Use the Moneyball curve to determine what effect your labour has on sales and margins.
“Moneyball,” the best-selling book and movie about the game of baseball revealed how data insights could determine which players contributed the most, rather than relying on hunches. This breakthrough way of looking at labour, also known as Sabermetrics has been shown to have implications in retail, too.
Many retailers use Sales Per Labour Hour (SPLH) to measure productivity. However, analysis shows this interpretation to be lacking and even misleading. It does not take into account employees’ ability to generate revenue, repeat business and ultimately increase margin.
Retailers cannot clearly see how labour impacts revenue and margin.
- Current incentives drive the wrong behaviors.
- SPLH is not the metric it is thought to be.
- Misunderstanding labour can lead to systemically depressed sales and margins.
Using a statistical lens, retailers can isolate the impact that labour has on sales, while controlling other factors. The Moneyball curve shows how increases and decreases in labour drive ups and downs in sales, allowing retailers to get closer to their potential sweet spot.
Download this white paper to learn how Moneyball principles may be able to help you reach your sales goals.