Corinne Kraft didn’t set out to datamine her specialty pool stores.
Years ago, she started making a “playbook” for her sales staff — a list of products with high profit margins that she wanted them to focus on selling.
“That’s when we started putting little displays on the counter or in front of the counters,” adds Kraft, who is owner of Valley Pool & Spa in the Pittsburgh area. “We started doing big pyramid displays and some special endcaps.”
Creating a playbook, incentivizing sales and adding special displays to help staff easily move the product are logical steps. But you still have to know if your efforts are making a difference. That’s when using a point-of-sale system comes into play.
Datamining is the catch-all term for any information pulled from the POS system. A retail store owner can use it in a general way to better control inventory, understand the sales on a new line, know average sales at different times of year, or scheduling staff more effectively. But data also can be very granular, such as what Kraft is doing with putting specific items on endcaps and watching how they sell, or even mapping an entire store layout to see which areas of the floor sell better than others (known as “sales per square foot”).
Don’t have a POS system? Don’t worry. It only takes one year of data to start using datamining to increase sales.
To that end, you want a system that’s all inclusive — tracking consumer data, products, sales information, profit margins on products, and inventory, says Ted Lawrence, corporate retail category manager with Covington, La.-based PoolCorp. Lawrence flies all around the country helping PoolCorp’s dealers revamp their businesses. The most important measure to take in that first year, Lawrence adds, is collecting every bit of information about your customers.
“Once we figure out what they’re buying, then we can start targeting products and services and those sorts of things that they’re not buying,” Lawrence says.
For instance, a retailer selling patio furniture can look into the system and see that a customer who purchased a furniture set never bought a cover or umbrella. Or the set might be five or more years old, so the customer could be in the market for a new look or replacement cushions.
Watching items that might indicate a customer’s needs — whether it be information, more products or even pool service — is one way Jason Miller plans to use the data his POS system has collected since 2007.
“For example, if someone buys a patch kit for their vinyl liner, they might need a liner,” says the vice president of A-1 Pools in West Bend, Wis. “They might need leak detection service. They might need a liner replacement service. They might need any of those things, so there are a variety of creative ways that we could use to follow up with them.”
Miller’s mission, though, is to ensure that the message his staff is sending customers isn’t just that they’re going for the sale. “The message has to be customer-service oriented,” he adds.
Reaching into the data treasure trove of your POS system isn’t done blindly. It starts with a question, maybe something that’s been nagging you about your customers’ shopping habits or your sales patterns through the years. So you delve into the depth of technology and pull out the information — and then figure out how to use it to change your bottom line.
For Miller, the nagging question on his mind was how many of the people in his company’s preferred customer program had 100-percent participation in the sales event that kicks off the season each year.
“What I found is if the previous summer had a high volume of chemical sales — higher than normal — typically due to an extended or a hot summer, then we would have lower participation in our preseason sales event for our members,” Miller says. “If the sales were kind of low or flat for the year, maybe indicating an average or below-average temperature or a shorter than average summer, we found that our preseason sale was much larger, and we had an increase in sales.”
By knowing what the hot sellers at the sale will be — or won’t be — Miller is able to better plan his event and drive traffic into the store with targeted marketing. The data also can show when in the sale most customers are shopping and make staff scheduling easier.
“I never staffed my store by ‘The weather’s going to be hot next week, so I’m going to need more people,’” says Lawrence, who operated stores in a regional pool and spa retail chain before taking on his role at PoolCorp. “It was my historical data over the past years on what my sales were per hour, per day, what I sold, major ticket items …. [that’s] how I staffed my stores every week.”
Arranging high-margin merchandise on endcaps helps to easily identify the products that move out of the store faster and nets the owner more profit — just by adding a second display location. The psychology behind the sale isn’t complex. Elevated visibility equals increased sales.
To that end, Lawrence highlighted two types of products to place on endcaps: items that customers are coming in for at the time they enter the store, such as shock, and items you want to re-energize, such as enzyme-based products.
“Ten years ago, everyone had it on an endcap,” he says of enzyme products. “And then the sales became so big that they moved them somewhere else because they needed more shelf space. You stopped talking about it and then sales declined.”
Changing out products and signage during the busy season can seem like an additional headache when you’re just trying to keep everything in stock, on the shelves and get the customers through the line without waiting too long. But it’s worth the trouble. Putting a product on the endcaps will help it sell and increase your profit.
Every year, Kraft changes the endcaps eight times. “From the third week of May to the third week of June, that’s when our business is gangbusters, so we won’t make a change during that one-month time period,” Kraft explains. Even changing the endcaps monthly will make a difference.
When you talk to a retailer about datamining and all the components that can come from it — better sales staff scheduling, targeting marketing because of indicator items, changing endcaps and watching results — the enthusiasm for the actions is there, but there’s also trepidation. Starting all of this can feel challenging.
“I think really the first step is just to begin,” Miller says. “Pick something, do it, go from there and go where it leads you.”
It’s best not to think of these actions as an all-or-nothing proposition. Start small by completing the easiest actions and then, once those are second nature, add another level of datamining.
“The big thing that datamining is, is it’s local, and it’s real,” Lawrence says. “These are customers that are in your neighborhood. These are customers who are probably driving past your business to go to Wal-Mart to buy something, and while they’re there — out of convenience — they’re buying pool-related products. That’s the enemy that we’re trying to steal business from: the mass merchant.”
Collecting the information is the first step. But what do you do once you have it?
If you want to emulate Kraft’s strategy of using displays to increase sales, you can start small. Kraft puts about 100 items in her playbook each season and has the goal to increase sales on those items by 20 percent each time. She didn’t start out that way.
Fifteen years ago, Kraft’s store was 1,800 square feet. Now, she has three stores that are each 6,000 square feet, plus a newly opened store and an express store opening in the spring.
“I have more of an opportunity today with a larger store to do it with more products than I did 15 years ago,” she adds. “I think that’s relative to the size of your store [and] how many different products that you have in your product line. It’s going to be different for what’s going to work for each individual pool dealer.”
For your first season, Kraft recommends picking 10 items and tracking their sales. The criteria should be that the items aren’t ones a customer would come in and ask for, and that they have high profit margins. Ancillary chemicals are perfect for this.
“Everybody’s going to walk in the door and say, ‘I need shock,’ and ‘I need chlorine,’” Kraft says. “But they’re not going to walk in the store and say, ‘I need an enzyme to add to my water, like Pool Perfect or Enzyme Magic.’ That’s something that you have the ability to sell them on all the benefits of it and get them to start using that.”