What Radio Shack Can Teach Us About Online Business Success
For most of the time when I was a child, my dad worked at Radio Shack — first as a computer specialist and then a store manager. Getting access to TRS-80 computer technology at such a young age and being able to self teach myself computer science (look ma — I’m referenced in ACM) was directly attributable to my father’s career there. Retail store lingo and thinking was a part of every day life. More importantly, his retail sales success meant the difference between public school and private school (at least before high school). It meant the difference between the car breaking down being a stressful financial disaster or a minor inconvenience.
A Radio Shack store manager back in the day was compensated 3 ways:
- A base salary (paltry)
- Commission of sales (just like the sales people working for the manager)
- A bonus based on how the store performed versus last year
The bonus could be significant — Radio Shack was aggressive back then and wanted to incentivize growth. The savvy store manager quickly learned that focusing on overall store performance — instead of personal performance — was the most lucrative path. My father was savvy and become adept at optimizing a Radio Shack store and turning it into a sales engine.
These were the variables he had to work with:
- Traffic — the number of people coming into the store
- Sales Tickets per Visitor — how many sales occurred per visitor to the store
- Average $ per Ticket — the average dollar amount per sale
- $ Returned — how much merchandise was returned to the store*
*This was always frustrating in that even if someone bought an item at a different Radio Shack, the return still counted against my dad’s store. Some Radio Shack managers refused to refund large purchases and send them to other stores (a big “no no” and a huge matter of contention between different store managers).
The formula then became easy:
Traffic * (Sales Tickets per Visitor) * (Average $ per Ticket) - ($ Returned)
That was it. That’s what he had to optimize. This was the formula that meant the difference between “barely hanging on” and “doing ok.”
Each of these things would be addressed sequentially. Traffic could be manipulated through merchandising and keeping the store looking spiffy. Sales Tickets per Visitor could be improved through classic sales techniques (greet the customer, sell the product, ask for the sale). Average $ per Ticket could be increased through upsells (accessories, batteries, cables). $ Returned could be minimized by managing buyer’s remorse — making sure that the sales process appealed to the customer both emotionally AND logically.
When you are running an online business, whether you sell Software as a Service (SaaS), physical goods, or virtual goods, this is just about all you have to work with as well. It’s so easy to get sucked into multivariate testing, new product features, or social media that we forget that, basically, we’re just running an online store.
DigMyData is about optimizing your store.
Traffic. Sales. Support.
Traffic. Sales. Support.
This is what drives your business. You must stay on top of these. You have to know immediately if one of these starts to act funny. You have to know which one of these to focus on right now.
You’ve probably seen my MacBook2TV.com demo business in our product screencast. The success I’ve had with that really is because of DigMyData.
Houston, we’ve got a problem
DigMyData is what made it obvious to stop focusing on paid traffic and to focus on organic traffic.
A way out
DigMyData is what made it obvious that my organic traffic efforts were working and that it was time to focus on sales conversion rate.
DigMyData let me know that Google was sending me loads of new traffic and that it was time to tweak the website to make sense for the new keywords people were searching for.
DigMyData tells me that my support costs are under control.
DigMyData keeps my eyes focused on the prize — an online store that makes money.
Conclusion
Online business success is not mysterious. It obeys the same sales laws that the traditional brick and mortar stores discovered through centuries. It does require hard work. It does require focused attention. DigMyData lets you focus on those important variables that are at the heart of your formula. It makes the work a bit easier.