Cultivating potential sales could be the difference between financial stability and increasing expenses. That’s why it’s important to have a proper process to build the relationship with opportunities coming in your door.
A POTENTIAL SALE is not yet a SALE. Even though she has not bought, she is a shopper interested in purchasing from you and has shared contact information with you – a phone number, an email address, and maybe a delivery or mailing address.
The information you have already collected about your future customer may include: how they found out about your store, the products, the categories, and brands in which they are interested, their price range, their time frame, and how they would pay for their purchase.
You may also have a next step, an action to which you and your potential customer have agreed. Maybe they want to return to your store with another family member or group. Perhaps they have brought a fabric sample home to help them with their selection. Maybe they invite you, or a designer from your company, to visit them in their home and further help them with their intended purchase. Perhaps they are not yet decided, but they have invited you to call them in a week. A POTENTIAL SALE is an opportunity to continue building the relationship with an interested shopper that started today and will eventually result in their purchasing your products and services.
The work you do and the trust you build with the shopper can have a lasting impact, with mutual benefit for both of you. The basis of this engagement is an interested shopper willing to give you the chance to help them decide that you, your company, and its products and services, are the right choice for them.
Each day you entertain shoppers who provide you with new opportunities to win new business and make new customers for your company. In-home furnishings stores this year, between 60% and 70% of those shoppers, or opportunities, will leave the store without purchasing today. These shoppers will not be interested in taking the next step or sharing more information with you. With these shoppers, you have no immediate opportunity for a second chance to build the relationship and assist them with their purchase. With these NO SALE customers, there is a cost for each opportunity that walks through your door. Rent, utilities, advertising, display, administration, and other related expenses may represent 20% to 30% of projected retail sales. These are typically grouped as Opportunity Acquisition Costs.
In addition, with each NO SALE shopper, the salesperson is likely to spend an average of 20-30 minutes or more. At the same time, the number of opportunities that each store entertains daily is limited. In 2022, thus far, the average number of opportunities per day for the average home furnishings store is 20, or just over 7,000 opportunities for the year. A home furnishings store with annual sales of $6,000,000 may have an annual opportunity cost of $1,500,000 or a cost per opportunity of $215, which means that the store is expending $4,300 in Opportunity Costs each day, regardless of the outcome.
However, the smaller number of shoppers you have worked with, who are interested, who have shared their needs, and are inviting you to contact them again is aptly referred to as the POTENTIAL SALE. Each POTENTIAL SALE is an opened door to a new customer and a new SALE. The store and salesperson’s initial effort and expense have already been invested.
What is a realistic and obtainable goal for creating new POTENTIAL SALE clients? Would one new POTENTIAL SALE, out of the 20 daily opportunities, suffice? The average, thus far, this year, among leading home furnishings retailers, and based on the preceding metrics herein, is about one new POTENTIAL SALE every two days, or 1 out of 40 Opportunities. If just 35% (same as the current average closing rate) of the additional POTENTIAL SALEs, one more out of every 40 Opportunities, convert to SALEs, that’s 63 more SALEs for the year, an additional $151,000 in sales revenues.
Although not analyzed here, other potential impacts for increasing the number of POTENTIAL SALEs at your store may include:
- The Closing Rate for already-interested POTENTIAL SALE clients may be higher than for initial-visit shoppers.
- The Average Sale Dollars for already-interested POTENTIAL SALE clients may be higher than for initial-visit shoppers.
- Based on your relationship with them, existing customers may already be POTENTIAL SALEs ready to purchase again.
- Word-of-mouth customer recommendations are a great way to add new POTENTIAL SALEs.
- New customers, who recently transitioned from POTENTIAL SALE to SALE, frequently are the best source of word-of-mouth recommendations.
Cultivating and focusing on the POTENTIAL SALE in your business can be very rewarding financially and can foster an environment that encourages new and satisfying customer relationships.