Next Monday is the start of a whole new month. But more importantly, tomorrow is the end of February. And not just any February – it’s a leap year February.
What does that mean for business?
Quite a lot, especially if you’re a bricks and mortar retailer.
This year we have that rare thing: five Saturdays in February. To give you some context, this hasn’t happened since Microsoft released Windows 3.1 and Nirvana’s Nevermind was top of the charts – anyone remember that? If you do, you should probably keep it to yourself (I say this as a friend).
But back to business.
This year, you have the same number of trading days as 2019 plus an extra Saturday after payday – typically the busiest day of any month. So you can expect more sales this year, which is great.
But if you look at your end of month sales report and see that February is +2% on last year, is that really success?
A lot of smart companies will allow for this in their budget and inflate their February targets to reflect the reality. That’s great. But while looking at last year’s numbers and inflating or deflating for the number of weekends in the month is a good place to start, using the principles of customer economics will enable you to forecast your expected sales much more accurately.
What you did last year affects this year’s sales in more ways that can be allowed for with traditional accounting techniques.
Let’s look at an example.
Imagine you had a great 2019 and managed to recruit 30% more customers than ever before (well done you!). But let’s say this year’s sales remain flat. You’re still doing okay compared to 2018, right? Not really. In fact, you’ve failed to realise the sales you should have secured from 2019’s larger active customer base. Not good.
So let’s apply that thinking to next Monday’s meeting.
You shouldn’t be measuring this month’s success against the same month last year, nor should you simply adjust last year’s sales to reflect the extra trading day. Instead, you should look at your customer economics to work out your expected sales and measuring performance based on those accurate figures.
It’s not an easy thing to do but it’s worth getting it right.
What were your expected sales?
And how have you measured up? Not sure? Drop us a line at firstname.lastname@example.org to find out how to crunch the numbers.