Your retail organization is about selling more product and retaining more customers. In order to stay competitive, you need to sell your team on the value of retail KPIs and metrics.
Sharpen your competitive edge with the right data.
Your retail organization is about selling more product and retaining more customers. In order to stay competitive, you need to know everything you can about your business, your customers and your competition. Use these retail KPIs and metrics to keep your performance in perspective at all times.
The Customer Retention KPI measures the ability of your organization to retain customers over the long term and to generate recurring revenue from existing customers. It’s hard to overstate the value of customer retention for any organization, as research shows that a modest 5% increase in customer retention can increase profits anywhere from 25% to 95% (source: The Economics of E-Loyalty). In addition to that fact, generating revenue from loyal customers is considerably less expensive than acquiring new customers.
Customer Satisfaction metrics measure the quality of your customer service and provide a reflection of the public’s perception of your business. It’s important to remember that, on average, happy customers will share their experience with 2-3 people, while unhappy customers will share their experience with 8-10 people (source: How Customer Service Works). Collecting this data can be done by distributing forms at the point of purchase or by using your call center to conduct a formal survey.
The Point of Purchase or Point of Sale KPI measures where retail transactions are completed and compares each “point” over a given period. Retail organizations can measure this at a “macro” or “micro” level. For instance, comparing online vs in-store purchases is at the “macro” level, while “micro” level transactions may be specific checkout lanes in a store, or a URL for an online retailer. This KPI is about figuring out where customers are making purchases, identifying trends and investing resources where they’ll have the most impact.
The Cost of Goods Sold KPI measures the actual profit margin on products and services by analyzing how costs such as labour or shipping affect your profit margin. This KPI is instrumental in determining the markup percentage for products and can be a key component in a pricing war with your competition. It’s important to remember that even if product is flying off the shelves, you still need to make profit on all that product.
The Incremental Sales KPI measures the amount of sales you’ve gained as a direct result of marketing and promotional activities. Every retailer uses promotions to generate interest and increase sales revenue, whether that’s through social channels, direct mail or advertisements. By measuring the success and reach of each campaign, you can determine which campaigns need tweaking and which ones you should invest more time and money on.
The Average Purchase Value KPI measures the average value of each purchase made by your customers and will often compare that to the average number of units per transaction. This KPI may vary greatly depending on the type of products and services you are selling.
Sales per Square Foot Measure how much sales revenue you are able to generate for each foot of retail space provided. The Sales per Square Foot KPI measures how much sales revenue you are able to generate for each foot of retail space provided. Use the following formula when calculating the sales per square foot KPI: Total Net Sales ÷ Total Floor Area This a popular retail sales KPI because it clearly demonstrates how effective your store layout and retail personnel are at selling product.