Do you know who your customers are? (...and who are you?)

Who buys your products and services? Do you know these people? Do you know how they found out about you? Do you know why they're buying from you and not your competitor?

Are you meeting their needs?

The last question is the most important and the reason why surveying your customers from time to time is an excellent idea.

At The Pot & Bead, we've tried surveying a couple of ways. First, every time someone comes in to paint pottery they fill out a slip that asks them how they've heard of us. This single piece of information has been responsible for my major decisions regarding our advertising budget over the years.

A couple of years in a row we mailed out a survey. Each year there was a specific theme to the questions we asked. For example, one year we focused the questions on birthday parties so we could figure out how to improve them. Every time we sent one out, we always included some standard demographic questions in order to track where our customers were coming from year after year.

We've also tried the online survey. Mailing surveys to our customer database became very expensive. There are several really fantastic online survey sites. My two favorite are zapsurvey.com and surveymonkey.com. Both offer a free version of their service (that limits the number of questions and responses). I've used the paid version for the store (needed more questions and responses). It was well worth it and cost next to nothing when compared to a mailing.

When making your own survey, think carefully about the questions. Don't ask a question unless you know why you're asking it or what you would do with the results. For example, when we asked several questions about birthday parties we were asking because we were ready to make changes in our offerings in that area so we held off on other more general questions.

I'm practicing what I preach today...

Here's a survey I just put together on surveymoney.com designed for me to find out about YOU, the reader of this blog. Please take the survey... it will help you see how fantastic it is (It only took me 15 minutes to set the survey up once I knew what questions I wanted to ask), and it will help me improve this blog. Win-win, right?

Click here to take survey

(This survey can be taken by anyone who just found their way here - whether today is the first day you've seen this blog or the 10th; whether you've read my book or not; whether you're a close friend or someone I've never met; whether it's the same day I posted this blog entry or a month from now.)

Thanks and have a great day!

Other ways to look at your sales data...

Last week's blog about how to figure out how your business is doing got me thinking about other ways to track data and I came up with this idea...

How about amount of sales per employee? I don't mean specific employee by name. I mean divide your sales for any given month by the number of employees you have that month.

For example: Let's say your sales in December 2006 were $20,000 and you had 10 employees that month. $20,000 divided by 10 is $2,000 per employee.

Why might this be interesting? Well, let's say that in December 2005 your sales were $18,000 but you had 8 employees and in December 2004 your sales were $16,000 and you had 5 employees. Your sales each year has gone up and so has the number of people you have employed.

So for those three years, your sales per employee were:
Dec 2004: $3,200 / employee
Dec 2005: $2,250 / employee
Dec 2006: $2,000 /employee

On one level, business is good - sales went up each year in December. But your sales per employee has gone down - way down. Given the increase in employees, your payroll has gone up which means any profit will have gone down. So the question is: Are having more employees worth it? If I had a metric that had this kind of trend, I'd start to wonder about the effectiveness of my employees. Why aren't they able to keep up the $ per employee? Do they need more training? Is having more employees making them prone to "someone-else-can-do-it" syndrome?

This is just one metric to think about if you're wondering why your sales are increasing, but your profit is not. There might be a correlation, there might not - it's just one thing to think about. Go ahead and try it. (Other calculations you could do: sales per thousand dollars of payroll; sales per hour the business is open; sales per # of hours of payroll, etc)

Have fun!

How you doin'?

How's business?

If you're in business for yourself, you've been asked this once, twice... okay anytime anyone who knows you sees you this is probably the first question they ask.

I always answer "fine" or "good" or something else pleasant and upbeat - any other answer isn't all that appropriate for the masses IMHO.

But can you answer this question objectively for yourself? And how do you really know how you're doing? One way (but not the only way) to do that is to compare ourselves to everyone else.

There's a fantastic website, bizstats.com, that has taken data from many (sole-proprietorship) businesses and compiled it in a useful way for the rest of us. Go ahead and click on your industry and type in your gross sales from last year. You'll get a fantastic indication of what your expenses and net income should be based on everyone else.

The other neat thing to check, especially if you're a retail business, is the Sales Per Square Foot (SPSF) section. This is one interesting retail benchmark. Unfortunately, it's not necessarily helpful beyond giving a warm fuzzy. For example, the only stores I can really compare my paint your own pottery business to are the listings for Jo-Ann, Hancock and Michael's (arts and crafts businesses). Note that the SPSF range from $75 to $204 for these 3 businesses. That's a pretty large range. The SPSF for my business happens to be somewhere in the middle.

So what can I take away from that...? If my SPSF was under $75, things wouldn't be good and I'd be worried. If it was over $204, things would be wildly fantastic. It's really just a point of interest beyond that. Since I have a single retail location, I'm comparing my number to these other businesses. If I believed that my current number is acceptable for my single location, and was planning to open a second store, I'd set this SPSF as a goal. Make sense?

So take a look at your numbers and answer these questions for yourself... what's you're sales per square foot for each year you've been in business? What about each month? If you have multiple locations, how do they compare with each other? If you're not open yet, based on these numbers, can you set a goal for yourself?

Have fun!