Maximize your retail technology with training
The problem with retail software and hardware today is that it is priced too low. "What do you mean?" you may say. "But I spent more than $3,000 for my software!" And some retailers will quote a figure even more than this. The truth is, the purchase price for retail software is deceptively inexpensive. That's because the initial cost to your business is, unfortunately, only the beginning of expenses related to the software: the software often requires customization or add-ons to adequately meet changing or unique business needs, and employees have to be trained to use the software efficiently.
Most retailers don't realize there will be additional cost to make that initial software purchase fully useful. Because of this, they often feel that they do not have technology that works the way they want for their business needs. In more than twenty years of working with retailers using technology, the most frequent complaint I have heard—and still hear—is "My software really doesn't give me the information that I need to run my business." Translated, this means: "My technology is an expense, not an investment."
You can turn your retail software into an investment and get a greater return on that investment by following one simple rule: train your employees to use your software solution efficiently and strategically.
Training, training, training
In almost every case when I hear complaints about software not working for the company, I ask the retailer how much training they gave the people who are using their software. And they almost always answer, "The guy who sold it to us installed it and spent a day showing us how to use it." Insufficient training is the problem, better training is the solution.
No software is totally "intuitive," and most software that helps you run your store is not simple to learn. Software is a tool for your business and, as with any other tool, you have to learn how to use it properly. It's not unusual or out of line to spend up to ten times the cost of the software on learning how to use it effectively.
For example, a retailer who spends $3,000 on a software package should spend at least $10,000 in the first three months on professional training for employees to use that software. This equates to roughly 120 hours (three weeks) of a trainer's time, which is the standard fee of a good trainer. The cost for the hours that your people spend learning to use the software—which could easily be twice the number of the trainer's hours—has to be factored in as well.
And more training!
Over the next year after the initial training, you must invest in ongoing training to make sure that you maximize the power of your software. You and your people should learn not just how to run reports, but which reports to run, and, most importantly, how to determine what these reports tell you about your business and how to change your business operations based on this information.
Reports alone do not change a business or make it more profitable; it's what you do with the reports that counts.
To maximize the potential of your software solution, you need to update employee training regularly or make training an ongoing business practice. A good software provider will not only train you on the use of your software (for example, teach you which buttons to push, how to enter data, how to create a report, and so on); they will also teach you how to use your software strategically to help you achieve your business potential.
Strategic use
A good example of strategic use of your software is leveraging it to maximize your vendor information. Over a six-month period, you probably order and receive quite a bit of merchandise. A good vendor analysis will help you tell which vendors you should be giving more business, and which vendors are not helping you make money. I would argue that there are at least six factors you should use to measure your vendors' performance:
1. | Percent on-time delivery |
2. | Percent on-quantity delivery |
3. | Percent goods sold at full price in first 90 days in inventory |
4. | Gross Margin Return On Inventory Investment (GMROII) |
5. | Return percentage from customers |
6. | Maintained margin after all goods have sold |
This information is very important when you are deciding what you should buy and from which vendors. It can also add power to your negotiations with vendors. Imagine showing a vendor a report demonstrating that last season they shipped only 50 percent on time, and averaged an 80 percent fill rate with only 20 percent of their merchandise selling at full price in the first three months in the store, and that their GMROII was in the lower quartile of all your vendors because they maintained a margin of less than 30 percent. This information equips you to look that vendor in the eye and ask, "If you were me, would you buy from you?" This negotiation strategy can open up a dialogue with your vendors that can lead to real change in the relationship—and increase your profitability.
Hundreds of examples like this suggest that if you have the right information, you can make smart decisions. The problem today is that most of us are drowning in data and going thirsty for useful information and knowledge. You need to pay tuition to get a high-level education. For every dollar that you invest in learning how to maximize your retail technology investment, you will get back at least ten dollars in increased productivity, sales, and profitability.
James Dion
James Dion is the President of Dionco Inc., a retail consulting firm headquartered in Chicago. James started his retail career 40 years ago in a menswear store in Chicago. He has been a division manager, catalog merchandiser, and buyer for Sears as well as product manager and merchandise manager for Levi Strauss. He was the executive vice president of Gilmore's department stores in Kalamazoo, Michigan. He is the author of two books on retail: Retail Selling Ain't Brain Surgery, It's Twice As Hard and How To Start And Run A Retail Business. |
