Jennifer was frustrated. She recently purchased a quilt store, and after the initial excitement, things got real. Within the first few days, she went from being excited to entirely overwhelmed by everything that needed her attention. First, it was the roof. The inspector said she needed a new roof ASAP; it was leaking and only expected to worsen. That was a $15,000 expense she was not expecting. Then came the need for updated inventory. While the store came mostly stocked, most of the inventory was over two years old, and they ran dangerously low on sewing machines. She needed tens of thousands of dollars worth of new inventory she couldn’t afford. But the biggest shock was the team members.
The store had operated for many years before Jennifer purchased the cute little suburban store just outside a big, bustling mid-western city. She had big expectations and the gumption to get it done, but she knew she could not do it all herself. Luckily, the store came with half a dozen part-time employees and a few full-time employees, and Jennifer would be relying on them quite a bit in the next few months as she learned the business. But within the first week, half of the employees had quit.
Here, Jennifer was a new quilt shop owner with hundreds of thousands of dollars in debt, a leaky roof, old inventory, a team with low spirits, and no idea what she needed to do first. Everything was essential and urgent. She was overwhelmed and stressed to the max but determined to make this work.
She worked her magic and got the leaking roof fixed, thanks to a handy husband who works in the roofing industry. She then turned to the finance, inventory management, and human resources experts. Following their sound advice, she miraculously turned the ship toward brighter days and calmer, more consistent waters.
While she is not out of the storm yet, she has a plan, the grit, and, most importantly, the metrics dashboard to tell her where to focus next. And it is that metrics dashboard that I will share with you today.
Every business has a chain of four elements that link the company together. Those elements are, in no particular order, Attract, Convert, Deliver, and Collect.
You must attract leads, which are inquiries into your products and services. Leads feed your sales. No leads, and your sales will dry up because you have no one to sell to.
The sales activity aims to convert a lead into a paying customer. You may have all the leads in the world, but if you can’t convert them into paying customers, your business will die starving to death.
Delivering refers to the processes and services necessary to deliver what you sell to your customers adequately. If you don’t deliver on what your customer buys, they will see a way out–sometimes canceling their order, sometimes seeking a refund, and possibly spreading the word about how you stink. If you can’t deliver, you can’t stay in business.
You are also in trouble if customers don’t deliver on their promise to pay you. If you don’t collect the money or can’t keep the money because of refunds, your business will die starving for cash.
In a quilt shop, you attract leads in various ways–from flyers to signage to emails and many more methods. Your marketing efforts are your attracting efforts. You convert a lead when they ask for a few yards of fabric to be cut from a bolt or place an item in their cart. You collect payment from them at the counter and then deliver the items they purchased when you hand them their bag of purchased goodies. As you can see, the convert, collect, and delivery elements quickly happen in traditional brick-and-mortar transactions.
An online transaction might look a little different: a lead browses your website because of your marketing efforts (attraction), adds an item or two to their digital shopping cart (conversion), then places their order by paying for those items (collecting), and then a day or so later you ship their order (delivering).
These are the core functions of every business. You have to do all four elements well in your shop. Every business everywhere is always looking to improve these four elements. It is from these four elements that you build your metrics dashboard. You need to track and measure at least one metric related to each of the four elements and your Queen Bee Role–the most essential activity ensuring your Big Promise is fulfilled.
Once you know the order in which your business performs these four elements, you set a metric for each. Start simple: only set one metric for each component. You can quickly get overwhelmed and confused if you start tracking twenty different metrics simultaneously.
Imagine a security guard on the night shift. The guard can monitor five screens and easily spot the slightest movement. But when they have to monitor lots and lots of screens, they are sure to miss something. In every movie where the bad guy gets past the security guard, it's because the security guard has too many monitors to watch or gets distracted by a suspicious noise. A dashboard allows you to be the security guard for your business, so the fewer metrics you have to monitor, the better.
Your metric for attracting leads may be the number of people who have entered your store. Or the number of people who visit your website. Or the number of people who give you their email address. Regardless of the metric, you want to track and measure this to spot potential disasters before they happen. If new leads start to decline, you ask why. What is causing this to happen? Is there construction outside? Is your website down? Is your messaging correct?
Your metric for converting leads to customers might be the number of transactions you process. Or the average cart size. Or the number of new customers on your list. Again, if this metric starts to fall, you can ask why.
Your metric for collecting might be the number of refunds. If you have a spike, then you might have a problem.
Your metric for delivery might be the average number of days it takes to fulfill an order. Or the number of returns. Or the number of canceled orders. Again, if the metric deviates from what you expect, you can find the problem that must be addressed.
And finally, the metric for your Queen Bee Role is critical. For our store, our Big Promise is that we have a fast edge-to-edge turnaround time and the means that the longarm machines need to run constantly. Our metric for measuring our QBR is the number of square inches completed. If there is a dip, we know we are not fulfilling our promise to our customers and need to identify and fix it immediately.
These five metrics make up our dashboard. They indicate where we need to focus our efforts.
Imagine your quilt shop is like a river, and the lake of success is at the river's end. You have a lovely lake house with the most beautiful sunrises and sunsets on that lake. The more water flows down the river and into the lake, the more majestic it is.
But if you allow beavers to build dams across the river, slow it down, and divert the water, your majestic view isn’t magnificent anymore. You have to monitor the river for those dams and evict the beavers. In business, those five metrics make up a dashboard that monitors the river and tells you when a beaver has started building a dam or causing a bottleneck.
But what do you do if you have multiple dams? Or are not sure what to work on first. You check the metrics by asking, ”Which metric is getting a lot of input but is not performing?” You need to identify where the dam is. The reality is your effort only works well when focused on the right thing.
For example, if you have low sales and everyone who walks in the door is buying something, you might assume you are not delivering. So, you put a lot of effort into delivering your products and services by buying and expanding your inventory, but your sales have not changed after a few months. You have misplaced your effort. After checking on your metrics, you find that the number of people coming to the store is down a lot, at an all-time low, and your conversion rate is where you expect it. In this case, your efforts will be best spent on attracting more leads to your store, not expanding your inventory.
As you start “fixing” things in your store, turn one knob at a time. This means only making one change at a time and testing it for a month or two. If things improve, then you have probably found the issue. If things have not improved, then move on to the next, most likely fix by checking your metrics.
Sometimes, when you spot a problem on your dashboard in one category, the problem can be emanating from another. You have to test each area independently to find the cause.
Your best bet is to turn the knobs in sequential order. In our examples from earlier, that order would be Attract, Convert, Collect, Deliver, and then the QBR. Turn each knob independently until you find the cause. If you do not find a cause, you may consider turning multiple knobs simultaneously.
Running a quilt shop is complex. It is possible that the cause and effect do not have a one-to-one relationship. It could be that multiple components are affecting an outcome at the same time. But finding solutions by trying a mix of fixes simultaneously is really time-consuming. Start with the usual suspects and the easiest test first. If the obvious, easy, fast, and cheap fixes don’t bring about the solution, you will be forced to turn multiple knobs.
Only turning one knob at a time for one problem at a time seems very time-consuming. So the question that begs to be asked is, “Can you ever fix more than one thing at once?” When analyzing a specific situation where multiple knobs could influence the outcome, the answer is often no. You must turn one knob at a time to fix one problem. But when your quilt shop is working on independent problems, and the knobs address different outcomes, you can turn multiple knobs at the same time. Always prioritize the most important dam or bottleneck, and only address other independent bottlenecks at the same time if you have the capacity to do so.
The other situation where you can turn multiple knobs is when you have a known problem and a known solution. It's the old been-there-done-that situation.
With a clearly defined QBR and a team focused on ensuring that the QBR is delivered consistently, without fail, you can monitor the health of your quilt shop using a dashboard made up of simple metrics. You must have numbers that tell you the normal expectations for the core parts of your business: Attracting (leads), Converting (customers), Collecting (their promise), and Delivering (your promise). The numbers don’t lie, but they don’t tell the whole story either. They flag an opportunity to fix or amplify something. With the flag raised, take action and investigate. You can finally step away from your quilt shop and manage by the numbers while still enjoying and finding fulfillment as you grow your quilt shop.
Take twenty minutes right now and determine the core metrics you want to use to create your own dashboard. Remember, keep it simple; tracking too many things is hard.
What metric are you going to use to measure the Attract element of your quilt shop? Email me at jacob@curtisaccountingsolutions.com.