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David Geller

David Geller: Take Your Shop To the Next Level

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Outstanding customer service is not just about your reputation: It’s a business multiplier and profit booster.


This article originally appeared in the November 2015 edition of INSTORE.

David Geller bench shop advice

“Customer service” is a widely used but not-done-enough-in-practice phrase. Extraordinary service gets people talking about your store, lowers advertising costs and increases sales. How? Your customers come back to you rather than go to a competitor and they send their friends in as well. In addition, repair sales are trust sensitive. That means that when you have won customers’ confidence through superior service, they will turn to you for their higher-end repairs and custom work.

Here are 10 ways to improve
customer service in the shop:

 

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1 Have jobs done on time. If a job can’t be done on time, have the staff call the customer so the customer doesn’t make a pointless trip to the store. Adopt some type of system to manage this. Most POS systems have a shop-tracking module. Some stores use a calendar on a board with customers’ names next to the due date. You can buy “Day of the week” stickers and attach them to the envelopes before they are given to the jewelers. (Buy them at: instr.us/11154.)

2 Deliver all repairs and custom jobs back to the customer in a suede or leather pouch. Even inexpensive jewelry is a treasure to customers.

3 When taking in or delivering jobs, handle them with the same care as you would a fine piece of jewelry. Place a pad on the counter when handling items.

4 After delivery, put the delivered envelope in a “week from now” box. Have the staff call each customer a week later to check up on the repair or custom job. Imagine their response: “The store called me to check up on the ring I had fixed. I spend $1,000 for car service and they didn’t acknowledge me.” Then after calling, file the envelope away in your normal fashion.

5 Make yourself a calendar system and on the anniversary of the date the customer’s custom design was delivered send the ring a birthday card: “Happy Birthday, Jennifer’s Ruby Ring! Another great year helping to make Jennifer smile. Be sure to come in this month for your free Clean & Shine so you’ll look great all year.”

6 In the process of custom making a piece, take progress pictures and email them to the customer. “Here’s our jeweler Marvin making the design on the computer.” Then later, “Here’s your ring having the stones set by Marvin. Next he’ll detail the ring and polish it to a great shine.” People love the TV show How Do They Do That? and this is similar. It will cause excitement and better yet, your customers will have a photo they can send to their friends via email, Twitter, Facebook, Pinterest or other social sites. You’ll get exposure for free — on top of an excited customer.

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7 In the showroom, have brag books with pictures of things you’ve made in the past. Or better yet, have a slideshow on a separate computer screen running all the time.

8 If possible, position the shop so people can see work being done through a window from the showroom or even from the street.

9 There should be a dress code for shop staff as they are occasionally seen in the showroom. It can be as simple as the jewelers wearing the same style polo shirts or aprons with the store logo.

10 Send a thank-you card through the regular mail even if you send out email or text thank-yous. Yes, even for watch batteries. It’s a nice touch and yet so few retailers do it. Think about how many thank-you cards you received this year despite all of the money your family spends. Almost zip, I’m sure. We sent postcards for any work under $250. Above $250 a handwritten thank-you note in an envelope was sent.


David Geller is a consultant to jewelers on store management. Email him at dgellerbellsouth.net.

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David Geller

Can You Make Money at 12 Percent Margin? Yes, But Here’s What It Takes

As one factor decreases, another must increase.

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CAN YOU MAKE a living on a profit margin of just 12 percent? Did the word no come to mind? You’re wrong.

For coin or bullion dealers, 8-12 percent gross profit margin is the norm, and they make a lot of money with little debt.

The “magic triangle” includes profit margin, inventory turn and inventory level. The combination of all three tells your future in a store, how much money will be left over to pay all bills and have money in the bank.

Let’s take a simple store math example for a year using keystone. A typical jewelry store would have a net profit of 5 percent. Here’s how a P&L would look:

Total Product Sales: $500,000
Cost of Goods: -$250,000
Gross Profit: $250,000
Expenses (45%): -$225,000
Net Profit (5%): $25,000

Are you making money? Absolutely. Do you have any money left over after paying expenses? Depends.

Imagine if last year, you sold everything at Christmas, not a stitch of inventory left. January 2nd, you fly to New York with three suitcases and buy the $250,000 of inventory that the cost of sales above pays for. You’ll have no debt. If something sells within six months, you have the money to reorder the replacement for the case, thus always having a stocked showcase.

Divide $250,000 in cost of goods by inventory of $250,000 and you get one turn a year.

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Now assume the same figures above, but instead of three suitcases costing $250,000, you bring five suitcases and bring back $600,000 of inventory for the store. Same sales and profit numbers as before. Did you make a profit, make money? Yessiree Bob! Do you have money? No! You bought $100,000 more inventory than the sales you took in. So how do you pay for it?

  • Owe vendors way past the due date
  • Put it on credit cards
  • Go to bank and take out a line of credit
  • Personally skip paychecks
  • Take money from your personal checking accounts

In this scenario, your inventory is $350,000 higher than the cost of goods sold. Divide cost of goods by inventory level, and it shows you have a 0.41 turn. A turn of 0.41 means this store has more inventory than needed for two years.

So, what’s the secret to having money?

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The long and short of it is, if you’ll keep your inventory levels approximately equal to the gross profit dollars you’ll make over a year, you’ll both make money and have money.

The lower the profit margin, keep inventory lower, or if you must have a higher inventory level at lower margins, then turn it faster. Instead of taking 12 months to sell it, sell within nine.

It takes all three for The Magic Triangle to work magic in your store!

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David Geller

What You Can Learn About Turn from Clothing and Furniture Stores

Hint: Turn more, earn more.

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THERE ARE REALLY only three important numbers in a retail store: gross profit dollars, inventory on hand, and inventory turn. So who’s better at managing money among these three retailers?

Store                         Gross Profit %
Jewelry                      42.6%
Furniture                  45.0%
Clothing                    46.5%

Darn close, aren’t they? The grass isn’t so green on the other side after all. Or is it?

Let’s look at inventory turn, which means how many times a year an item sells. (These numbers are from stores doing “pretty well.”)

Store                            Turn            Days in the Store
Jewelry                   1.4                       260
Furniture               3.5                       104
Clothing                 4.3                       84

A clothing store won’t keep a shirt/suit/jacket/blouse in the store more than three to four months. They will heavily discount it at that point to get it out the door; they don’t just “squash” merchandise closer together to show more like jewelers do.

Furniture stores work the same way. They have a natural problem: available floor space. The biggest reason for high turn in a furniture store was told to me by a furniture store owner: “Where am I going to store an extra 100 mattresses?”

Clothing stores get rid of their merchandise every quarter. Furniture stores get rid of their inventory every four months, and a good jeweler turns their merchandise a little over once a year. But most jewelers I meet have had their total merchandise for two-and-a-half to four years! This causes terrible cash flow and piles of debt.

If you buy jewelry in January, it should sell at least once by Christmas; that would be a turn of 1.0. If it stays until after Christmas, discount it or give a spiff to the sales staff to unload it, or even return it to your vendor and exchange it.

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If it is still there in 18 months, scrap it. That’s what clothing and furniture stores do.

Let me show you the money-making power of turn. All three stores are going to buy an item for $200. For a jeweler, this might be earrings; for a clothing store, a nice jacket; and for a furniture store, it might be a chair. In the table below you can see the cost, profit margin in dollars, and what that brings in for total product dollars in a year.

Keeping an item long-term is a detriment. Even if someone buys it three years from now, you should have had that $207 in profit for each of the three years, totaling $621 brought into the store (not the measly $163.35 you would make by holding it three years).

When it’s over a year old, most things need to be disposed of and replaced. Maybe your customers just aren’t buying what you have in stock. Change that!

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David Geller

Here Are a Few Tips You Haven’t Seen to Make the Most of Your Bridal Custom Designs

They’re simple yet brilliant.

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IT’S 2019, AND it’s not your daddy’s jewelry store anymore. No more high margins on diamonds. Where’s the money now? The mounting.

Keystone is the goal, and many get it on the mounting, but comparison shopping can make it difficult. That said, the really big problem with selling from the showcase is the amount of inventory you must carry.

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On the other hand, custom designing an engagement ring has many advantages:

  • Higher profit margins
  • You pay for the item after you’ve collected money from the customer.
  • The customer feels like they are directing the process rather than being “sold.”
  • If you share the process of designing their ring with the customer, they will likely share with their friends and family. It’ll be on social media, texts and emails.
  • You can adjust which components go into the ring to more fit their budget.
  • Selling from the showcase has a closing ratio of 30 percent in most stores, but custom design has a closing ratio of 70-80 percent.

The downside? Someone must know how to design the ring, how it comes together and pricing. Training is essential, or having someone specific to sell the ring and lead the customer through the process. Figuring out how to price the item requires particular skills.

Here are some additional tips to make the most of your custom design process:

  • While designing the ring, if you use CAD/CAM, take a snapshot of the model on the screen and send it to the customer, saying something like, “Well, Jim has gotten started on your beautiful design.” If you hand-carve the wax or mill it, take a picture and send by text or email. Same goes for the casting process and another of the jeweler finishing up the ring.
  • When appropriate, send out a handwritten thank-you note.
  • Go to Office Depot and buy a pack of 100 sheets of do-it-yourself business cards. Make yourself a master blank company business card with no logo, just everything else about your store. Take a good picture of their new ring and paste it on the card, then print a sheet of 10 and have it in the envelope when you deliver the ring.

After they “ooh and aah” over the ring, tell them, “I’m glad you love it. You know, we have more customers come in from referrals than anything else and would love for you to refer family and friends. Here are some of our cards.”

Then plop them down on the showcase face up.

They will be so excited that they will not only place one on their refrigerator door, they’ll give them out to friends and show everyone how their ring is on “my jeweler’s business card.”

Isn’t this a fun business?

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