What is the Cost of an UP?.

The most valuable part of your business is floor traffic. Every thing that
happens in your store is based around floor traffic. How valuable is each UPthat walks in the door?

Many retailers have no idea of the real number of Ups that walk in their
business let alone the real cost of to the business each person that walks in the door. Once they learn the cost of each UP, they are able to see how those valuable assets are being handled on the sales floor.

Assigning a dollar value to every UP that walks into the store can be a
valuable tool for looking at many other aspects of your operation. The first key measurement in determining "Cost Per Up" is floor traffic. If you only do one measurement in your business this is the one. Floor traffic is the basis for everything else that happens in your store.

The more accurate the traffic count, the better able you are going to be to
fine tune the selling processes in your store and improve the profitability
of the operation.

To learn your customer cost, divide the floor traffic for the month into the
advertising and marketing dollars spent for the month. This will give you avalue for each person that walked in the door of your store that month. You can use this number several ways. By watching the trend you can determine the effectiveness of your advertising and marketing efforts. (Number going up is bad. It means that it is taking more resources and effort to entice people to visit your store. Number going down is good. It tells you that iis taking less resources and effort to entice people into your store.)

Use this number to track your customer costs. If the customer cost is going up, you need to sharpen your focus on the effectiveness of the marketing efforts. Take a look at your marketing. Are your ads clear and compelling? Do your advertising messages create a clear differentiation between you and your competitors? Is your message going to the right people? Consider having an audit done on your advertising to make sure your messages are hitting the tar get market, at the right times and being seen in the numbers promised by the various media outlets.

If the number is going up, what does it mean to your business? Take a look around in the community. Has a major employer announced plans to lay off people or close? Is a new competitor coming into the market and doing a massive grand opening sale? Is an established competitor doing a massive G.O.B. sale that is drying up demand? These are factors that could be causing the number to go up.

Once you find what is causing the number to go up, you can take decisive actions long before the negative factors can do serious damage to the bottom line. If there are negative factors impacting your market, consider adjusting your stocking orders back. Look at your inventory aging report and consider blowing out some slow turning or low margin items to raise cash.

Pilots learn to use instruments such as a "turn and bank indicator,"
"artificial horizon indicator," and an "effective ground speed indicator" to
supplement their gut feelings because flying by feel alone is flying blind.
Many furniture storeowners are in the same position.

In our work with retailers around the country we teach storeowners how to create and use performance indicator numbers in their own business. Towards that end, we have been looking for a technology solution for our clients to help them automate the process of collecting relevant sales information, and we are recommending they install TRAX.

When we see storeowners collecting and using numbers to complement their business sense, we see storeowners who are making dramatic and positive improvements to the profitability of their operation.

Ken Guerrero

For more information on Profitability programs and how they mesh with TRAX Pease call 877-370-3688, or visit their website at www.furnitureprofits.com.

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