While dining with a friend in the clothing industry, he told me that his store achieved double-digit same-store sales growth last year. When I asked for his secret, he said it was simple: process-orient the sales metrics, track everyone's KPI completion in real time, and supplement with various sales incentive games.

Process-orienting metrics often helps us see the facts behind the data. In many aspects of inventory management, we can process-orient management metrics, such as sales amount, stockout rate, order amount, etc. I will use the sales amount metric to illustrate this theory.

The following is a simulated DuPont analysis chart for sales amount, which breaks down sales into two parts and three levels, with adjacent metrics linked by multiplication. This is a "simple but not simplistic" chart. It is called so because it is simple in form—only 10 metrics—but not simple to use effectively. These metrics process-orient the entire sales process, making each sales link clear at a glance. These metrics are the secret to improving retail store sales.

Characteristics of this DuPont analysis chart:

  1. It process-orients the sales result, and the concepts of people, goods, and place are all reflected in this chart.
  2. If we ignore the interrelationships between metrics, a 10% improvement in each metric means a 10% increase in sales. Therefore, in practice, you need to find the weakest link in your store and break through them one by one.
  3. Changes in the five metrics on the right are likely to affect the "conversion rate" and "number of transactions" on the left, but changes in the five metrics on the left do not affect the right-side metrics.
  4. Generally, stores have more influence over "rates" than absolute values. For example, we may not be able to influence foot traffic, but we can find ways to increase the entry rate; we cannot raise retail prices, but we can control sales discounts.

Based on the DuPont analysis chart, we can further process-orient into the sales formula as shown below.

The retail industry typically uses sales target completion rate to assess employees, which is simple and direct. Some companies have abandoned this assessment and transitioned to assessing based on the sales process, which is more conducive to maximizing store sales and aligns with the principle of breaking down goals into the smallest executable units. Of course, this is a gradual process; avoid rushing into it. If process-based assessment is not feasible, at least apply process-orientation in sales analysis.

After process-orienting metrics, it is necessary to establish a sales tracking system. Without tracking, sales efforts come to nothing. Some FMCG companies like to set up a dedicated tracking team, sometimes even a department.

The main responsibilities of this team are as follows:

  1. Track the completion of various sales targets;
  2. Track and remind team members of various sales anomalies;
  3. Supervise and check the execution progress of various project plans;
  4. Continuously apply pressure to the team through data.

Tracking is not just making phone calls or sending emails; it is also a technical job. Sales tracking is based on extensive data analysis. The main forms of data-driven sales tracking are as follows:

Data Comparison Comparison creates gaps, pressure, and problems. Comparative analysis includes absolute value comparison and relative value comparison. The common city sales ranking is an absolute value comparison, while the city sales contribution ranking is a relative value comparison. Years ago, when I was in sales, the quarterly city ranking was of great concern to everyone. We always kept an eye on the cities immediately before and after us, striving to surpass the one ahead while preventing being caught up by the one behind.

If you want to track a city's sales completion, you can first look at the year-over-year change. If that is good, then look at the month-over-month change. If that is also good, compare with other cities' data. In short, you must find the "problems" in the data and then push them to work harder to achieve the target.

Effective Use of Extremes to Track Sales There are many extremes (including maximum and minimum values) in sales that can be used for tracking, such as store daily/monthly sales records, peak sales during golden weeks, maximum sales on store anniversaries, historical lowest sales, etc. Sales is a process of constantly breaking through oneself. Excellent salespeople enjoy this breakthrough process, so a good tracking method is to guide salespeople to continuously break their own highest records while raising their lowest records. Companies can even set up breakthrough awards.

Using Forecasts to Track Sales We are accustomed to using sales completion rate to track sales, but the flaw of completion rate is that at the same time point, completion rates in different regions may not be comparable (because sales rhythms may differ). Completion rate is a comparison of historical data, while forecasting is an estimate of the future. Forecasts include monthly and annual sales forecasts, product sell-through rate forecasts, etc.

Sales Tracking Must Be Programmatic

  1. Tracking should be tabulated and systematized. There must be a unified set of tables and logic; otherwise, it will lead to unnecessary arguments. Also, "dual regulations" are important: upload tracking data in the specified format within the specified time.
  2. Fully leverage the role of people, especially direct reporting managers, in tracking at each level.
  3. Use sales meetings for tracking; morning meetings and weekly meetings are good tracking tools. Each meeting should reserve time to review the execution status of previous projects.
  4. Use technology to track sales. Embed some business logic into the company's system software; when data is abnormal, the tracked personnel can receive an email or SMS.
  5. Process-orienting results is more conducive to tracking. For example, instead of directly tracking sales amount, break it down into foot traffic, conversion rate, and average transaction value, and track each separately. This is more effective.
  6. Tracking must have results; tracking without resolution is meaningless.
  7. Sales tracking needs to connect procurement, allocation, shipping, transfer, and clearance into a closed loop.

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