Furniture World Magazine
Volume 150 NO. 4 July/August
By David McMahon on 8/4/2020
The new front door was not invented during the pandemic; however, it has become critically important for furniture retailers over the past few months.
COVID or not, it is well known that the customer’s purchasing journey most often starts before going into a physical location. In the May/June issue of Furniture World (www.furninfo.com/Authors/David_McMahon/6) we characterized this as the “New Front Door.”
Lead Traffic
Because consumers are spending much more time in their homes, many home furnishings retailers have seen increases in lead traffic. It comes from multiple sources, including email, telephone, social media, as well as text, chat, video, website triggers and in-store traffic. Some businesses have become hard pressed to handle this increase due to compromised human resources and outdated processes. It is also true that even before the crisis, furniture retailers were mostly not up to the task of handling even a smaller amount of non-physical customer engagements properly. This retail condition is not anyone’s fault. It is a classic case of retailers doing things the same way as always because those things “kinda” worked.
Better management of all lead traffic is a sizable opportunity in retail. In this article I will discuss the customer journey, challenges retailers face, and explore ways to better manage the process so that Furniture World readers can achieve higher sales volumes and more satisfied customers.
Challenges
The challenge starts with the fact that retailers use a variety of marketing methods to attract customers. These methods include traditional ads—for example, TV, print, Facebook and Instagram—plus search ads, email marketing, and a variety of website plug-ins. Then, when customers like what they see, or are just “in-the-market,” they will either transact online or attempt to reach out to retailers using the methods that they are most comfortable with. These include phone calls, emails and text chats.
That all sounds great in theory, but there are common difficulties.
Retailers that rely to a large degree on their brick and mortar business generally do not have business models and processes in place to handle non-physical customer leads. Their processes are entirely built upon salespeople “taking an up” once shoppers enter the building. Inquiries received via retailers’ “new front door” are not counted as “real” leads and are even seen as an interruption by some.
Even though leads received through this “new front door” signal the start of a customer’s journey, and her engagement with a retailer’s marketing, these engagements are often mismanaged. Here is an example of a typical interaction:
- A prospect calls the retailer.
- The prospect hears an auto message asking them to press a number, or any staff member who is free at that moment answers the call.
- If the first person who talks to the customer is not in “the sales department” he or she places the customer on hold while a salesperson is paged, or they try to muddle their way though the call.
- Once a salesperson is located, the prospect asks a question and then receives a short answer from the salesperson. There is little attempt to understand the customer’s situation. If the retail store is busy, the salesperson cannot take the necessary time to even record the prospect’s name, contact method or where they live.
- Call ended. The lead is not recorded. There is no possibility of follow up. The store does not find out what happened to the prospect— if they visited the store or if they made a purchase.
The same issues also occur with email inquiries, chat, and text. The main difference is that with written communications, stores often respond with poor spelling and bad grammar. Across the board there is a lack of attention, qualifying, tracking and follow up.
The Opportunity
If you agree that there is an opportunity to improve the way you handle these kinds of customer inquiries, look at your processes and people. The first question to ask is “Exactly what is it worth overall for your organization to improve your lead management process?”
Terms like digital salesperson, internet salesperson and phone operator understate the importance of the function and what retailers are trying to accomplish. |
Running through the numbers for a store we will call XYZ Furniture, let’s assume:
- The typical close rate for XYZ Furniture’s physical store is 30 percent. (This usually varies between 15-40 percent).
- The typical average sale for XYZ Furniture’s physical store is $1,800. (This can range between $500 and$5,000).
Using the formula…
Monthly Leads x Close Rate Increase x Average Sale Increase x 12 months = Annual Sales Opportunity
… we see that 100 extra leads in the store is worth $54,000 per month or $648,000 per year in extra sales (100 leads x .3 close rate x $1,800 x 12 months).
However, if I stated that this was the limit of the opportunity of improved customer journey management, I would be wrong. That’s because better lead management also produces higher close rates and higher average sales. This has been proven over the past few months by the many stores that operated via appointment during and after physical shutdowns. Close rates from well-managed non-physical leads range from 60-100 percent with average sale increases of hundreds of dollars. Extrapolating on the opportunity of 100 leads per month using these assumptions, the revised calculations for sales growth using the formula above can be calculated as follows:
One hundred extra leads in the store at a 70 percent close rate and $2,000 average sale equals $140,000 in sales per month or $1,680,000 per year in additional business.
Making it Happen
Any innovation starts with a new way of thinking. The process of organizational change needs to be accepted. Here are some new ways of thinking that can help you manage your customer journey to capitalize on incoming leads.
- Change terminology.Terms like digital salesperson, internet salesperson and phone operator understate the importance of the function and what retailers are trying to accomplish. My suggestion is to reclassify them under the banner of Customer Journey Management or Customer Lead Management. I have witnessed showroom salespeople who believe that internet sales are in direct competition to their retail in-store sales. The reality is that journey management done right supports revenue for the entire organization.
- Put one person in charge.Give them a title. The title might be Director of Customer Journey, Prospect Manager or Head Lead Manager. If many people are responsible for handling incoming (non-physical) leads, the reality is that no one will ultimately be responsible, therefore, fielding those leads will be less systematic and less effective.
- Define your systems and processes.The best retail operations have defined selling systems already in place for handling in-store traffic. Processes should be developed and put in place for nonphysical leads as well. Systems define outcomes so, when defining your lead management systems, consider the best outcomes for nonphysical leads. To me, that means converting a high proportion of incoming leads into sales of larger average tickets, while at the same time delivering top customer experiences. If you are on board with this, you will want one of the following four outcomes for an incoming lead:
From this data, you will be able to see metrics such as traffic by lead type, revenue per lead, sales by appointment type, success rate of lead managers and sales associates.
• An immediate sale• An in-store appointment scheduled with an associate• An appointment scheduled virtually• An appointment scheduled in the customer’s homeYour systems and processes define your sales funnel, much like natural gas being directed to homes. Upon entering the funnel your leads need to be managed in a defined way. When they exit the funnel they should move in a desired, organized direction. This results in less waste. “The gas does not spill.” Instead, the flow is controlled and moved along. Here is a summary of how the lead process may work:• Lead (calls, chats, emails, texts, messages, web forms) enter the funnel.• Customer inquiries are answered by the leads manager and/or dedicated staff that reports to the lead manager. If for some reason the lead management staff is not available, information can be taken for a same-day response. Lead managers and lead associates should be as knowledgeable about your products and selling systems as any other salesperson in your organization. Designated salespeople who normally handle walk-in traffic can also take these incoming leads provided they are trained and monitored and follow processes as directed by the lead manager.• Customer leads need to be managed in a uniform way, similar to the following five common in-person retail selling systems steps.i) Start a conversation. Start with an approved greeting. Get all their information including name, where they live and contact information for follow up.ii) Understand the situation. Ask the right questions and collect all the information necessary (pictures and video are great).iii) Propose a solution. Solutions include an immediate purchase, a scheduled in-store appointment during the week, a scheduled virtual appointment or a scheduled appointment in the customer’s home. Note that in-store appointments should be transitioned from the lead manager to a sales associate or a designer of the sales manager’s choosing. All appointments should be hard-scheduled with an accepted calendar invite!iv) Conclude the sale. Get the right merchandise and services booked for the customer.v) Follow up. Follow up with the customer during the entire process at scheduled touch points. - Be ready for in-store or virtual appointments.Appointments are similar in many ways to making house calls in that sales or design associate preparation is critical. Ensure that they are prepared by having an understanding of the customer’s situation before the appointment. Have pictures, know how the room will be used and by whom (pets, children, number of people), ask about style/color preferences, when the merchandise is desired (custom and in stock), know budget and preference for financing (so approvals can be processed), even create sample room plans in advance. Treat in-store appointments as a VIP experience: think welcome package. Be Ready for Success!
- Track the lead process.Either use your ERP or a CRM as the hub of your process. This will enable task management and a central place to store notes. Control the pipeline of multiple leads through this “funneling” process. You can use various methods and platforms to communicate with prospects, but the interactions and tracking are best recorded in a central hub-like system. For example, if a chat comes in, it is recorded in the CRM or ERP hub. The appointment and follow-up are also recorded in the hub along with additional important information. Whether subsequent follow up happens via Facetime, in person, email, etc., all notes need to be maintained. This is a common work-in-process system. On its most basic level, the management system should track: To Do Tasks, Doing Tasks, and Done Tasks. By following this process, the management and tracking of information become an engine for growth.To generate a greater number of appointments and make your process as streamlined as possible, I recommend using a web based appointment system connected to your website and other sites (e.g., Instagram). This enables customers to book appointments with the desired sales associate at a time that suits all parties. Your manager can set the parameters of the available slots for sales designer associates. These systems help organize and make better use of everyone’s time.
- Metrics.Establish metrics for tracking the results of your lead management actions so you can achieve continuous improvement. Here are some metrics to consider tracking:a) Non-physical leads and sourceb) Who the lead was assigned toc) Leads with customer information vs. no informationd) Leads that result in a remote sale, an in-store appointment, a virtual appointment, no sale or a house calle) Sales associate assigned to lead via appointmentf) Results of appointments From this data you will be able to see metrics such as traffic by lead type, revenue per lead, sales by appointment type, success rate of lead managers and sales associates. You will also get an overall opinion of the value of managing your customer’s journey—starting with the real front door.
Upon entering the funnel your leads need to be managed in a defined way. When they exit the funnel they should move in a desired, organized direction. This results in less waste. |
Conclusion
With any new process there are always people who say “What if this happens?” or “That won’t work because of…” I say, there are exceptions to everything. Don’t create your standard operating processes around exceptions. Don’t hurt your future by holding on to the past. Move toward where you want to go. You will have a much better chance of getting there.
It is a fact that customers engage with businesses prior to showing up physically. This was true before COVID, it has been greatly expanded by COVID and it will continue to be the norm after COVID. My advice is to constantly improve upon systems and processes for managing your customer’s journey and ask the question: “How am I going to better manage leads though my pipeline and into my funnel?” For my part, I will continue to develop systems and processes for our industry and report my findings and suggestions in follow-up articles for Furniture World to help you maximize your potential and your customers’ experience.