Tuning in Retail Performance
Critical retail performance metrics HME providers must track if they want to ensure cash sales success.
- By David Kopf
- Sep 01, 2016
When it comes to retail, phrases such as “retail experience”
and “customer relationships” might sound like the business of retail
sales is somewhat emotional and driven by instinct. That couldn’t be further
from the case.
If anything, the business of retail is rooted in numbers, in data, in the kind
of information that can help a provider truly understand how their business
is performing, and what they need to change or implement if they want to
“Providers need to measure their performance in order to see if they’re
on track in terms of their goals and objectives. So they need to set up
specific metrics,” says Cy Corgan, national sales manager for home access
equipment maker EZ-Access. Corgan has a long history in helping providers
with retail sales. At EZ-Access, he helps providers learn how to sell home
access products, a key retail offering, and prior to that at Pride, he helped
providers sell retail mobility devices, such as scooters, as well as lift chairs
and home access solutions.
Moreover, retail performance measuring is especially important given how
much the industry has shifted and how steadily it continues to transform.
“Because we’re changing so much as an industry, we have to be able to
react and plan, and we have to create a strategy,” says Maria Markusen, the
director of Operations & Development for the VGM Retail of the VGM Group
Inc. “And there are two ways to do that: you can throw it against the wall and
hope that it sticks, or you can look at the day and say, ‘Here’s my starting
point and my foundation, now I’m going to look at what’s going on every day
so that I can adjust and readjust to what’s going on in a timely manner.”
Markusen has a long history with retail sales in the industry. Prior to VGM
Retail, Markusen was co-founder of Simply Shops and COO of Simply Retail,
both of which VGM Group Inc. acquired. Those organizations provided
outsourced retail solutions and retail consulting for hospitals and other
“If we measure, we can react; we can be ahead of the curve; and we can
communicate,” Markusen adds. “If we do those three things, we can be
successful and also serve the patient.”
One provider that pays close attention to its retail performance is Mobül,
the mobility store, located in Long Beach, Calif.
“One hundred percent of our revenue comes from retail,” notes Mobül
Founder and CEO Wayne Slavitt. “We don’t take any insurance at all.”
After identifying what he calls a “vacuum in the marketplace” for retail
mobility solutions, especially with competitive bidding looming, Slavitt
— who also felt frustration going the traditional funded route with HME
providers to help get mobility solutions for his mother and mother-in-law —
decided he wanted to take and entirely different approach.
“I figured there had to be a better way,” he says. “I kept thinking of Kmart vs. Nordstrom, and I decided with the Baby Boomers getting older, and the
market growing, that there was a real opportunity to address the market in a
more respectful way, and so we launched Mobül.”
Needless to say, with all Mobül’s revenues coming from cash sales, it
keeps close tabs on its performance.
“Numbers guide most decisions … and the ability to know how you’re doing, whether you’re growing or falling behind is important,” Slavitt says. “It’s also a good motivator for the staff. We discuss metrics with our staff every morning. For us, it’s a pretty active way of how we run the business.
”Whether a provider is retail only like Slavitt, just getting into retail, or has been selling some items on a retail basis for years or even decades, there are some universal performance indicators that they should be closely moni-toring to ensure that they are performing well. They act as the Rosetta stone that lets them translate the blur of everyday activity in their stores into real numbers that can be used to generate actual change. Let’s take a look them:
A prevailing metric for retail sales is gross profit (GP), or as Corgan jokingly calls it “am I making money?”
“It’s important that [providers] track that on almost a daily basis,” he says. “Let’s say I got into the business saying, ‘I want to make 50 percent margins on everything I sell.’ For example, if this were a coffee shop and I were selling a cup of coffee for $3 and my profit was $1.50, then obviously I’m making 50 percent margins. Now if I got into the business, and that was my storegoal, and I’m measuring that everyday, then, perfect, I’m right on traffic.
“But if something happens, and suddenly my costs start going up, and I don’t recognize that, and now I’m selling a cup of coffee for $3 and my costs continues, adding that this is why gross profitability is the ultimate metric. “… Each day they can they can quickly measure their GP and determine if, ‘I need to change the product mix for next week or next month,’ whatever the case may be.”
Essentially, gross profit serves as the canary in the coal mine — an early indicator that something is wrong and needs to be corrected. And that is why a provider must measure all the other metrics. In addition to being the keys to increased revenues and profitability, they can also help the provider pinpoint key problems before they turn into disasters.
Cash flow is a very simple metric that simply describes the difference between a retail business’s incoming cash inflows from sources such as sales or loans, and its cash outflows for items such as bills or inventory purchase. Obviously the goal is to show positive cash flow, because then the business can reinvest and grow.
“My biggest metric is cash flow,” Slavitt says. “You have to be able to balance the receipt of sales with the payment of bills.”
Being the CEO and President, I also get the fun responsibility of being the CFO,” he jokes. “So I have to ensure that there’s adequate cash that we’re generating, and make sure that is growing.”
There are multiple factors that can impact cash flow, and once again, that’s why monitoring a variety of retail metrics is so important.
Sales Per Square Foot
Sales per square foot — also called sales by unit area — is a traditional retail metric that is a very standardized retail metric. The metric is just that, how well is the store performing when the total sales are broken out by square
foot. It is used universally across retail businesses as a general rule of thumb
regarding the store’s performance.
On an annual basis, U.S. retailers generate roughly $300 to $350 a
square foot on average (again, that’s annually), but that is averaged
across a wide variety of businesses, including everything from food
courts to the Apple Store (which, incidentally, rakes in an average of
$6,050 per square foot annually). For numbers a little closer to retail HME,
a 2013 report from the National Community Pharmacists Association put
their industry’s mean sales per square foot for items other than prescriptions
Whatever a provider’s numbers might be, by regularly monitoring this key
retail indicator, they can keep tabs on the general health of their business,
and be aware of any changes that might be occurring either suddenly, or
over time. Moreover, it might help providers with more than just one location
make smart decisions about their business.
“If we have multiple stores, we want to be able to tell who is performing
better, and this is an easy way to do it,” Markusen explains. “We’re encouraging
providers to think like traditional retailers, so that you can start to
compare your performance against other businesses to benchmark where
you are, and if you are going to open another store, you can say, ‘My first
store is doing about $800 per square foot, I think I can afford to be an
upscale, luxury space for my next location, because I’m compatible with
those stores and that shopper.’”
Customers Per Day
Obviously, location is critical for a retail business. While a mostly funded
provider serving Medicare and privately ensured beneficiaries can locate
their operation in a business park, that kind of setting is not going to fly.
This is because retail needs foot traffic in order to survive. That is as true for
a HME business as it is for a coffee shop. The provider must ensure it has
an adequate number of customers coming into the door in order to drive a
sufficient number of retail transactions.
“What’s your foot traffic like?” Corgan asks. “How often does someone
walk in the door?”
And this is fairly easy to track. Most door chimes for retail businesses offer
a counting feature that can total up the number of times someone passes
in. In fact, there is a whole range of people-counting systems available to
providers, along with analytic tools. Better yet, there are a variety of sensors
that providers can install in each section of their store in order to track
customer traffic by section.
For trending, Markusen recommends that providers initially average this
across 14 to 30 days.
“That way, we can get a starting point on how many people walk in the
door every day,” she says.
The next thing to track is how many of those people coming in the door turn
into actual buyers. This is as simple as comparing the day’s number of sales
to the number of customers that came in that day.
“You want to know how many customers you have per day, versus people
who come in, stroll down the aisles once or twice, but never buy anything,”
Corgan says. “How many true customers do you have during the day?”
Knowing that can help the provider identify possible issues and then start
to address them. If the conversion rate seems particularly low, the provider
can start to examine why those potential customers never wound up buying.
“Why didn’t they buy something?” he explains. “Did I not have something
they were looking for? Did I do surveying while they were walking around to
see if they needed help?”
Each one of these questions can help the provider drill-down to address
issues such as inadequate inventory, or proper customer service and sales
training? The key is to start working to identify why a poor conversion rate
might exist. And some of the other retail metrics identified in this article
might help to provide some of those answers.
That said, Slavitt cautions that conversion rates might not be as simple to
count as one might expect, especially given the nature of HME sales.
“I don’t have the resources, nor do I know of any other business at the
small retailer level, have the resources to monitor to store traffic versus
sales, because you might have one person come in on their own, or you
might have three or four people come in as one buyer,” he explains. “Those
three or four people are not three or four customers, they’re really one
customer, but mom is bringing along her daughter and her son-in-law and
maybe a grandchild to come look at a new walker.”
Average Sale Per Customer
Now that the provider knows how many people are coming in, and it knows
how many of those people are turning into a customer, it can apply some
simple math to start looking at the average sale per customer. That average
can then get the provider thinking about the ways it can increase that
“For example, say I really want to sell a lot more scooters, and I also carry
threshold ramps, and I have some ramps displayed near by scooters, but
it seems that I’m selling a lot of ramps, but not a lot of scooters,” Corgan
posits. “That would lead me to question, do I have the right inventory of
scooters? Is everyone looking for travel scooters, but I carry larger scooters,
so I’m not getting that conversion.
“That’s where the bundling and the ‘bump up’ philosophy come into
play,” he continues. “So if I do have scooters and I do have a nice mix of
inventory, and I also have the ramps there, I should set a target that for
every scooter going out the door, I want to add on fifty more dollars, and it
could be a can holder, a flag, a cup holder, a threshold ramp, but whatever it
is, I want to bump each sale up by fifty dollars.”
That’s where the sales person can start asking questions and probing
whether or not the customer might need a threshold ramp to get into the
house or to help negotiate inside the house.
Items Per Customer
But dollar figures are only one part of track sales by customer, It’s also
important to track the number of items on average each customer buys,
according to Markusen. That metric an speak volumes about the retail location’s
“Let’s say your conversion rate was 100 percent, for easy math, but if they’re
only buying one thing, that’s not really that great,” she says. “Say they’re
CPAP patients, and all they’re buying is their mask, if they’re not buying all the
stuff that goes with it … then we’re not really accomplishing our goal.”
Tracking repeat business is also important. There’s an adage that it costs
10 times as much to get a new customer as it does to keep an old one.
Bearing that in mind, tracking repeat sales is a key metric for HME provider
businesses, given that they work so hard to develop long-term patient
“If you treat someone nicely, chances are they’re going to come back,”
Slavitt notes. “We think we do such a nice job on the customer service
side, that people want to come back to our stores. In fact two-thirds of our
revenue are repeat sales.”
Inventory Turn Times
In addition to knowing sales by inventory item, inventory turn times are, in
fact, a crucial retail metric, particularly for the HME industry. Reason being
is that, since we are talking about medical equipment, there are many items
that HME businesses keep in stock that are very expensive.
The longer that expensive inventory sits on the shelf, the longer the capital
spent to acquire that inventory is tied up in a kind of cancerous limbo that literally
works against the provider’s cash flow. It is critical that the inventory get
sold in a cash flow-intensive business such as retail sales. The faster expensive
items move, the more profitability will almost exponentially increase.
And this is why monitoring inventory turn times is so important, particularly
if the provider can drill down to turn times per inventory item. Then it
can start to identify pricey items that are languishing in stock, as opposed to
being sold. From there, the provider can start examining whether or not they
can move those items faster, and how they might possibly move them faster,
or they should replace those items with something that might sell better.
“If something is sitting there forever, your cash is tied up because of this
item that is sucking up space that you can replace with something that’s
going to sell faster,” Markusen says, adding that the some big box retailers
have gotten so sophisticated that they check inventory turns multiple times
an hour, because it can let them promote a specific item that is suddenly
moving for whatever reason (which, in turn, leads us to our next metric).
“We look at inventory turn times by vendor,” Slavitt says. “It’s a tough
road, because we have a large inventory, and when a customer comes in, we
have to have what they need, but we also don’t have to have a lot of inventory
sitting around waiting for that sale.”
“We have a very good relationship with our key vendors,” he says. “…
These guys are partners with us … so if some inventory isn’t moving, then it
becomes part of the partnership to figure out how we can do a better job.”
Assuming a provider has the right product mix and customer conversion is
at a satisfactory level, then it can start looking at how to optimize the sales
for inventory items. By examining sales by inventory item, also known as unit
sales, the provider can analyze what items it can sell more of, whether or not
it needs to highlight top selling items over more traditional items.
What this is all getting down to is inventory effectiveness, according to
Corgan. For instance, to take things out of the DME realm, let’s say a retailer
sells televisions, but only offers a few, basic models. Well if a customer
comes in looking for a smart television that can watch Netflix and YouTube,
and the shop doesn’t have it, then that customer will drive a half hour to BestBuy or go online and order.
In other words, by knowing average unit sales how long each of those
items takes to sell, the provider can start to get an accurate picture of
whether or not it is providing the right items to the customers, and what
items it might need to replace or add to its lineup in order to better serve
Slavitt says Mobül tracks unit sales, particular on its higher ticket items.
“We compare that to the previous month,” he says. “We compare the
same month last year. We look at trends in terms of are unit sales increasing
Sales by Department
And of course, there’s another element tied to those inventory items’
performance and that’s whether or not they’re actually being sold well.
Perhaps an item could sell better if it wasn’t suffering due to factors that
have nothing to do with its merits. For instance, the product might not have
good sales support, might be under-promoted, or might be poorly located
within the store.
“In the days when I was selling lift chairs, somebody might say, ‘Well, I’m
not selling enough lift chairs,’” Corgan recalls. “In their showroom, they
might have two lift chairs, and they might be in the back, in the corner, or
up against the wall, or worse yet, they might have product in front of them
that made it difficult for the consumers to sit in the chairs.”
Whatever the retail product category — mobility, sleep, accessibility,
bath safety— if the provider wants to sell that item, but it is underperforming,
the provider needs to ensure it has the right selection of product
that customers want, and showcase it in such a way that clients can interact
with the product and learn more about it, Corgan explains.
Sales Per Salesperson
Obviously, the sales team is a key element in the retail sales process, and
if they are under performing or performing will really, management would
want to now about that right away to either fix a problem or take advantage
of a key staff asset.
“We’re not a typical sales organization where we say, ‘Okay you need to
sell 10 people today or you’re out of here,’” she explains. “It’s how do we
improve, get that person training.”
And that fix could be as simple as providing an underperforming staffer
with simple sales lists of all the items a patient with one condition or
another might need. In other words, the fixes could be really simple, but if
the provider management isn’t aware that a team member needs that help,
it will never be able to apply those fixes.
“It’s the sales person’s job to understand the bundle of things a patient
might need,” Markusen explains. “But the only way to do that is to make
sure the salesperson has the training they need so that the numbers start to
average out by performance on daily/weekly/monthly basis for that particular
And let’s not forget that the positive reinforcement side of the equation is
also critical. Sales per salesperson is a great way to fire up the team.
“Everyone of our sales staff have sales goals,” Slavitt says. “And we monitor
them on a regular basis. And it becomes a nice little incentive for them to try
and achieve those goals, because they get incented to meet them.
Mobül has a performance-based compensation program that pays
commission, and each salesperson has a code that can be entered in the
cash register. That said, Slavitt underscores the fact that the ultimate goal is
not sales so much as it is service.
“Our approach is very soft sell; We don’t hard sell anyone,” he notes. “We
never pressure sell anyone. So it’s not a situation where our sales staff gets
involved in forcing someone to buy something they wouldn’t buy; that never
happens. That being said, we sell a lot of product.
“Given that, we want to incent the sales staff so that when the customer is
ready to buy, we’re ready to sell,” he continues. “And that’s what we use our
performance-based compensation for. We have sales contest and all sorts
of things that help the sales staff make the sale, but only when the customer
Salesperson Sales by Category
Moreover, if the provider gets even more granular, it can track the types of
sale by given staffer. This can start to shed light on the salespeople who
might be demonstrating expertise with a particular category or disease
state. For instance one salesperson might excel at selling diabetic supplies.
“You can say, ‘Wow, Jane, I really see that diabetes is a category that
you’ve taken off with,” Markusen says, adding that the provider can then
start to ask questions as to why. “Is it because we have more diabetes
patients? Did we get a new referral source? Or, maybe Jane really understands
diabetes. Maybe Jane is a diabetic herself and she can relate.
“Then, when we have a diabetes patient come in, we know to send that
customer to Jane, instead of Paul, because maybe Paul is better at selling
new moms what they need,” she explains.
In other words, monitoring this as a regularly tracked metric allows the
provider to start playing towards the team’s strengths.
Moreover, this can also help the sales people push a particular category
that is being promoted. Slavitt notes that Mobül will run sales contests on a
particular category to get those items moving.
“We sell a lot of lift chairs and scooters, and we have a lot of lift chairs and scooters on the floor,” he explains. “And we like to make things exiting and
interesting for our sales staff, so we have little contests once in a while.”
How and When to Track
Of course, knowing what to track is part of the battle. The other part of the
battle is knowing how to track to them. Fortunately,
many of the industry’s HME business management
software offerings offer retail components that
include reporting tools that can help providers track
their retail performance. And even without them,
there are various off-the-shelf and download able
accounting packages available to providers that
can help retail business calculate their performance
metrics as well as start modeling where they need to
be, Corgan suggests.
“They’re so efficient nowadays that you plug in
your numbers, and where you want to be, and they’ll
calculate everything for you,” he says. “There are a
lot of bookkeeping software packages out there to
help you run a business.”
But regardless of how providers track their data,
the key is that they do it constantly. They need to
know how they are performing in terms of these key
metrics right now, as well as be able to trend their
This is a daily, weekly, monthly, quarterly, annually
tracking process,” Markusen says. “It [retail data] has
to be incremental in order to be valuable. You have
to be able to look at changes and patterns in order
for it to have any sort of value.”
“We do same store sales comparisons,” Slavitt
says. “So we’ll look at how we did last year for the
same month, to see if we’ve grown, or held steady, or
For daily tracking any of the HME software
packages offer dashboarding features that can
provide instant daily feedback across a variety of
metrics, which Markusen recommends. (See “HME
Dashboard Essentials,” in the May HME Business
“Information Technology” insert, to read more about
HME dashboards.) That daily feedback, mixed with
the long-term analysis is critical.
“You track it, you create a dashboard, and then
you watch trends,” she says.
Also, Markusen says factoring in seasonal variations
is very important for providers. They need to
look at how their business is performing and then
cross reference against holidays, weather and the
other completely external factors that will predictably
change their performance. Then they can see
how they are performing during what they know will
be a predictably off time of the year.
“Weather or events are one of the things that we
recommend tracking,” she says. “That way you can
say, ‘Oh you know what, that was because of Father’s
Day, that’s why sales were down,’ she says.
The main thing to keep in mind is that all these retail
performance metrics help a provider shed light on
the true performance of their retail business. From
there they can start to drill down and make much more granular decisions
about merchandising, sales training, advertising, branding and all the other
elements that help contribute to the overall success of the retail business.
“I wish we had more data,” Slavitt notes. “We’re constantly looking for
ways to get better and expand our base of business.”
TIP: One thing at a Time
As you track your performance based on these various performance
metrics, you will uncover problems that need to be fixed, as well as opportunities
for maximizing strong points. However, there is one prevailing rule when
it comes to implementing changes that can have trackable results: change one
thing at a time. If you try and implement multiple changes at the same time, you
will not be able to determine which one of those new approaches was beneficial.
For instance, if a certain model of personal mobility scooter is underperforming
in terms of sales, you might first want to relocate your scooter department
in the store. Then you might want to change the display. Then you might
want to try different signage. Then you might want to try a special promotion.
And you might ultimately conclude that you need to change that model for
something else. The key is to try one, and then look at your retail metrics to see
if the change produced any results.
But if you try several of those approaches all at once, you won’t be able to
reliably track which one was beneficial. Remember to be methodical and patient
when it comes to leveraging how you monitor your retail performance to track
changes and new strategies and programs.
This article originally appeared in the September 2016 issue of HME Business.