The Retail Management Advisors, Inc. logo

SALES STAFF REVIEW

If you want to improve something, you have to find a way to measure it.  Owners and managers want to improve the sales effectiveness in their store so here are some measuring tools.  At least spend the time to do this annually although monthly would be better.  If you, the owner, are the only salesperson, you will still want to improve your sales and the number of items sold per transaction from one year to the ne t.  You need to review a few key figures each month and year-to-date for each sales person to help direct both you and your sales staff to improve on their weaknesses and fortify their strengths.  I will also cover the cost of poor performing employees (which may make you sick).

The things you will need to know are:  Total sales for the store and for each employee, annual number of transactions for the store and per employee, amount of payroll expense dedicated to selling staff by employee, number of sales hours worked by each sales employee and, if possible, number of items sold.

For this example, we will use an imaginary store in Springfield, MO.  This store operates with 2 full-time sales employees, Ken (the owner) and Barbie, and 3 part-time employees, Midge, Stacie and Allen.  Annual sales are 1.5 million.  The store is open Monday, Tuesday, Wednesday, Friday and Saturday 10 to 6, Thursday 10 – 8:30.  Generally, Allen works only on Thursday evenings, 6-8:30.  Please note the following table is a year to date table
NAME
SALES
HOURS WORKED SELLING
# TRANS
TOTAL SALARY
% OF SALES
AVG $ OF EACH TRANS-ACTION
AVG ITEMS PER TRANS-ACTION
# OF ITEMS SOLD
SALES PER HOUR
SALES / COST %
LOSS IN SALES BASED ON STORE AVG
Ken
625,000
1960
1150
41,475
42
543
5.8
6673
319
7
Barbie
420,000
1920
1080
31,800
28
389
3.0
3267
219
8
-4,320
Midge
315,000
1470
945
16,380
21
333
2.2
2067
214
5
-9,870
Allen
75,000
225
195
3,375
5
385
5.5
1075
333
5
Stacie
65,000
1200
230
11,450
4
283
1.2
284
54
18
-200,200
 
Store
1,500,000
6775
3600
10,4480
100
417
3.7
13,366
221
7
-214,390

Note:  the total in lost sales is $214,390 at retail.

% of Net Sales
Calculation:  Employee’s Net Sales per month / total net sales *100
As you look at down the list, keep in mind that a percent of net sales will be governed by the total number of hours worked and when those hours are worked.  For example, a part-time employee only working on Thursday evenings should sell less than a part-time employee who works Saturdays or weekday afternoons when business is brisk.  Working fewer hours should produce a lower per cent of net sales.  You will notice, however, that although Allen usually works only 2 – 3 hours a week, his percent of net sales is greater than Stacie’s.

Average Dollar Amount of Each Transaction
Calculation:  Total Net Sales per employee / Number of Transactions per employee
This ratio shows how experienced your sales person is.  If a customer is looking for a dress shirt, did the salesperson also sell a tie?  An experienced sales person may be able to add socks, new shoes laces or some other accessory with a pair of running shoes.  Keep in mind that this ratio also considers when a person works.  Sometimes, the store is just normally busier than others and generally, sales people who work during the busier times sell more. 

Who looks out of line?  Stacie, with sales of only $283 per transaction.  Theoretically, since Stacie works weekday afternoons and Saturdays, she should be outselling Allen, who usually works only 1 evening a week.  The owner should consider:  does she need more training or coaching?  Or is she focusing on the wrong items?  Is she friendly?  Does she know the store?  Is she a blood relative?  Clearly, she is not pulling her weight. 

Average Items Sold Per Transaction
Calculation: Total Items Sold / Number of Transactions
When comparing one employee to another and considering average items per transaction, it is important to note that a good salesperson should be able to increase the number of items sold per transaction no matter what time of the day or week they work.  This is more evidence that Stacie is not benefiting the store as it appears she is doing little to encourage the customer to buy more items.  This goes along with what we mentioned above about increasing the amount of each sale.  Even if Stacie is your wife’s sister’s youngest daughter, it is time to let Stacie go for the good of the store!

Sales Per Hour
Calculation:  Net Sales per employee / Selling hours worked per employee
The Sales per hour calculation helps to levels the playing field.  Since Stacie and Midge worked similar hours, similar sales per hours are also expected.  Ways to improve sales per hour are to increase the number of transactions, increase the number of items sold in each sales transaction or sell more expensive items. 

Sales Cost % Ratio
Calculation:  Salary per employee / Sales per employee * 100
As you can see, when comparing the payroll cost to sales produced, Allen and Midge are the least expensive employees.  Too bad Allen is only available to work evenings.  Ken and Barbie are doing well.  Again the problem is Stacie.  The owner has to wonder what she is doing with her time.  Since this is an annual report, it allows for twelve months so vacations or minor illness and surgery should not be a problem. 

Loss in Sales Based on Store Average
Calculation:  Employee’s Sales per Hour - Store Average Sales Per Hour * hours worked
This is the most telling of our calculations.  Notice that this is based on the store average of $221 sold per hour, not on Allen’s very impressive $333 or the owner’s $319.  What this shows is that Ken has a vested interest in the store and works hard to make his store the best it can be.  Allen is doing his part as well.  Barbie and Midge could do better.  Looking at the numbers tells us that the problem is with Stacie.  One bad apple can spoil the whole bunch.

The numbers do not lie.  Stacie is the most expensive employee percentage wise and she costs the company the most money in lost sales.  More than likely, the owner is spending extra time trying to coach her into doing a better job.  Yet, morale may be suffering and other employees are also being affected.  If the problem can’t be fixed, it’s time to eliminate Stacie.  Unless she has acted illegally—in which case you should terminate and prosecute her right away—follow your state’s policy on employee termination.  Not all states allow you to fire at will.


The Retail Management Advisors is a BBB Accredited Management Consultant in Allen, TX

Follow Us On Facebook   LinkedIn

Back to Top

© THE RETAIL MANAGEMENT ADVISORS, INC.