„Is our Lease too high?“ was the question I have had in my mind for the last month or two. I mean – 15% of everything we sell goes to a rich guy (or a half-dozen of them), sitting in a comfortable chair in his over-priced office in God-knows-where?!

„Is it too much? And how much is okay?“ kept bumping in my head. All day long.

Then one day I woke up with a paradigm-changing idea in my head. It gave me a completely new perspective of looking at this COST. Here it is, this idea. Explained. Step by step.

So – I know you calculate your cost per visitor. You think it’s calculated like this:

Total Marketing Cost / # of Visitors

You take all your Marketing Costs and divide this number of $ or € by the total number of (new) visitors. Yes – it’s very hard to calculate if you want to do it precisely and only for new ones! It means that you have to subtract the no. of repeating visitors from the no. of all of them. It’s pain in the ass, believe me, unless you have a super tech face-recognition stuff installed. And most of us don’t.

OK, let’s say that the approximative (and quite precise) formula is the one I’ve mentioned above. And it’s very well explained in this article, too. And there’s nothing paradigm-changing. Yet.

So – what has happened a few days ago is that I’ve realized that this formula is incomplete. It doesn’t take into account REAL Customer Aquisition Costs. And here comes into the scene our ever-loving LEASE COST!

I think the LEASE COST should be on the left side of this equation, too! The equation should look like this:

So, you think I might be crazy to put LEASE COST in the formula, too, but let me ask you a thing: Imagine having THE SAME shop you already have (same no. of square meters, same window, same furniture, same people selling the same stuff) in a picturesque Scotish village with 200 inhabitants. How many visitors per day would you have then? Less than now, right? Yeah, dude, much less! You would pay your lease a couple of dollars, right, but would it make your business more cost-effective and would you make more money? Got it?

Now – imagine having the same shop on the 5th Avenue or in Harrods. Oh, I can see a smile on your face! That’s the attitude! Now – think about your lease cost! Much, much higher than in a small village. So – the difference between those two is THE PRICE YOU PAY FOR THE VISITORS! Yes, yes! Our Rental Fees, Lease, or whatever you call them is the price we pay for the visitors (and we’re not just paying for ANY visitors – no – we want visitors with deep pockets and in a buying mood!).

So – the guy in the comfortable chair knows what he’s taking the money for. And he’ll keep doing it, believe me!

That’s the reason I’m putting this cost into the formula where I calculate how much I really pay for one visitor who enters my Store.

It’s not only the Marketing that influences the number of them coming in! No – it’s the location (and therefore the LOCATION cost goes into this formula), and, to be honest, it’s the look of the window and the store, too. So, if I want to be very, very precise, I have to put this into the formula, too.

So, let’s summarize. Here’s how I calculate my cost per visitor:


As I have mentioned before – this formula is more precise and gives me a more realistic answer to an ever-lasting question: Am I paying my lease too much?

COST PER VISITOR – what the hell is it?

No – I mean really – who DO you trust your money? To a renowned Bank with highly educated clerks? Ok. Who else?

Now I can see a little cloud on the top of your head, asking: what does he mean by trusting my money? I don’t trust it to anybody else!

The fact is that – yes – we all think that way at the beginning. But what if I tell you that most of your money is in the hands of poorly educated, low motivated and not skilled people who see their job (of keeping your money, providing the ROI and making you Profit) as a temporary one until they find a real job?

Yes, that’s your reality. And I must have scared the shit out of you know, right? Those people are called Sales People! Now I see a new cloud over your head, arguing: „I didn’t give those people any of my money!“, and I’ll tell you that you’re very, very far from the truth.

’Cause you’ve invested in your Retail Shop(s), right? And in the stuff that you sell in it, too. So, basically, what you have in your shop is your money, only in another form. And this money shall bring you more money. That’s ROI plus Profit. With a capital P! So, if you just look at it this way, you can say that, if you, for example, sell shirts, the price of this shirt contains your investment (cost of the goods), plus the expected Profit money (not to mention the other costs it should pay).

Your money, dude! And who do you trust it? To your Sales People, of course!

Now – let’s make a short exercise.

Calculate (don’t need to do it very precisely) how much money have you invested in all the goods on your shelves and in the warehouse? Tens of thousands of Euro or Dollars? Even more? Ok. Write this figure on a piece of paper. Imagine the suitcase filled with that amount of money. Got it? Right.

Now – imagine giving that suitcase to your Sales People. Those are the people that will have to not only give this amount of money back in a few months but make you a Profit, too. Yes, the same people you see in your shop(s) every single day. And just be honest – would you REALLY give them any money and REALLY expect them to give it back with the Profit? Not in a million years, right?

So – what’s the solution?

The solution is, as Rihanna would say – work, work, work… WITH them. First – pick them very carefully and then educate to become the people who you would trust your money for real. Don’t take anything for granted, be very serious about everything that concerns them. And never forget that they are the most important of all of your employees. They’re on the first line, bringing your ROI and Profit. Or not.

Do you know who do you trust your money?

If you think that my previous post was just exaggerating (when I was writing about Sales People handling your money), this one will, for sure, make you think twice…

So – let me ask you a question first. What are the buyers like comparing to, let’s say, just 10 or 15 years ago? More demanding? Complex? Hard to talk to? Know what they want and can’t be influenced? Well – that’s our new reality. But the fact is that the customers are the same. What has changed is that they became informed. To be honest – I don’t know what the exact numbers are, but let’s say that 80% of customers behave just like that.

On the other hand – there are less excellent Sales People then before. This profession is not even perceived as Profession – we usually see it as some temporary „gig“ until we find something better. You feel it on your own skin when you go to a shop and ask Sales Person about, let’s say, the fabric some item is made of. „Fabric…hm…let’s see…“ and then (s)he goes, looks for the label and reads from it. I can read myself, honey! I don’t need you for that!

So, let’s be very compliant and say that there are still 20% of gifted salespeople, who just know how to close the sale (without any training) and 80% of, well, mediocre ones.

Now, let’s look at our reality:

So, as you can see from the table, the statistics usually looks like this:

Out of 100% of all visitors with whom your salespeople speak, they sell in just 36% of the situations. And yes, they lose 64% of potential customers mainly because of their poor Sales Skills.

Someone might say that not all of that 64 % of lost sales are just due to poorly developed Sales Skills – some can be, for example, because you don’t have the Customer’s size or preferred color. Yes, that’s true. And do you remember a situation in your life when you were looking for some item and they didn’t have your size? And do you remember a great salesperson who found a completely different item instead of the one you were looking for and eventually sold it to you? That’s the kind of Sales Person I’m talking about!

Now is the time to put the question: „What can we do to fix the situation?“ I mean – more than half of the opportunities lost due to poorly developed Sales Skills – that’s too much!

The average Business Owner will tell: Oh If only all salespeople could be like that 20 % – the best ones! The truth is – they probably won’t! But it doesn’t mean they could be much, much better than now. By training. But not just ANY training. We’ve tried the usual ones (classroom 2 days sessions) – don’t work. No (significant) long-term result. Not to mention ROI!

Then we have tried on-the-job coaching – it gives better results, but takes lots of resources (read: time and people) to do it on a daily basis. Because if you don’t do it on a daily basis – well – you know…

Therefore – the best „formula“ for upgrading that 80 % of your salespeople would be – training on a daily level and knowledge sharing (that means that 20 % tell the other 80% how they solved some situation). And if you think that ONLY this knowledge-sharing methodology will give result  – I can assure you that it won’t. ’Cause very successful salespeople can’t really tell what exactly are they doing in order to be so successful. And they usually prefer selling, not teaching how to sell. Therefore – you still need (in-house or external) trainers and Sales Managers to do their work.

Pareto in Retail Sales People’ Results

We talk a lot about Lean Organizations. We all do a lot to become Lean. The definition and the core idea of „Lean“, according to [Lean Enterprise Institute](https://www.lean.org/WhatsLean/) is to maximize customer value while minimizing waste. Simply put, it means creating more value for customers with fewer resources.

And, at the same time, we miss lots of opportunities to make our Organizations more lean. I don’t think that the reason for this is our ignorance or laziness. No – the main reason, in my opinion, is that we don’t see how some functions could become more lean. We just got used to doing things the certain way and we tend to think that this way is the only possible.

Since I’ve been working as a Sales Trainer and Consultant for more than a decade, I see huge „waste“ being created in my industry every day. There are as many as 8 fields where we spend our precious resources (time, money, energy) in vain:

1. **Defining Sales People development needs.** The common way of doing things goes somewhat like this: we usually send a group of our employees to some (product, sales or any other skills) training. They all attend, but… At that point, I’ll just say that different people have different needs. And talents. And challenges. They don’t need to attend the same training. Imagine how much time (and time IS money) we waste by doing so!

2. **Choosing a development methodology.** We have all heard that people obtain 70 percent of their knowledge from job-related experiences, 20 percent from interactions with others, and 10 percent from formal educational events (you can read more about this [here](https://trainingindustry.com/wiki/content-development/the-702010-model-for-learning-and-development/)). Nevertheless, we still spend huge amounts of money on those formal educational events, much more than, for example, on supporting peer – to – peer learning. So, this is the second non-lean part of the People Development process.

3. **Choosing a training provider.** Well – what can I say – most of HR people think that they can define their Sales People needs on their own and that training provider should just execute. Or they execute by using their own, internal, resources (trainers). The situation is, however, much different in the practice. There are training providers who really only – execute. They do generic training, or training which they claim are tailor-made (what they really do is just change the logo on their PowerPoint presentation). A very good provider will (besides talking to you about your people needs) do the serious analysis of the Sales Process itself, supporting Systems (such as setting targets, reporting, compensations), Management model and Sales People Skills by observing them at work. Because the target should be higher Sales Volume, right? And maybe, just maybe, there are wiser ways of reaching it (instead of just executing training).

4. **Making groups for the training.** We usually make ten to twelve people training groups. And we often split them by region. Or by some other criteria. And my suggestion here is that, if you really have to send people to the training, you group them by the challenges they face on their day-to-day job. Otherwise, the trainer has to address different kinds of problems on the training, which usually means that (s)he doesn’t address any of those problems good enough.

5. **Sending wrong people to the training.** Imagine having ten fields where you want to plant some seed. And you have the limited amount of (very expensive) seed. You know that some fields will be much more fruitful than other ones. The soil in some of them is so bad, that you will literally throw away your precious seeds if you choose those fields. My question is – will you spread your seeds equally – the same quantity of seeds in all ten fields or will you choose the ones that will give you the best harvest? It’s very intuitive, right? That’s why I get so frustrated when I see how we send non-trainable people to the training. We don’t just waste Company’s money, but that kind of people usually contaminate others on the training and ruin the possibility of learning something new for them.

6. **Thinking that the training has to motivate people.** If you ever attended any kind of Leadership Training, you should know by now that low motivation needs to be „treated“ not with the training, but with the one-to-one conversation with the Manager. Training is a Development Intervention designed to gain a new knowledge and low motivation will be the obstacle for that. Training is not designed to increase Employee’s motivation. And if you do so, you’re treating an illness with the wrong cure. And you make waste, of course.

7. **On the training.** I’ve already mentioned generic training. And those that just look like they’re „tailor-made“. Now let’s talk about how real LEAN training should look like. It should address attendee’s real-life challenges and give answers to them. Don’t hire outside trainers to do generic training if you really need them (you can do them on your own or buy them online for much less money). If you already hire an outside expert, (s)he should ONLY train your people on the concrete situations and problems they face.

8. **After the training.** If the training has no follow-up and someone who will be accountable for the implementation in practice, your people will most probably forget almost everything they have learned within a week. It’s called Forgetting Curve and was described by Herman Ebbinghaus more than a hundred years ago. So – if we know that fact for such a long time – why do we keep doing it?

The Waste we create by training Sales People in Retail

There was a 4 years old girl who liked to watch her mother cook. One day the mother decided to fry a fish for lunch. They have bought a beautiful, fresh see fish on the market, brought it home, washed, put it on the chopping board and then the woman chopped its head and tail off.

„Why did you just chop those off?“ asked the girl. I mean – she was constantly asking about everything, but this question sounded like the one she’d really like to get the answer to.

„Hm“… mumbled her mother and raised here eyebrows just a little bit. „To be honest, dear, I don’t know. My mom did so and I do, too. Maybe you could ask her why she was doing it.“

The little girl quickly grabbed her mother’s cell phone and speed-dialed her Granny’s number. After a few polite sentences about the weather and the kindergarter, little girl asked: „Granny, why do you chop the tale and the head off of the fish when you fry it?“, but the answer was the same as before: „Oh, dear! I haven’t really thought why I do that! I must have seen my mother prepare the fish that way! Maybe we could ask her, what do you think?“

The little girl was not completely satisfied, but still hoped that the final answer will, eventually, come.

„Yes, please, ask her! Right now! Pleeease!“ she said with her delicate feminine voice.

„Okay – wait a minute! She’s sitting on the porch!“ said Granny and obviously started to walk, since the girl heard some strange sounds in the telephone.

After a few moments, the girl heard Granny’s voice: „Darling, are you still there?“

„Yes, yes, I’m here!“, said the girl impatiently.

„Well, I’ve asked your grand-grandma why she used to chop off the head and the tail. And gues what?“ said the Granny with a smile on her face. „She did it only because she used to have a frying pan that was very, very small!“

End of the story. Got the point?

Now – I can tell you that we, Retailers, often behave as those women – we do some things that don’t make sense just because those things used to be done that way. We never ask ourselves – can it be done differently? Is it really the optimal way of doing it? I mean – come on – its 21st Century, for God’s sake!

Let’s take the Sales People training as an example. How do most of us still do it? By telling people what to do. In the classroom, or on the Sales floor – same thing! We do it randomelly. Or even don’t do it at all for several months in a row! We take outsourced trainers. Or we use internal ones. Whatever the methodology – we all know that the oldfashioned way of doing it doesn’t work. It doesn’t bring what we expect, not to mention the Return on Investment!

So the result of our work is still the same – non motivated personell, HUGE losts due to missed sales opportunities, our money stuck on some warehouse shelves and enormous churn rate among Sales People (up to 100%).

People, come on! Isn’t it time to buy a larger pan?

COST PER VISITOR – what the hell is it?

Do you know who do you trust your money?

Pareto in Retail Sales People’ Results

The Waste we create by training Sales People in Retail

Why we do stupid things that don’t work