Connect together, and even more importantly, lock it up
Release Time:
2012-02-01 10:33
Source:
China Chain
Chain Operation As a business format, it originated from department store retail and was quickly accepted by various industries. Chain operation has become the norm in fields such as building materials and home furnishings, fitness and beauty, medical and pharmaceutical, catering and accommodation, tourism and leisure, and chain operations in other fields are also thriving and very active. From the perspective of venture capital, chain operation is an important area of great interest. As a venture capital institution, besides focusing on the company's sales revenue and profit indicators, it also pays close attention to the team situation, the core competitiveness of sustainable development, and the company's internal control (internal management).
Many company management teams focus more on the speed of store expansion during development, while paying less attention to the management of chain enterprises. Although they have implemented some unification, the problem is that although the stores are connected in form, the key elements are not secured.
Locking in Customers
When the owner of a beauty chain company introduced the company to us, he said that a customer once approached a store manager hoping for a discount. This customer had been purchasing the company's products and services continuously for ten years. The owner's intention was to tell us how loyal the company's customers are, but I think the company should reflect on the fact that no one from the company executives to the store manager knew about this situation. Although they have established files for each customer and issue membership cards annually, obviously this membership system is a mere formality. The company doesn't even know about such highly loyal customers, and when a customer comes asking for a discount, this entrepreneur's talk about customer relationship maintenance is basically just for show. What is emphasized here is the need to truly value customer relationship maintenance, especially to pay attention to the 20% of old customers and major clients who bring the main profits to the company, and to lock them in.
Locking in Core Products
I once investigated a daily necessities chain company, which had grown to a scale of more than a dozen stores. Directly Operated Stores , the store image management felt quite good, and it was said that the profitability of individual stores was generally good. However, when asked about details such as which few products have the best overall profitability, which few products have the highest gross profit margin, how high the gross profit margin can reach, what proportion they account for in the company's total sales, and which few products have the slowest turnover, from the chairman to the general manager to the vice general manager responsible for market impact, no one could answer accurately. Perhaps they were busy expanding at the time, or their team was adjusting positions due to expansion, or there were other reasons, but I think the management should still keep some key data in mind. Although the company has established a unified database, if these important data are left as cold numbers without exploring their underlying meaning, problems will eventually arise. Imagine, if the management doesn't know the data, can you expect the purchasing department to know better? Can you expect the sales department to proactively adjust the store's product mix? Therefore, chain enterprises should not only focus on expansion but also on internal control, clearly distinguish between profitable and poor products, conduct very detailed category and inventory management, and firmly lock in the most profitable products and services.
Locking in Talent
It is necessary to lock in existing talent while also locking in potential target talent. The rapid expansion of chain enterprises must be supported by sufficient qualified talent, covering business management, financial management, information technology, marketing, customer relations, etc. Not only are top-notch store managers needed, but also high-quality first-class sales staff. With talent guaranteed, the company can confidently and boldly expand, which is not just a matter of funding. In the chain enterprises I have contacted, the consensus among senior management is that after developing to a certain extent, bottlenecks will appear, and the key to the bottleneck is people. This is indeed on point, but it seems no one has found a good solution to this problem yet. I visited a beauty and fitness company called Elizabeth in Foshan, whose many management measures benefited me greatly during my research. Here I will talk about their talent strategy.
To obtain the talent needed for development, the company has established a beauty training school, enrolling several classes each term and three to four batches annually. This way, the company trains three to four hundred students each year. All students must complete on-site internships at the company's affiliated stores before graduation, working as beauticians. Through training and internships, the company identifies outstanding graduates to supplement its various stores, solving employment for students and ensuring a continuous influx of fresh blood into the company. The training these new employees receive, both in skills and philosophy, deeply imprints the Elizabeth brand, enabling them to quickly integrate into the company. For existing employees, the first guarantee is income. According to the employees themselves, their compensation is quite attractive locally. In addition, outstanding employees are given continuous career growth opportunities: excellent beauticians are promoted to beauty consultants, outstanding beauty consultants to assistant store managers, and assistant store managers naturally become store managers when opening stores in other locations. Furthermore, to improve the overall management level of the company's management team, the owner spends money to take all senior executives to attend classes at Peking University HSBC Business School, showing the company's charm. Such methods lock in new employees, retain old ones, and ensure the company's strong talent demand during continuous development, which is worth learning from.
Locking in Business Philosophy
An excellent chain enterprise must have a very clear business philosophy guiding its operations and establish an excellent corporate culture centered on this philosophy. I personally believe that the unity and adherence to an excellent business philosophy weigh more than concepts such as standardized processes, information-based management, and professional services. It is the soul of enterprise operation, bringing long-term cohesion to the company and enabling it to achieve healthy returns in business. In China's current business environment, when bosses assess senior managers, the main indicators are often still performance and profitability. Although words like integrity and social responsibility are often mentioned, they mostly remain at the verbal level and are difficult to implement in practice.
Taking a maternal and infant product sales chain company I investigated in Hefei as an example, the company's philosophy is to provide safe and reliable products and services for infants and young children. Among the company's product categories are health supplements, which generally have high profit margins. However, it is difficult for ordinary consumers to accurately judge whether these products are effective, as long as they do not cause problems when consumed. One type of infant health supplement sold very well, so a health supplement company approached the company owner, promising greater discount space to sell their supplements. When the owner opened the sample, she immediately asked the health supplement company's representative to leave, saying the business could not proceed because the samples they sent had obvious sediment inside. Owner She is a lady who told me, "I am also a consumer and a mother. Can I give my child such inferior products to drink? I cannot accept making money in such a dishonest way." She said that although she cannot stop others from doing so, in her stores, products that might harm infants' health will never appear. This is the bottom line her company adheres to. Because of this adherence, the company's stores have formed a good reputation locally due to guaranteed product quality, providing a good social environment for the company's development.
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