What is Business Acumen?
The definition of business acumen is being able to combine your experience, knowledge, perspective, and awareness of what is happening in your business and then take that insight and determine what actions need to be taken to either sustain or improve results.
For a retail manager at any level, this is key to your success. You know this better than anyone, gone are the days where sales just happened because the store was open and full of merchandise. Even before COVID abruptly entered the scene, it took more to be successful than just opening the doors and turning on the lights.
Sharp Knives Need To Be Sharpened
It doesn’t matter how much money I spend on kitchen knives, over time, I complain that they aren’t sharp. Slice a tomato, you will know immediately if your knives are any good. Inevitably, I tell my husband it is time to go get new knives and he tells me, “no matter how much you spend on knives, over time, they will need to be sharpened”. Then he pulls out the sharpener and spends time sharpening each blade.
Sharpening your business acumen is no different. Even though you know how to evaluate your results, if you don’t continue to sharpen your skills, you might lose your edge. Stores have been closed for a while. Managers haven’t been able to work together, helping each other. The metrics that drive your results when the store reopens may be different than what was driving your results when you closed. All of these components will require a review of our business acumen and ensure we are “sharp” when we review our results.
Do you want to DO MORE, BE MORE, LEAD MORE?
During my years as a store manager, I was consumed with wanting to DO MORE, BE MORE, LEAD MORE. Then I became a District Manager and the desire to do more, be more and lead more once again consumed how I thought about every decision I made, every person I hired and every action I took. What I learned in both roles was that my success was deeply rooted in continuously building my business acumen. I dug into my results daily and took action that would sustain or improve my results. I was the top ranked District Manager and one year, won $10,000 for reaching the top spot. This wasn’t by accident and I am not bragging. This was a direct result of great people and strong business acumen…at every store, with every manager.
Focus on Building Business Acumen
Building strong business acumen for retailers begins with a solid foundation of the sales equation. When evaluating your results, start with understanding which metric drove the results. Once you understand the specific metrics, the next step is to determine the behaviors.
You might ask yourself, does it matter how I got to the sales? The answer is YES, it matters. By understanding how sales results were achieved, you can determine the behaviors that are driving the results. If the ASP is low and the store isn’t in clearance mode, a follow up conversation with the associates working could provide insight into what is happening. This should not be accusatory or negative. It is a fact finding mission. By asking questions, you will learn how they think about the sales metrics that drive their results.
Using the Sales Equation to Understand Results
Let’s dig into an example of how the sales equation works.
- Which KPIs drove your results?
- Was it Transactions or ADS?
- If Transactions, was it Traffic or Conversion?
- Traffic is harder to control. Great experiences bring customers back but generally, the marketing team drives traffic to your store.
- Conversion, on the other hand, is strongly influenced by the store team. The experience provided within your store to every customer, every day matters now more than ever and the conversion results will reflect that experience. In all fairness, there is economic hardship that has impacted many people so this will play a role in conversion. Just make sure every behavior within your control is being done!
- If ADS, was it UPTs (Units per Transactions) or the ASP (Average Selling Price)?
- What behaviors drive those KPIs?
- Can you identify what the team did specifically to achieve the results?
- What do you anticipate the sales drivers to be when you re-open post Covid?
- Will it be Transactions and if so, will traffic or conversion drive your results?
- Will it be ADS and if so, will it be the number of units each customer buys or the price they pay for each item (are they buying clearance or full price?)
Create a list and determine what steps you should take to maximize your sales results.
Who Gets It and Who Needs Help?
Now that you have identified both the results and the behaviors that drove the results, it is time to consider the strengths and weaknesses for the team. Understanding behavior by associate is critical to moving the needle on performance. Remember, you must be able to observe the behaviors in order to identify if it is a strength or weakness. Don’t assume.
Does your store track each manager’s segment results? If so, this should be addressed weekly for the prior week when evaluating the store’s overall results. I created a Business Review that you can use each week. Some retail stores already have something like this. But if you don’t, this will help you think through your results and establish an action plan to move the needle on results.
Complete this tool each Monday for the prior week. By evaluating the sales results and digging into the behaviors that drove the results, establishing an action plan to address weak behaviors is necessary in order to impact results. Waiting and hoping the results improve is not a strategy.
Don’t Underestimate How Your Managers Think
One of my favorite quotes is “What I BELIEVE drives how I BEHAVE and how I behave drives my RESULTS”.
Understanding how your managers think about their results and how the team’s behaviors influenced those results, you will he able to ask the right questions about how they lead the team when they are the floor supervisor.
Some managers may believe that associates can lead themselves and that as long as they are talking to the customers, they have done all they can do. Nothing could be further from the truth. The quality of the associate engagement impacts the results. As the Store or District Manager, you cannot be in the store every hour it is open. Consistently evaluating the store’s results and talking to the team about it will grow everyone’s business acumen.
It’s Your Turn
Most retail stores were closed for 8 weeks if not longer so it may take time to figure out what metrics will drive your results. Managers haven’t been floor supervising in a while. Talk to your leadership team. Ask them how they feel about their results from before the store closed. How strong is their grasp of the sales equation? How might you help them sharpen their skills? It might be more important now than ever. If you have questions, email me, I am always here for you.
In your Corner,
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