Retail Observer

RETAILOBSERVER.COM MARCH 2016 70 O ver the years we have all witnessed, or may have been a part of, some entertaining tussles between sales and marketing teams over their team's contribution to sales performance. We all start with sales to review our business, and develop sales metrics and reporting to gauge performance. Generally, as a basic requirement, this includes the measurement and tracking of year-over-year (YOY) sales or comparable store "Comp" performance. Unfortunately, this is where the tussles begin. Marketing teams are continually challenged to find new ways to drive new customer accusation and foot traffic into stores and on to sites while maintaining the integrity of the company's brand. The need to create differentiation and to stand out in the crowd often guides marketing to try new ideas and investment in "Tests" to prove out the idea. As a result, and all too often, the only metric reviewed to prove out these "Tests" is sales. Unfortunately, buried in the sales reporting are countless layers of contribution that effect the result, including but not limited to a great sales team. It is the marketing and advertising purpose to drive customers to the store, and it is the sales team's responsibility to close the sale and provide a great customer experience. As is the case with so many retailers that focus on close rate and average sales price (ASP), a great sales team can overshadow or dilute the results of driving traffic. The Tussle becomes what drove the result, and did the test work? And when measured only on YOY sales or "Comp" the facts on how you got there are partially lost. In addition to the fact that sales teams can exacerbate or repress testing metrics, the local level market performance can also effect the results of both sales and marketing. Driving a false positive or false negative result and riding the wave of market performance is common. For example, if a test measures that a marketing investment in new web marketing program drove +10% YOY sales over a period of time, you may look at that result and think, "well that worked well and let's do more of that". However ,if at that same time your local market increased +25% YOY, the 10% result actually doesn't look that great. In fact, it would suggest you lost customers on that investment and brings you back to the question of did the marketing or sales drive the result. This is a great example of why share matters. Understanding first how your local level market is performing gives you a great baseline to measure from. Dividing your sales performance by the market performance delivers your share of that market. Measuring unit share is a good measurement for marketing purposes, eliminating the impact of ASP. While measuring Sales $ market share is good for measuring impact of product assortment, merchandising and sales initiatives designed to improve close rate and ASP. Share = Your Sales (Units or $)/Market Sales (units or $) Now from one period to another you can track your share results. If your share goes up, you gained more customers. If it goes down, you lost customers. Share neutralizes the measurement effects of the market and gives you another great data point to measure your investments around. By no means is this the only metric you should be prepared to track. Foot traffic, site visits, conversion etc., are all very important to measure also, but the market affects them all and understanding your share should be the starting point. Derek Mattila Appliance Trends Derek Mattila, Director of Appliances for Nationwide WHY DOES SHARE MATTER? RO

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