5 key retail metrics and how to optimize them
In retail, metrics play a key role in defining the performance of our points of sale and determining the success or failure of our business. With the data provided bt KPIs, we can take informed decisions to optimize business processes and operations.
In this post we will show you 5 key metrics to take into account in your retail company, as well as actions to optimize them and boost the growth of your company in the long term.
1. Conversion Rate
Conversion rate is an essential metric in any business, measuring the percentage of visitors to a store, whether physical or online, who make a purchase. The key to optimizing this metric is to understand and improve the customer experience so that more visits and end it in a purchase.
Some of the things you can do to improve your conversion rate include:
- Improve the navigation and usability of your online sotre if it is an e-commerce or change the layaout of the store and improve the customer experience in a physical store.
- Provide clear and attractive product descriptions.
- Implement marketing strategies that are personalized and targeted to prospects. The more data we have about our current and potential customers, the better we can target our commercial communications to them.
- Provide excellent customer service and quickly solve any problem and doubt, we must take care of both, the purchase process and post-purchase, to build customer loyalty and repeat buying products in our business.
2. Average Order Value
Average Order Value (AOV), is the average amount spent by each customer in our store. This metric focuses on sales. Improving this metric increases the value of each purchase. But, how do we improve it?
Some actions you can take to improve the value of the average ticket are:
- Promote complementary products or suggest related items during the sales process to increase the average basket value.
- Offer incentives such as volumen discounts, free shipping or loyalty programs.
- Implement cross-selling in the physical stores as well as on the website.
- Run special promotions, such as limited-time offers or discounted packages, to create a sense of urgency and increase the quantity of products purchased and the amount of the transaction.
3. Inventory turnover
Inventory turnover measures how often companies sell and replace their inventory. Stangnant inventory can have a negative impact on our company’s profitability and liquidity.
Some ways to improve the value of this metrics are:
- Perform demand analysis to predict and adjust inventory levels based on our customers’ purchasing and the seasonality of the products we sell.
- Implement and efficient inventory management system to avoid overstocking or out-of-stock.
- Establish alliances with reliable suppliers and maintain fluid communication to avoid delays in the delivery of products.
4. Return Rate
The return rate is the percentage of products that are returned by customers. A high return rate can indicate problems with product quality, accuracy of description, or customers experience.
How is it possible to optimize this key performance indicator?
- Providing detailed and accurate descriptions of our products to avoid negative surprises for buyers.
- Improving the quality of our products and carrying out exhaustive test before launching them on the market, both in terms of quality and consumer acceptance of the product.
- Offering a clear and easy to understand return policy for every buyer.
- Collecting customer feedback about the reasons for returns and use this information to improve our products and services.
- Training of customers services staff to quickly resolve any problem that may appear and to provide satisfactory solutions.
5. Amount of new and loyal customers
To know how many of our customers are new and how many are repeat customers is key in the retail industry.
Some strategies to optimize theses metrics that we suggest to improve theses metrics are:
- Implement effective digital marketing strategies such as: SEO, social media advertising, and direct mail campaigns to attract new customers.
- Create loyalty and rewards programs to encourage customers to return to our store and make recurring purchases.
- Deliver excellent customer service and build long-term customer relationships through effective, personalized communications.
- Conduct surveys and collect feedback from customers to understand their needs and expectations, and use this information to continually improve the customer experience.
By implementing effective strategies such as improving the customer experience, offering strategic promotions and discounts, and using customers feedback, retailers can optimize the metrics mentioned in this post to achieve sustainable growth in this competitive industry.
Every business in unique, so it’s important to tailor these strategies and metrics to your company’s specific needs and goals. Staying on top of market trends and leveraging technology tools can also help further optimize retail performance and success.
Thanks to the perfect combination of Retail Pro and Icape, you will be able to know everything that happens in your stores and how your customers behave. Get the best tools to measure all your business KPIs.
For more information about this or any of our solutions, contact us and our team of consultants will help you to take your point of sale to the next level.
