customers and Cell D by selling New Products to new Customers. Thus, through these strategic thinking and customer management process we are in a good position to influence the customers for increasing the number of items per bill size. While dealing with these customers again care has to be taken of not over-imposing anything on them but to show the new items/products in a very subtle polite manner.

 

Management Action Required

As said earlier here again to improve this factor of transaction matrix greater training on all the factors as discussed above will be required besides use of Customer -Product Matrix to understand skilful use of the same in converting the existing buyer into buyer of more number of items.

 

Significance of each of the Transaction Drivers in Retail, finally measuring the Performance of the Matrix.

  Each of the transaction factors like Conversion Ratio; Ticket Size; and Items per Ticket in itself are measuring performance of the store on both day-to-day basis besides store-to-store basis as well as comparison of the figures for the one month with another or yearly trend in one year with that of the previous year’s trend. Thus, these kinds of analyses give greater insight into the working of the store as well as its progress.

Besides the above measurement factors, we can also measure employee-based factors like shown here below:

  • Average Ticket Size Per Employee Average Ticket Size per Bill Number of Full-Time Employees per Store.
  • Average Number of Items per Employee – Average Number of Items per Bill
  • Number of Full-Time Employees.

The above measures will also tell us about the productivity achieved per employee in a given store at various point of time besides providing comparison with other similar types of stores for the same period. Thus, helping us to determine the standard strength of full-time employees required, to achieve the given targets on the Transaction Factors

 

THE FINAL WORD ON ACHIEVING BEST RESULT ON SALES

‘Sale’ is a very lucrative terminology in customer perspectives. It is also a driving force behind attracting customers to the store. There are certain following aspects which can better conceptualize this thought.

  •  High sales mean fast depletion of stocks. If sales are more than plan gets worried. We may end up not having stocks on hand after a few days
  • Low sales mean risk of high stock levels. This means more of what we already have and hence no new merchandise on floor.
  • More fixtures means less space for customers and hence not enough circulation area.
  • Big back stock means higher risk of shop-soiled merchandise and hence loss of sales
  • High stocks at the front end ensure that customers see a bad-looking store.
  • When we need to increase sales do not get into non sellers before exercising our winning horse ( merchandise)
  • If we or our people do not understand the merchandise rest assured our customers won’t appreciate us or our merchandise If we expect others to train us in life without we seeking the same, we run the risk of missing the bus.
  • Simple things in retail make first impressions on customers: Security guards, loos, uniform, cleanliness on floor, method of handling merchandise.
  • The attitude that we bring into the store in the morning determines what we are to achieve during the day. Do not forget to have fun by achieving.
  • We can either choose to be a fire-fighter or a planned player in life.
  • The only power that sales personnel have is greater understanding of customers.
  • Plan and get enough feedback and act on it.

Source – The Retail Sales Playbook: Battle Tested Strategies for Selling to Retailers by David Happe (Read on December 2023)
Retail Revelations: Strategies for Improving Sales, Margins, and Turnover by Ritchie Sayner (Read on February 2024)

 

 

 

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