General

Hidden losses

Sometimes it seems easy to track the impact of a change.

Take my local grocery store as an example. Some time ago, they suddenly started upselling at the meat counter every time I went. When I asked for a given cut of meat, they’d try to convince me why I needed a more expensive cut. When I asked for a pound, I’d get 20% extra.

Simple tactics. And if they were tracking, it would be easy to see the impact of these sales efforts by their butchers. Selling me a $14.99/lb cut instead of $9.99/lb increases revenue 50% without any extra effort. Boom. Easy money.

But they’d be missing something.

Sure, they made a couple of extra bucks on me once or twice, and I probably enjoyed the better quality or additional quantity of meat I got.

But eventually, I got sick of the upselling. I don’t get my meats at that store any more. And since I go somewhere else for meat, I now buy just about everything else at the other store as well.

Over the past 18 months, the original store has probably made an extra $10 or so on me thanks to upselling, but now they lose 10 times that from me every week because I take my business elsewhere.

That loss won’t show up on a spreadsheet. The butchers probably still have KPIs showing the great things they’re doing to bring in more money for the store.

Which is the danger of myopic KPIs.

They rarely tell the whole story.

-Brandon