Just MAYBE its time for some good old fashion bribery.

There's many ways to sell jewelry and I think you'll agree that life would be great if you could just sell more stuff from the case.

So how do you sell more stuff from the case?

1- Advertise it
That tends to work, but what happens in most stores is 10 people walk in and you sell to 3 or 4 out of those 10. So 6 or 7 people look around and leave! Ever figured what it costs you to GET 10 people in your store? If you spend 10% of sales on advertising, spend $70,000 a year and you write up 4000 sales tickets in a year, then it costs you $17.50 to OBTAIN a paying customer. That's if you sell 4 out of 10.

Another way to look at it is if you sold 4000 people then that would mean you WAITED on 10,000 people. Your cost to be able to say "Hi, how can we help you today?" was $7.00 a person. That's what it cost to get a human to stand in front of the showcase and listen to your spiel.

Every time they walk out without buying you're throwing away seven bucks. Is there a better way?

2- The sales staff actually sells and razzle/dazzles the customers.
They engage with the customer, become a friend and sort of "jewelry consultant". The customer ends up buying rather than being sold.

OK, that's nice and I know almost every one of you will say how great your customer service is at your store.

But can you staff really SELL? Every staff member listens to the same station on their car radio coming to work each morning: WIIFM - Which stands for "What's In It For Me?"

Many of you don't pay the staff a commission. It's either too hard to track or you think it will make guerillas out of them and they'll eat the customers alive. Even further you won't pay anything to entice or motivate the staff. Look, a 2 or 3 percent commission is nothing. If they make $50 a week in commissions/bonus money and they work 5 days a week that's $10 a day. How much is lunch at Blimpie's next door? They want to be able to pay off some of their bills or save for a new "something".

So here's a thought? Either pay the staff 3% to NOT Sell the 7 people who come in OR pay the advertising company 10% and have them bring in 10 people of which 3 people buy and again 7 walk out the door.

So you're used to paying the advertising company 10% of sales. So why not continue to pay them 10% but with ONE DIFFERENCE:

Pay the advertiser 10% BUT ONLY ON THE PEOPLE WHO ACTUALLY BUY SOMETHING? Don't pay advertising dollars for those who walk!

Now that's a return on investment.

So now call the advertiser and tell them "We'll pay you 10% of total sales as we have in the past but you also bring in 7 people who don't buy! So now we will only pay you 10% on those customers that actually buy something!"

Their response? Maybe "OK, but I can't sell jewelry, I don't know a corundum from a beryl."

Excellent point. What to do? Continue with your 10% offer but pay it to someone who does know the difference between a corundum and a beryl. Who could that be?

The Sales Staff!

What a novel idea. Which stuff should we pay 10% on? Everything? NO! Only items that would help the store with cashflow. OLD INVENTORY OVER A YEAR OLD!

I know this is a hard concept to grasp. Just think about it, you could bury a diamond ring in the dirt and 1000 years later dig it up, clean and polish and it’s ready to go. But that's not what jewelry is, it’s a way to make a living EVERY YEAR, not every 2, 3, or 4 years. All other retailers get rid of old inventory after MONTHS, not years. Just check with any woman who buys clothes (which has the same margins as jewelry).

Let me tell you a short story on this success. I have helped a store that does a larger volume and does not and will not pay commissions. I've helped them with QuickBooks and they use The Edge. With the Edge I showed them their GMROI report which shows how well you handle all inventory-items you've sold and haven't sold. Once this jeweler understood that old inventory was one reason for larger accounts payable he jumped on it. Discounting and getting rid of old stuff. He even made a deal with a vendor "I didn't buy these diamonds from you, take back these $100,000 at my cost and lets credit it towards new purchases." He was happy that the vendor gave him $65,000 for the lot. He said "man was I happy to get rid of just that 2+ ct marquis, I had it since 2007!"

So he's getting rid of old, it reduces his accounts payable by a ton. Now he has money, availability to buy new exciting items and the cases don't have the "same old/same old" stuff.

Four months ago we looked at his GMROI report again and the year old stuff showed up AGAIN on the inventory GMROI report. "Man, there's even more old stuff. What's been happening?"

Simple. Young stuff will turn into old stuff if not sold. It’s an ongoing task.

So I asked how much they spend on advertising? Last year they spent 13% of sales on advertising. BIG on radio and its successful for the store. So I gave him the info that I just gave you, many paragraphs up. BINGO! He jumped right on it giving the sales staff 10% of anything they sold, at whatever price it was marked down to on stuff that was over a year old.

The result has been nothing less than phenomenal. For a store that never pays commissions (they do pay very good salaries) the sales staff jumped all over selling old and getting rid of it. In a few short months they have sold over $92,000 in old stuff and still made a small profit. I don't care about profit when it’s REAL old, I just want my money.

They made a small profit EVEN WITH PAYING THE STAFF ALMOST $8800 in commissions (that's close to 10%). One sales person made $3000 in one week pushing old stuff.

So think about why old inventory won't sell:

• It's old
• It's out of style
• Vendors aren't advertising it in ladies magazines
• Its not in the right price point
• The sales staff doesn't like it
• You don't like it
• Customers don't like it
• Even I don't like it

 

So it’s destined to just sit there. Also customers by law are not allowed to touch the jewelry without your permission! Think I'm lying? Then why is everything under lock and key? They can't touch anything without asking permission! That's why Stuller has come forward with a display unit that the rings are tied to a piece of cable that is hooked to a secure case. This way a customer can pick stuff up, on their own, try it on without asking you and can't steal it. This makes shopping fun. Why didn't someone think of that before?

As it is 99% of you have everything under glass, how can you get it OUT from under the glass and onto the customers hands?

HAND IT TO THEM

How's this done? Rewards. So try small. Mark tags with a red marker if they are over a certain age OR move most of them into a case marked "Special Value" case. Knowing you have some of everything that's old, coloring the tags might be best.

Now pay the advertising company their 10% fee but only if old items are actualy sold..

Oh no! I said it wrong! I have the percentage right, just the company. Sorry.

Now pay the sales staff 10% on anything they sell that's over a year old. (Phew, that's better)

Now you'll have money, probably more credit with your vendors and can start stocking items that are

  Better looking

  In fashion

  See in ladies magazines

  Right price points

 

Lastly if you think you'll have too little inventory in the cases think again. The best mix of inventory is to have 12 pieces of inventory per linear showcase footage. If you have a 5 foot showcase then it would hold 60 pieces.

Less clutter makes things prettier, easier to see and makes everything seem more luxurious.

Sincerely,
David Geller - JewelerProfit | June 7th, 2012