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Summit Insights
May, 21

The Retail Sales Pipeline


The Retail Sales Pipeline


 A recent retail study by Accenture revealed that 24.4% of surveyed consumers felt that they frequently received too little attention, and nearly 10% of the respondents felt that they were frequently treated rudely in retail environments. According to that same survey, 89% to 95% of the responding consumers indicated that they were irritated by the actions of a retailer within their last four shopping experiences. 

Although there is precious little dialogue about prospecting and planning a pipeline for retail firms, the premise of understanding consumer budgets, buying cycles, and individual needs are just as relevant as understanding the purchasing cycles of large, non-retail enterprise organizations. In big company or single shopper environments, it is equally important to understand the budgetary cycle of the client and to manage communications and operations accordingly.

In many small and medium-sized retail businesses, the concept of a sales pipeline is not often considered, whether they have brick and mortar stores or are non-store-based retailers (E-store, Online, TV, Direct Mail). This is primarily because retailing firms typically don’t have internal Business Development associates, Proposals, RFP (request for proposal) creations or submissions, SOWs (statement of work), or other short or long-term contracts to generate revenue that are the typical elements involved in the sales pipelines of other industries. A retailer’s revenue is derived from a single individual’s foot traffic, inbound phone call, and/or “left click.” This distinction, however, does not excuse the retailer from the necessity of understanding and managing their own, unique sales pipeline. 

From the CFO’s perspective, the pipeline can be quantified and the metrics can be reported and managed. The key components of Retail Sales Revenue (RSR) can be broken down and quantified. 

Three key elements of any retail enterprise – Merchandising, Store Operations and Marketing – work together to impact RSR.

Let’s take a brief look at each one individually: 

1. Marketing (Transactions) 

Measuring trends in transaction counts is critical for any retailer. Even better is to measure foot traffic and then determine conversion rates of foot traffic to transactions. The marketing initiatives to increase foot traffic and transactions take many forms, and the key for the CFO is to understand the nature and timing of these initiatives and then correlate transaction data to those events. 

2. Store Operations (UPTs) 

Selling techniques of Store Associates are often overlooked as key elements of the retailer’s sales pipeline. In this case, maximizing Units Per Transaction (UPTs) can add significant retail revenue. The CFO can serve to provide actionable and concise information to Store Operations Management regarding specific UPT metrics and data. 

3. Merchandising (Pricing) 

The merchandising (or buying) group in the retail enterprise is charged with vast responsibilities. Among these is pricing, or the dollar value per unit at which the inventory will be sold to the public. Pricing considerations are many, and the importance of considering various sales pipeline metrics is paramount for optimal revenues, profitability, and cash flow. 

Troubleshooting your system response time can be a laborious process, so enlisting the assistance of an expert to diagnose the problem will be an excellent investment. Once they identify the issues, you can develop a plan to improve your system performance that will balance your business issues with available technology so that your end result meets your short- and long-term company needs. 

Consider this testimonial from a colleague: 

“A retail sales client called us to ask if we could help him improve his company’s sales. He explained that sales revenue was not high enough, and that his staff needed training in closing sales, so that they could close more sales and therefore improve sales revenue. 

When we spent some time with his staff, it became clear that there was nothing wrong with their ability to close sales. Instead, we found that staff was finding it difficult to start or carry on a conversation with a customer. Most potential customers were walking into the stores and then walking out again without really having an opportunity to talk about the products they wanted to buy. 

By analyzing the sales pipeline and the particular points within the sales process where more customers were “leaking” from the pipeline, we were able to determine that the biggest problem staff had was not in closing sales, but in opening a dialogue with customers. 

Once we established that, we ran some training courses and created training aids designed to assist staff in opening a sale and keeping a conversation going. 

Year after year, the sales at each store showed increases of up to 20%.” 

At a gross level, sales pipeline management is nothing more than estimating incoming cash flow. We look at our leads and prospects, make some estimates of the likelihood that they will eventually buy our products and services, and feed that information along with their expected spend into our projections to find out how much revenue we’re expecting to make. 

But the real power of sales pipeline management becomes clear when we establish proper metrics and put processes in place to respond to changes in those metrics. 

to productivity issues. System slowdowns or difficulty connecting to the network or the internet might mean that the network needs to be upgraded to handle the extra demand from additional employees. 

Founded in 2001, FocusCFO is the leading onsite fractional CFO services provider in the Midwest and Southeast, with more than 100 CFOs and Area Presidents throughout Ohio, Indiana, Kentucky, Michigan, North Carolina Pennsylvania, South Carolina, West Virginia and Tennessee. FocusCFO works closely with small to medium sized businesses helping business owners gain control over three key financial and operational areas: increasing cash flow, reducing business risk, and creating a platform for scalable growth. This allows business owners to then realize full financial control and increased value in their businesses.

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