Clare wasn’t particularly looking forward to the board meeting. Presenting to a group of seasoned non-executives and her colleagues was surely an opportunity to demonstrate she was at the top of her game. Except that wasn’t how she felt.
In today’s retail market the future was less than clear. Online sales were growing, but not enough to match the fall of those in the high street stores. Clare was responsible for hundreds of outlets selling consumer electronics, from phones to laptops, and expected to grow the business. Yet these days just matching last year’s numbers seemed a positive result.
Clare knew that the difference between a good year and a bad one is the Christmas sales peak and the weeks that follow. A good year can be wrecked by failing to get it right.
Every year the same strategy was used to drive shoppers into her stores. Some unique products that could only be bought in those outlets, coupled with attractive discounts and payment terms. And snowmen and tinsel in the windows.
Yet Clare felt something was missing. Change was needed to tip the balance of success in the company’s favour. She decided to meet with her colleagues to review plans and not just repeat last year’s formula. There must be a way to generate more business, not involving even more marketing and deeper discounts. Both of which would hit profitability.
Clare decided to consult people in the company who didn’t work in her department. In the past she’d mostly rejected outside views as irrelevant. But she now realised that, as some radical new ideas were needed, they were more likely to come from outside her immediate area of command.
The meeting explored the reasons for not selling more product. Everything from supply chain issues to competitive pricing. They agreed factors such as the economy, the weather and other matters were outside their control. Other than having a reactionary plan there was little they could do.
As the discussion progressed Clare realised what needed to be done. It would be a radical approach but it was logical and based on indisputable facts. There was a clear problem,that if successfully addressed, would lift sales and win customers. In fact, it would create more loyal shoppers, perhaps for years to come.
The thought of presenting this new approach at the board was daunting. What if they considered her strategy was poorly thought through? Would her job be at risk? Clare knew it might be and certainly would be if Christmas sales missed target. But in spite of sleepless nights she decided to press ahead.
Clare was allocated twenty minutes at the board meeting to present her plans. The board members liked Clare and always looked forward to her attending. But they were very aware that the market had been challenging and that improvements needed to be made. Not least of all to appease the company’s shareholders who were becoming grumpy at the falling share price. Everything was hanging on a successful Christmas, everyone knew that.
Clare’s moment arrived. She wasted no time in explaining that a successful trading period needed more than glitzy TV advertising and snowmen in the windows. It needed a new look at how to sell more product, but at no additional cost.
Clare asked the board a question. What percentage of people who visit our stores actually buy something?
Selling electronic consumer products is not an easy business. It takes time to explain and help the customer decide on the right product, particularly at this time of the year as most purchases are gifts.
The directors mostly widely overestimated the right answer of 13%. Then one asked why the company was spending millions on TV marketing and promotion. Surely that just made the problem worse? Why drive more people into crowded stores where we can’t serve them? Resulting in frustrated customers and stressed staff.
Clare explained her plan. Significantly reduce the marketing activity and invest the money in hiring and training new staff. Then presumably less people would come to the stores, enabling them to serve and sell to those who were there. In addition, she would focus on promoting items that provided a decent margin but could be quickly sold off the shelf. The company would sell to a higher percentage of their shoppers and provide a better service, creating a better experience and more loyalty.
Clare presented a detailed financial analysis to support her new ideas. It wasn’t rocket science. Just recognition of the facts and a simple plan that had every chance of working. The board agreed the strategy and Clare was delighted and somewhat relieved. All she had to do now was deliver.
By David Mansfield, founder of The Drive Partnership and visiting professor at Cass Business School