Here are five key performance indicators retailers should track to gain valuable insights in 2018:
1. Average spend per customer
Let’s say you’ve developed a new advertising campaign designed to draw customers into your shop or promote a specific product. This metric can help you determine the success of that effort. To calculate this KPI, simply divide the total number of sales from the day by the total number of transactions.
Tracked over time, this figure can serve as a tool to measure the success of each new marketing campaign. Likewise, this metric will show you the average shopper’s buying habits, so you can adjust promotions with greater confidence.
2. Number of transactions per day
If you’re not paying attention to the number of transactions your store processes every day, it’s difficult to determine when you’re entering a slow period. And if you can’t do that, you can’t determine when to change up your marketing tactics or rotate the products your store offers.
Owners who operate multiple units can use this KPI to compare stores and make merchandising adjustments as needed.
3. Gross margin
This is probably the most important metric of all. Calculated by subtracting the total cost of goods sold by the total sales revenue, then dividing that number by the total sales revenue, you’ll see your store’s profit margin. When that margin looks thin, it means it’s time for a change. Managers may need to alter processes, the layout of your store may need to shift or the problem may lie elsewhere. Used in conjunction with other metrics, this KPI can help you pinpoint operational inefficiencies.
4. Total conversion rate
To determine this metric, you need to divide the total number of transactions by the total shopper traffic for the day, and then multiply the result by 100. For example, if your store was visited by 90 shoppers who made 73 transactions, your total conversion rate would be 81.1 percent.
You’ll need a door counter to capture a completely accurate reading, but it’s worth the investment. This KPI gives you an accurate analysis of how shoppers respond when in your store. It answers an important question: “Are you convincing shoppers to make a purchase?”
5. Shopper traffic, year over year
It’s beneficial to track your store’s performance through the years. If your marketing campaigns are effective, and your customer service is satisfactory, you will build customer loyalty – and that means you should see more shoppers visiting your store every year.
To track this metric, you first need to define a time period to analyze. Let’s say you want to track shopper traffic in November, compared to the same month last year. Divide this November’s traffic by last November’s traffic, subtract 1 from that result and then multiply by 100 to get a percentage. For example, if 4,000 customers visited your store this November, and 3,400 visited last November, the change would be 17.64 percent.
These KPIs are important to monitor because they give you a reading of your shop’s overall health. Armed with solid analytics, you can make process changes, rearrange your store and update your marketing tactics.
If you need advice on how to better display your merchandise, call the retail design experts at Firefly Store Solutions today!