When it comes to managing a store, team leaders understand the struggle of balancing sales, service and productivity with changing customer patterns and behaviors. While it often feels like trying to hold onto something in the midst of a hurricane, there is a method for keeping steady: establishing a properly balanced labor model.
Doing so is an ongoing process that requires a focus on continuous improvement. The resources available to build a successful labor model—like engineered labor standards software—are more reliable and easier to implement all the time. Their impact on retail business management is impossible to ignore.
Cutting labor when sales dip is a classic retail reaction. One of the mistakes of trying to save money by cutting labor is underestimating how many behind-the-scenes activities workers may be doing. Research conducted by The Harvard Business Review noted that stores that strategically increased their staffing in the right places often experienced benefits such as a more organized back room or a cleaner store appearance, and that these stores often also experienced higher profits. A properly established labor model allows you to better calculate the impact of labor on profit and discover some of the surprising ways that staff may be contributing to the success of your business. Cutting isn’t always the answer when workforce management can provide a solution that allows you to make better use of your existing team.
Of course, the bottom-line, primary benefit of a proper labor model is that it can save you money on labor management. In fact, research by McKinsey and Company revealed that retailers are able to cut labor costs by upwards of 12 percent through better “labor scheduling and budgeting,” all without sacrificing “customer service and employee satisfaction.” Labor modeling helps re-balance and reallocate labor, allowing businesses to better meet customer demand with a “supply” of exactly the right staff at exactly the right time and place—a key factor in successful sales conversion.
Labor modeling provides key advantages when it comes to workforce planning and retail business management. It helps retailers gather more data, which they can then apply in ways that benefit staff and customers alike. For instance, the results can help maximize sales opportunities during non-peak times (such as the end of workers’ shifts). The staff member gets the sale and the customer leaves having found what they were looking for, and perhaps more, which is better than the employees simply starting their closing duties early. Armed with this data, retailers can also reward the employees based on customer conversion. These incentives will drive employee productivity and customer service which, in turn, will drive increased sales.
While labor modeling is perhaps most known for its contributions to workforce management efficiency and increasing productivity, it can also have a serious impact on customer service as hinted at in the paragraph above. By repurposing employees from inefficient non-service processes to customer-facing service activities, retailers boost service levels and sales. Research shows why this is crucial. According to Bain and Company, a whopping 25% of the “top frustrations” of customers came from poor experiences with sales representatives.
A properly designed labor model can stand alone, or be incorporated into workforce management software: to find the solution that works best for your company, contact us and request a free consultation!