PCA Magazine Winter 2020

54 PCA The Magazine | WINTER 2020 PREMIUMCIGARS.ORG Most retailers could significantly boost their revenue simply by paying closer attention to two planningmetrics: linking planned staffing levels to store traffic rather than revenue, and allocating the right number of staff to the right places at the right times. The research suggests that a “modest reallocation of the payroll budget” could yield a 2–3 percent increase in sales with no increase in cost. This is a clear signal that adequate numbers of knowledgeable staff help drive customer satisfaction, sales and retail execution success. Consider themany cases where your customers really rely on store associates to help themdecide which cigar, tobacco or accessory to buy. While youmay have correctly forecasted demand andmeticulously planned just-in-time deliveries to your store, the sales associate is the final link in the chain of events ultimately getting the products into the hands of the customers. And their money into your registers. HOW TO DETERMINE CUSTOMER SATISFACTION The researchers noted that, for many years, retailers have been asking customers tomeasure both their overall level of satisfaction and their opinion of various details of their store experience. However, whilemany retailers ask if the customers were able to find what they were looking for, there is rarely a deeper dive into what factors influence the quality of staff execution. Here are some questions the researchers asked that youmay consider asking some of your customers: • During your visit, did anything get in your way that was put or left in the aisles? • Did you need assistance, but were unable to find it? •Was your checkout quick and efficient? • Did you see any product which you were interested in purchasing that was too high for you to reach? • Did you look for anything that turned out to be out of stock or not carried by the store? • Did you have any difficulty finding the price of an item? • How knowledgeable are employees about what they sell? About everyday prices? • Based on your visit to our company that day, will you come back? • Do you feel you got your money’s worth on this visit? • Taking everything into account, howwould you rate your visit to the store that day? (scale of 1 to 10) However, the study also found that while understaffed stores increased sales by adding staff, and that even adequately staffed stores increased sales by reallocating employees to key sales areas, there is a diminishing return to adding or tweaking the staff. fter the cost of goods sold, the expenses related to hiring, training and employing staff constitute, by far, the largest component of a retailer’s costs. Payroll often accounts for 10–20 percent of sales and for more than 50 percent of operating costs. But not just in hard costs. What about costs of sales lost and customers leaving dissatisfied? Not only that: Payroll and staffing have significant impacts on inventorymanagement. We are looking not just at staff levels appropriate for traffic flow through your stores, but also the right type of engagement your staff offers to your customers. Knowing our customers, therefore, helps informeffective inventory control. According to a 17-month study on retail execution byWharton professorsMarshall L. Fisher and Serguei Netessine, with doctoral student Jayanth Krishnan, it was determined that sales and customer satisfaction were not drivenmerely by product availability and customers’ ability to find products. Instead, “customer perceived in-stock”—ametric theWharton experts used to describe the number of customers who answered “yes” to the all-important question of “did you find everything you need?”—was driven not only by actual in-stock products but by howwell the customer rates employee knowledge about the store and the products they are looking to purchase. In other words, the study found that lower customer satisfactionwith their shopping experience is a result of too few employees and the lack of accessible, knowledgeable employees. Sounds simple and straightforward, but the research points out some compelling findings about how small investments into adding some additional staff and ensuring staff are properly trained and fully engaged can add real numbers to your bottom line. Outside the A Cigar box BY SCOTT PEARCE THE POWER TO MAKE OR BREAK YOUR BUSINESS “No matter how you slice it in the retail business, payroll is one of the most important parts of overhead, and overhead is one of the most crucial things you have to fight to maintain your profit margins”. –SamWalton, founder of Walmart ILLUSTRATION BY AURIELAKI