If you want to achieve success in your business, measuring and improving its performance is key. For this reason, KPIs (Key Performance Indicators), are somo important. In this post we will talk about which KPIs you should consider to optimize the performance of your points of sale and how to use them.
What are retail KPIs?
Retail KPIs are key metrics that allow you to evaluate the performance and progress of your business in terms of sales and profitability. Indicators can vary according to the type of retail and the specific goals of each business.
THE MOST COMMON KPIs
Measures the percentage of visitors (online or in person) who make a purchase during their visit to our point of sale. A high conversion rate indicates greater efficiency in converting visitors into customers.
Average Order Value
This variable indicates the average value of the purchases made by each of our customers. Increasing the average ticket can significantly increase a company’s overall revenue.
It’s important to evaluate how quickly products are sold and replaced in inventory. Efficient stock turns ensure optimal stock management and minimize the risk of products obsolescence. One tool in this management is the “open-to-buy” calculation, which indicates the quantity of goods that must be purchased to meet customer demands.
The return rate, as the name implies, measures the percentage of products that are returned by our customers. If our company has a high return rate, it may indicate quality problems and customers dissatisfaction. In addition, we may be incurring cost overruns due to these returns.
The profit is the result of the brand revenue after cost reduction. It’s important to maintain a healthy profit margin to achieve a business sustainability and growth over time.
Shopping cart abandonment rate
The shopping cart abandonment rate tells us the percentage of e-commerce customers who add products to their shopping carts and then do not complete the purchase. If we can reduce this rate, we can increase the conversion rate and, as result, increase sales.
How to use KPIs to retail success
Once we have identified which KPIs are most relevant in a retail business, the next step is to follow some steeps to use them effectively.
1. COLLECT AND ANALYZE DATA
The first phase of any process is data collection and analysis. For this task, you can use analytical tools to collect accurate and updated data. This data will help you understand the current state of your business and to identify areas of improvement.
2. SET CLEAR GOALS
Once we know our baseline, the next step is to define specific and measurable goals that we want to achieve based on the measured KPIs. These goals must be realistic and consistent with the overall business strategy.
3. FOLLOW UP
Monitor your KPIs continuously to evaluate progress and make informed decisions in real time. This continuous assessment allows you to make quick adjustments and needed.
4. IMPLEMENT IMPROVEMENTS
With the insights are gained from the KPIs, we can see what improvements we need to make in different aspects of the business. These improvements can range from changes in the brand’s marketing strategies, such as inventory management at the point of sale, to changes in customer management. These changes are made depending on which metrics we want to improve.
5. TRAINING YOUR TEAM
Make sure your team understands KPIs, what they are, which ones are important to the business, and how their actions directly impact business performance. Your employees can be your best allies in finding better solutions for your point of sale.
6. EVALUATE AND ADJUST
Regularly review and assess the relevance of the KPIs you use to measure performance. KPIs can change over time, and it is important to keep up with market trends and needs.
Retail KPIs are a powerful tool to measuring and improving the performance of your retail business. By identifying and monitoring the righ KPIs, you can makr informed decisions that will help you increase sales, improve profitability and grow your business. Remember, the key is to collect accurate data, set clear goals, monitor frequently, and be prepared to make adjustment when necessary.
So don’t hesitate, use this guide to turn your KPIs into strategic allies and take your retail business to the next level. Rely on your POS and ERP systems and contact us
for advice on how to implement Retail Pro
in your store, franchise or international chain.