Archive for May, 2013

Business/Profit Multipliers

There is a technique called Business/Profit Multipliers that you can use when dealing with a reality of big increases required, or requested by your higher management team.

Let’s assume that the objective is a 25% increase in sales. This number, looked at by itself, is somewhat scary.

Here is how you may want to approach it. Let’s first look at the present scenario:

Traffic: 1000 / week
Conversion: 25%
Average Units / Customer: 2
Average Price: $25
Average $ / Customer: $50
Weekly Sales: 250 x 50 = $12,500

Now instead of talking about a 25% increase, let’s look at increasing each one of our operating variables by only 10%:

Traffic: 1100 / week
Conversion: 27.5%
Average Units / Customer: 2.2
Average Price: $27.5
Average $ / Customer: $60.5

Weekly Sales Become:
Customer # Converted: 1100 x 0.275=302.5
Average Ticket: 2.2×27.5=60.5
Weekly Sales = 302.5×60.5 = $18,301.25
% Increase: (18,301.25-12,500) / 12,500=46.41

In fact, for the above scenario, to achieve a 25% increase overall, you only need to increase your operating variables by 5.5%.

Much easier to sell it to your subordinates and get a buy-in, isn’t it?

Many more practical and actionable techniques, methods and insight in the Ultimate Retail Success ToolKit.

Advertisements

Enter your email address to follow this blog and receive notifications of new posts by email.

Retail Management

Ultimate Retail Success Collection
May 2013
S M T W T F S
« Apr   Jun »
 1234
567891011
12131415161718
19202122232425
262728293031  
Sales & Influence Blogs - BlogCatalog Blog Directory