The document is a presentation from George Hines of George's Music, Inc. discussing the use of key performance indicators (KPIs) to drive growth and profits through defined company culture. It provides examples of KPIs that could be tracked for sales, operations, customer service, and finance to establish accountability, action plans, and measure progress. Specific metrics include people per day, sales per transaction, inventory levels, customer satisfaction scores, and profitability ratios. Data from January 2012 shows most metrics either met or exceeded initial goals.

1. NAMM Presentation
KPI
(Key Performance Indicators)
Drive Growth

2. Drive Growth and Profits with
a Defined Company Culture
George Hines
George’s Music, Inc.

3. Interior Photo

4. Interior Photo

5. Interior Photos

6. Research
Owners – Sales - Administrative

7. Universal Laws:
“Law of Expectation”
You get what you expect

8. Which do you prefer?
$1,000
$10,000
$100,000 +

9. New Economy
“Do More with Less”
Problems:
–Economic Recession
–High Unemployment
–Increased Costs
–More Competition
–Consumer Demands
–Profit Pressures from Internet
–Others?

10. Solution
GET CLARITY – KNOW WHAT YOU WANT
Use KPI To Create
1. Accountability
2. Establish Action Plans
3. Measure Progress

11. KPI – To Drive Sales
SALES: - Set Specific Goals for:
1. PPD – People per day
2. TPD – Trans. per day
3. Conversion % PPD/TPD
4. Items per Sale
5. Avg $ per transaction
6. Gross Sales
7. Gross Margin %

12. KPI – To Drive Sales
Total Days in the Month 31 Todays Date 31
Sales Manager KPI Report
January 2012 Performance Dashboard
SALES Goal
PPD (People Per Day) 9,300
TPD (Transactions Per Day) 3,720
Conv % (PPD/TPD) 40.0%
Items Per Sale 3.2
AVG $ per Trans $ 55.00
Gross Sales $ 204,600
Gross Margin % 42.1%

13. KPI - To Drive Sales
Total Days in the Month 31 Todays Date 31
Sales Manager KPI Report
January 2012 Performance Dashboard
SALES Goal Actual
PPD (People Per Day) 9,300 9,138
TPD (Transactions Per Day) 3,720 3,780
Conv % (PPD/TPD) 40.0% 41.4%
Items Per Sale 3.2 3.3
AVG $ per Trans $ 55.00 $ 56.25
Gross Sales $ 204,600 $ 212,625
Gross Margin % 42.1% 42.3%

14. KPI – To Drive Sales
Total Days in the Month 31 Todays Date 31
Sales Manager KPI Report
January 2012 Performance Dashboard
SALES Goal Actual Forecast
PPD (People Per Day) 9,300 9,138 9,138
TPD (Transactions Per Day) 3,720 3,780 3,780
Conv % (PPD/TPD) 40.0% 41.4% 41.4%
Items Per Sale 3.2 3.3 3.3
AVG $ per Trans $ 55.00 $ 56.25 $ 56.25
Gross Sales $ 204,600 $ 212,625 $ 212,625
Gross Margin % 42.1% 42.3% 42.3%

15. KPI - Operations
OPERATIONS:
1. Inventory B.O H.
2. R.O.I. – Total Inventory
3. SQI score – Service Quality Indicator
4. COGS - Cost of Goods Sold
5. Sales per S.F. (10,000 s.f.)
6. Gross Sales
7. Gross Margin $

16. KPI - Operations
Total Days in the Month 31
Todays
Date 31
Operations Manager KPI Report
January 2012 Performance Dashboard
Operations Goal
Inventory BOH 400,000
R.O.I Total Inventory 2.40
SQI Score 92%
C.O.G. Sold $ 120,000
Sales per s.f. (10,000s.f) $ 20.00
Gross Sales $ 200,000
Gross Margin $ $ 80,000

17. KPI - Operations
Total Days in the Month 31
Todays
Date 31
Operations Manager KPI Report
January 2012 Performance Dashboard
Operations Goal Actual
Inventory BOH 400,000 398,000
R.O.I Total Inventory 2.40 2.71
SQI Score 92% 93%
C.O.G. Sold $ 120,000 $ 122,684
Sales per s.f. (10,000s.f) $ 20.00 $ 21.26
Gross Sales $ 200,000 $ 212,604
Gross Margin $ $ 80,000 $ 89,920

18. KPI - Operations
Total Days in the Month 31 Todays Date 31
Operations Manager KPI Report
January 2012 Performance Dashboard
Operations Goal Actual Forecast
Inventory BOH 400,000 398,000 398,000
R.O.I Total Inventory 2.40 2.71 2.71
SQI Score 92% 93% 93%
C.O.G. Sold $ 120,000 $ 122,684 $ 122,684
Sales per s.f. (10,000s.f) $ 20.00 $ 21.26 $ 21.26
Gross Sales $ 200,000 $ 212,604 $ 212,604
Gross Margin $ $ 80,000 $ 89,920 $ 89,920

19. KPI – Customer Service
CUSTOMER SERVICE
1. Mystery shop scores – min 85%
2. Mystery phone shops – min 90%
3. Customer on line reviews – min 4 stars
4. Vip Contacts
5. Events in stores – goal attendence
6. Staff Training Sessions

20. KPI – Customer Service
Total Days in the Month 31
Todays
Date 31
Customer Service KPI
January 2012 Performance Dashboard
Customer Service Goal
Mystery Shop 92%
Phone Shop 92%
On Line Reviews 15
VIP Contacts 400
In Store Events 4
Training Session 8

21. KPI – Customer Service
Total Days in the Month 31
Todays
Date 31
Customer Service KPI
January 2012 Performance Dashboard
Customer Service Goal Actual
Mystery Shop 92% 94%
Phone Shop 92% 96%
On Line Reviews 15 18
VIP Contacts 400 422
In Store Events 4 5
Training Session 8 9

22. KPI – Customer Service
Total Days in the Month 31
Todays
Date 31
Customer Service KPI
January 2012 Performance Dashboard
Customer Service Goal Actual Forecast
Mystery Shop 92% 94% 94%
Phone Shop 92% 96% 96%
On Line Reviews 15 18 18
VIP Contacts 400 422 422
In Store Events 4 5 5
Training Session 8 9 9

23. KPI – Finance Department
Control Cash and
Maintain Profitability

24. Retail Owners Institute

25. KPI - Finance
• Finance:
1. Inventory Turnover
2. Gross Margin % or $
3. Profit or Net Income Before Tax % or $
4. Current Ratio – Assets to Liabilities
5. ROA - Return on Assets
6. GMROI
7. Operation costs as % of sales
8. “Other” income in $

26. Turnover

27. KPI - Finance

28. Net Income – Pre Tax

29. Debt To Worth

30. Current Ratio Trends

31. Return on Assets %

32. KPI - GMROI

33. Small Goods Performance
sm goods
sales Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Total
2009 313357 284671 292537 283699 269951 275187 289602 292138 267815 279016 276186 528172 3652330
2010 306271 292278 301089 276737 267481 266719 284599 288316 268924 267057 287292 534846 3641609
2011 305649 298554 302001 275049 265630 263770 294554 288541 257555 272885 292545 568745 3685478
2012 308554 302105
GM$ Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Total
2009 166636 150768 155964 149836 140752 142973 150474 151255 139545 141554 142892 271411 1904060
2010 166524 153551 157898 144220 138900 138504 147399 149873 141258 141166 149144 281184 1909621
2011 167854 154512 158741 143866 137859 137666 142439 152441 145112 142544 151445 284110 1918589
2012 169852 155245
COG Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Total
2009 146721 133902 136573 134762 129199 132214 139128 140882 128269 132471 133294 253069 1740484
2010 145887 138726 135441 132517 123541 128215 137200 138443 124221 125891 134221 253661 1717964
2011 144567 129630 134553 131183 127771 126105 131616 125973 122986 124168 133641 252642 1684835
2012 141254 138524
GM% Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Total
2009 53.18% 52.96% 53.31% 52.50% 52.14% 51.95% 51.96% 51.78% 52.11% 52.52% 51.74% 52.09% 52.35%
2010 52.37% 52.54% 55.02% 52.11% 53.81% 51.93% 51.79% 51.98% 53.81% 52.86% 53.28% 52.57%
2011 52.70% 56.58% 55.45% 52.31% 51.90% 52.19% 55.32% 56.34% 52.25% 54.50% 54.32% 55.58%
2012 54.22% 54.15%
BOH $ Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Total
2009 935414 935063 1007319 1013011 1013326 1022475 981980 1007427 1024257 1063772 1116278 1082367 12202688
2010 1024014 987380 1013304 1051535 1063541 1058996 1059922 1045619 1053361 1112593 1213175 1169621 12853061
2011 1145520 1125305 1115034 1090082 1096755 1117742 1070355 1092874 1058173 1035977 1080399 1061810 13090026
2012 1022698 1032532

34. Quarterly Vendor Budgeting
vendor alloc
new qtr
JBL 16000
TAYLOR 50000
SABIAN (AIMM) 10000
ZILDJIAN 8000
FENDER 115000
KORG (AIMM) 15000
VOX (AIMM) 10000
ROLAND 75000
PEAVEY 24000
PEARL (AIMM) 14000
LINE 6 rebate 15000
HOSHINO (AIMM) 160000
AT (AIMM) 32000
DIGITECH 15000
SHURE 36000
CASIO 12000
YAMAHA (AIMM) 120000
$misc 40000
allocation
totals: 767000

35. Monthly Vendor Budget
vendor alloc alloc act diff
new qtr Month 1 Month 1 Month 1
JBL 16000 4800 4200 (600)
TAYLOR 50000 15000 16540 1540
SABIAN (AIMM) 10000 3000 3020 20
ZILDJIAN 8000 2400 2200 (200)
FENDER 115000 34500 29552 (4948)
KORG (AIMM) 15000 4500 5020 520
VOX (AIMM) 10000 3000 3480 480
ROLAND 75000 22500 24500 2000
PEAVEY 24000 7200 6800 (400)
PEARL (AIMM) 14000 4200 4400 200
LINE 6 rebate 15000 4500 3875 (625)
HOSHINO (AIMM) 160000 48000 52500 4500
AT (AIMM) 32000 9600 9745 145
DIGITECH 15000 4500 3850 (650)
SHURE 36000 10800 9650 (1150)
CASIO 12000 3600 3750 150
YAMAHA (AIMM) 120000 36000 38700 2700
$misc 40000 12000 6928 (5072)
allocationalloc. actual diff
totals: 767000 230100 228710 (1390)

36. Monthly Vendor Budget
vendor alloc alloc act diff
new qtr Month 1 Month 1 Month 1
JBL 16000 4800 4200 (600)
TAYLOR 50000 15000 16540 1540
SABIAN (AIMM) 10000 3000 3020 20
ZILDJIAN 8000 2400 2200 (200)
FENDER 115000 34500 29552 (4948)
KORG (AIMM) 15000 4500 5020 520
VOX (AIMM) 10000 3000 3480 480
ROLAND 75000 22500 24500 2000
PEAVEY 24000 7200 6800 (400)
PEARL (AIMM) 14000 4200 4400 200
LINE 6 rebate 15000 4500 3875 (625)
HOSHINO (AIMM) 160000 48000 52500 4500
AT (AIMM) 32000 9600 9745 145
DIGITECH 15000 4500 3850 (650)
SHURE 36000 10800 9650 (1150)
CASIO 12000 3600 3750 150
YAMAHA (AIMM) 120000 36000 38700 2700
$misc 40000 12000 6928 (5072)
allocationalloc. actual diff
totals: 767000 230100 228710 (1390)

37. Quarterly Breakdown
vendor alloc alloc act diff alloc. act diff alloc. act diff
new qtr Month 1 Month 1 Month 1 Month 2 Month 2 Month 2 Month 3 Month 3 Month 3
over/und
er
JBL 16000 4800 4200 (600) 4800 4154 (646) 6400 6450 50 (1196)
TAYLOR 50000 15000 16540 1540 15000 15840 840 20000 21200 1200 3580
SABIAN (AIMM) 10000 3000 3020 20 3000 3050 50 4000 4125 125 195
ZILDJIAN 8000 2400 2200 (200) 2400 2325 (75) 3200 3457 257 (18)
FENDER 115000 34500 29552 (4948) 34500 31200 (3300) 46000 41500 (4500) (12748)
KORG (AIMM) 15000 4500 5020 520 4500 4400 (100) 6000 5925 (75) 345
VOX (AIMM) 10000 3000 3480 480 3000 2950 (50) 4000 3650 (350) 80
ROLAND 75000 22500 24500 2000 22500 21250 (1250) 30000 30150 150 900
PEAVEY 24000 7200 6800 (400) 7200 7450 250 9600 8900 (700) (850)
PEARL (AIMM) 14000 4200 4400 200 4200 4100 (100) 5600 5600 0 100
LINE 6 rebate 15000 4500 3875 (625) 4500 4250 (250) 6000 5250 (750) (1625)
HOSHINO (AIMM) 160000 48000 52500 4500 48000 50100 2100 64000 64250 250 6850
AT (AIMM) 32000 9600 9745 145 9600 9450 (150) 12800 12875 75 70
DIGITECH 15000 4500 3850 (650) 4500 4650 150 6000 4650 (1350) (1850)
SHURE 36000 10800 9650 (1150) 10800 10200 (600) 14400 11750 (2650) (4400)
CASIO 12000 3600 3750 150 3600 3450 (150) 4800 3450 (1350) (1350)
YAMAHA (AIMM) 120000 36000 38700 2700 36000 39500 3500 48000 49500 1500 7700
$misc 40000 12000 6928 (5072) 12000 10225 (1775) 16000 15774 (226) (7073)
0
allocationalloc. actual diff alloc. actual diff alloc. actual diff
Quarter
total
totals: 767000 230100 228710 (1390) 230100 228544 (1556) 306800 298456 (8344) (11290)
755710
-11290

38. “If It’s Written It’s Real”
Use “KPI” to Drive Growth:
• Create Accountability
• Establish Goals & Actions
• Measure Progress

39. Thank You!
a Defined Company Culture
George Hines - President George’s Music, Inc.
ghines@georgesmusic.com

40. Streams of Income
Increase Profits

41. Streams of Income
Fast Pay Discounts
a) Current Programs –
b) Future Programs
c) Credit Card Opportunities
d) One Time Events

42. Streams of Income
Co-op Programs
Strategy –
• Catalog or Buyers Guide
• Online Sponsorship
• Events
• Promotions

43. Streams of Income
Rebate Programs
• Current Programs
• Future Programs
- Annual
- Quarterly

44. Streams of Income
Registration and
Processing Fees
a) Lesson Registration
b) Repair Paperwork Fee
c) Band Instrument
Processing Fee

45. Streams of Income
Warranty & Extended
Service Agreements
• Replacement Plans -
Internal vs. External
• Band Instrument or Rental
• Threshold Discussion

46. Streams of Income
Freight Negotiations
• Vendor Related
• UPS – FedEX
• Music Freight

47. Streams of Income
In-Store Paid Events
• ‘Home Grown’ Events
• Guitar Repair
• Uke Classes
• Home Recording

48. Streams of Income
Others
a) Lease Negotiations
b) Upgrade Items
c) Bin Items
d) Investment Income
e) Assorted Discounts –
Printing, Check Guarantee, Office Supplies, CC, Airline

49. KPI – Other Income
Track Results

50. Thank You!
a Defined Company Culture
George Hines - President George’s Music, Inc.
ghines@georgesmusic.com