How to Improve Retail KPIs
May 22, 2022
A key performance indicator (KPIs) is a performance measurement that aims to evaluate the success of a particular organization, team or individual. For example, retail KPIs may include average transaction value, sales per square meter, or year-over-year sales.
If you want to have a successful retail business, it’s important to understand how to improve your KPIs.
- Measure sales per employee
One important data point that you should be paying attention to is your sales per employee. Measuring your sales per employee will allow you to make better decisions in terms of hiring new sales associates and developing your roster.
If you want to get really specific, there are even point of sale (POS) systems that allow you to track each individual employee’s sales. This lets you know who should be put in leadership positions and perhaps who should be compensated more.
To improve sales per employee, you should develop a comprehensive sales training program for new team members. Having the latest POS system and customer relationship management (CRM) software can also help your staff improve their KPIs. It’s also important to set clear and specific sales goals so that your employees have direction.
- Pay attention to sales per square meter
If you have a brick-and-mortar store, you should also be paying attention to how well you’re using your space. Sales per square meter will show you how efficient your store layout is and if you’re using every bit of floor space effectively. This KPI is important as good retail space isn’t cheap.
Through the use of merchandise display units and strategic store layouts, you should be able to improve your sales per square meter significantly. It also helps to know a little about consumer psychology and behaviors. This helps you understand what appeals to your target demographic. This will help increase visitors and therefore improve your other KPIs.
- Track conversion
Once your visitor count starts to increase, it’s time to look at your conversion rate. This is the number of sales that you get for every customer that comes into your store. Your conversion rate is important as it will show you how effective your store is in terms of closing sales.
Some stores might find that, despite a high visitor count, they’re not making a lot of sales. A lot of factors can go into this, but the most common reasons are insufficient information about the products, poor customer service and not following up on potential leads.
With this in mind, you can improve your conversion rate by building trust and relationships with your customers, listening to their feedback and effectively communicating the purpose of your products. In this case, extensive customer service and sales training is a necessity.
- Optimize your marketing budget
As a budding business, you’re probably trying out all kinds of marketing ideas to see what sticks. While this can be beneficial at the beginning, after a while, you’re going to have to cut down on your spending.
One way to do this is to analyze the returns on your marketing investments. Are those new display stands improving your sales per square meter? Do social media ads work for your target demographic? All of these things need to be considered if you want to increase KPIs and grow your business.
Unfortunately, there is no fool-proof strategy for all businesses. Each company has its own unique set of problems. So, make sure you’re paying attention to the data points we’ve discussed above and invest in the strategies that work for you.
For example, if you’re seeing businesses succeeding with their large brick and mortar store, you shouldn’t necessarily follow their lead. You might be better off building an online presence instead.
Hopefully, this gave you a little bit of an insight on how to improve KPIs. As you can tell, there’s more to KPIs than just having the best products in the market. You need to know how to work with your employees, how to layout your store and how to connect with your target market.