Retail and service businesses are more competitive than ever. It is no longer enough to simply make sure the cash drawers balance and employees smile when they greet a customer. Savvy managers everywhere now seem to understand the value of a positive company culture and high employee satisfaction – things that use to happen by ‘accident’ are now are now considered a necessity. In order for a business to have sustainable success they must also follow key metrics and ‘own’ their mistakes.
“You can’t expect what you don’t inspect.” I learned this concept from one of my favorite business school professors. This simple statement has helped me time and again as I continue to grow and tweak my businesses.
It is hard to know how to improve if the people within the organization do not know how they’re doing. There are many metrics a company can measure its performance by – here are those I follow each month:
● Average ticket price
● Number of distinct transactions
● Number of items sold at each transaction
● Revenue per square foot
● Revenue per operating hour
● Revenue per employee
● Number of new clients
● Retention of clients
Other analysis includes the lifetime value of a customer, which anticipates how much a client will spend over the life of their relationship. Another is the client acquisition cost: examining how much money I have to spend to get a new client in the door. I compare that to the client retention cost – the amount spent to maintain a repeat customer base.
By tracking this data, and watching closely for trends, I’m able to read between the proverbial lines to understand what might be happening and allow ample time to address any trends that are headed in the wrong direction.
As examples, if the number of units sold per transaction slips, perhaps I need to change my retail mix, have a sales training session for the staff, or remerchandise my products. If revenue per employee drops, I’ll set specific, individual goals for employees or as a last resort consider cutting back on employee hours.
Own the Mistakes
It is not a matter of, “If mistakes will occur,” it is a matter of, “When will the next mistake occur?” Every business makes mistakes. What separates the exceptional businesses from the average is how they respond to mistakes.
When a mistake affects employees, the business must not skirt around the issue, hope that no one notices and wish it will just go away. They must be the first to admit a mistake was made and ‘own it.’ In doing so, share what will happen to rectify the situation and what was learned from the experience. My company experienced this a few years ago when details of an employee termination were not handled properly. Rather than allowing an ‘elephant in the room’ to remain unannounced, my team and I decided to address it head on by admitting the situation was not handled well, apologizing for the mistake, and most importantly, sharing what we learned so the remaining employees were confident the situation would not repeat itself.
If a client has a customer service breakdown, the same rules apply. Be the first to acknowledge the mistake and go above and beyond to show the client the company is sincerely sorry. It may be a surprise to learn that most loyal clients/evangelists for a company are not those who have had flawless experiences, but rather it is clients who have had a major breakdown in service that was beautifully recovered, and the client becomes loyal for life.
Everyone expects a business to make mistakes, what they do not expect is to be happily surprised with an amazing recovery. It’s not surprising that my business, a bustling day spa, has experienced its share of major breakdowns in our clients’ experience. There are so many opportunities for our clients’ experience to go awry – appointments can be scheduled for the wrong day, time, service; scheduled with a male therapist when a female was requested; appointments reserved at the wrong location, or surprises ruined by someone who confirmed the appointment without reading the ‘notes.’ Not that long ago a regular client and her husband were giddy when checking in for their couple’s massage to celebrate their anniversary on a busy Saturday. Sadly, their appointment was mistakenly scheduled for the following Saturday. Our spa was fully committed that day – there was not a single available appointment or any wiggle room in the schedule. My resourceful team not only found an appointment at a nearby spa, but also paid for their massages that day, and gave them a gift certificate for their next visit with us – all before the clients ever realized there was a problem. Since we estimate the lifetime value of a loyal customer, it was easy to make the decision to go above and beyond to save the day. The loyalty of these clients and the additional goodwill that is created by exceeding expectations will continue to pay off in the years to come.
Alissa Bayer created milk + honey spa and SALON by milk + honey, which have multiple locations in Austin and Houston.
Texas CEO Magazine has a podcast, Ask A CEO, featuring tech CEO veteran Joel Trammell. Listen to Episode One about the issues of taking your company public . Texasceomagazine.com/podcast1 pic.twitter.com/9zRZeGxxR9
We invite our San Antonio area readers to join us on Wednesday, Oct. 16 for The Frontlines of Innovation in Safety event, featuring San Antonio entrepreneurs. Stay tuned in the coming months as we re-launch Texas CEO Magazine. eventbrite.com/e/the-frontlin… pic.twitter.com/8Jdx0Gzwfw
#TexasCEO's 10 Most Read Articles Of 2017 #2 The Changing Of The Guard: San Antonio’s #Economic #Development Future texasceomagazine.com/features… @SanAntonioEDF #1 Deep Roots In The Heart Of #Texas: The Kaspar Family’s #Holistic Approach To #Ranching texasceomagazine.com/features…