NFIB

What Secrets Do Your Sales Records Hold?
06/ 03/ 2002

Small business owners are busy, and it's easy to form a tunnel-vision on one task. Dedication is important, but -- as the saying goes -- it's important not to lose sight of the forest for the trees. By taking a few moments to examine sales records (weekly or monthly), you might notice unexpected trends in customers' purchases. Jeffrey Moses explains the importance of this in today's Workshop.

All small business owners and managers know what their shops carry (or what services they provide), but a close examination of sales records can reveal certain products or services that are selling better than expected. For example, a retail clothing and accessories shop may be surprised to learn that 10 percent or more of its overall sales volume comes from items priced under $7.50, and placed in bins or rack near the front of the store. A restaurant may discover that nearly 25 percent of its business comes from its appetizers. Or a mailing and graphic design business may realize that an unexpectedly high 7.5 percent of its revenue comes from writing and designing resumes -- a service that was not emphasized in any company brochures or flyers.

From the opposite end, a bookseller may be shocked to discover that music CDs and books-on-tape produce only 10 percent of the store's revenue, even though they occupy 40 percent of the store's total floor space. Or a hair stylist may find that expensive, highly promoted brands of hair care products are producing lower sales volume overall than another brand.

What can you learn from such discoveries? Plenty. And it all relates to increasing profitability. For instance, a store can begin putting its attention on unexpected high-flyers, making them easier for customers to find. Or it may begin putting such items in ads and other promotions. If some customers are buying products or using services that aren't being promoted, it stands to reason that other customers may also be interested when they find out about them.

Another innovative way to take advantage of such knowledge is to "bundle" objects that are unexpectedly big sellers. Offer a 15 percent discount on one item when a customer buys a related item. This can boost the desirability of already popular items, increasing your volume and profits.

Or you might de-emphasize products that are just taking up space, or services that don't bring in revenue commensurate with the energy and time they take for employees to perform.

When unexpected sales results show up, it often means that you've discovered a trend. A product or service may be dwindling in general popularity, and as a result be selling less this year than last. It's important that a business owner not be the last to discover such a trend. Similarly, a product that's selling more than expected could be beginning an up trend. By promoting such products, the store can make the most financially out of the trend, playing it until the trend begins to slow. The only way to do this is to examine sales records regularly and often -- and to consciously realize what you're looking for: winning and losing products, categories of products, and types of services.

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