One common thing we noticed among all retailers we worked is their dedication towards their customers. Their energy and enthusiasm for seamless customer experience is unmatchable with any other industry. However, they lack in few basic aspects such as footfall optimization, identifying right product categories to focus on and margin calculation etc
Give Stars and Cash Cows the Attention they Deserve
What are Stars and Cash Cows and how to identify them?
Place the product categories in one of the above four quadrants. A Retailer should deal with each quadrant differently as detailed below.
Products with High Profit – High Sales fall under the Star Quadrant
Approach The Founder to closely focus on these product categories to ensure sales or profits do not fall. Ensure adequate variety and innovation in these products to continue the leadership position.
Have the Right Incentive Mechanism for Salespersons
Giving incentives to sales employees is an age-old practice in the retail industry. But the question is to know if the incentive mechanism is really driving up sales for the retailer. If it isn’t, the incentive is a cost burden with fewer or no benefits.
In usual incentive systems, a certain percentage of sales is given as an incentive to the person who sold that item. This system is not necessarily the best – it has several drawbacks:
- It may not align with the overall sales targets set for the business – employee-wise targets need to be fixed based on the overall growth desired by the company.
- The product focus of the company is not reflected in the incentive Policy.
Here are a few things that need to be considered while devising sales incentive policies:
Additional incentive systems can be set up to drive sales of the desired high margin products.
For instance, for a business which has higher margins on the accessory products, the extra incentives can be given if the accessories sales value is more than 20% of the total invoice value. This encourages active cross-selling – when a primary product is purchased by a customer, there is an incentive to co-sell the higher margin product categories resulting in an increased bottom line for the company overall.
