Retail is one of the most competitive industries with a sharp focus on increasing sales and retaining customers. In order for a retail organisation to stay on top, they need to know everything about their business. As consumer behaviour changes, retail organisations are at an ever increasing demand to deliver an exceptional experience to both their in-store and online customers. But within the retail industry this doesn’t always happen. Former CEO of Home Depot had this to say:
“Retail is a pretty simple business, but what adds complexity is the size and scale. We couldn’t do it without technology.”- Bob Nardelli (Former CEO of Home Depot)
While there are hundreds of key performance indicators (KPIs) that retailers keep track of, the following KPIs stand out in terms of the competitive advantage they provide and help you to continue to deliver superior performance.
1.The Point of Purchase or Point of Sale KPI measures where transactions are completed and compares it over a given period providing firms with a holistic "macro" or "micro" level view. This KPI is about figuring out where customers are making purchases, identifying trends and investing resources where they'll have the most impact.
2. Customer Satisfaction KPI metrics measures the quality of your customer service and provides 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.
3.The Average Purchase Value KPI measures the value of each purchase made by a customer and will compare the average number of units per transaction. This KPI may vary greatly depending on the type of products and services you are selling, for example, if you have a high average purchase value but low units per transaction. It's also important to segment customers according to key demographics to better target sales & marketing efforts.
4.Average Customer Spend KPI involves calculating the average amount customers are spending during each purchase. An analysis of average customer spend can help retailers in segmenting their customers and plan their sales and marketing efforts
5. Stock Turnover Rate refers to the number of times the average inventory of a product is sold in a year. It is an indicator of how quickly you are able to sell your inventory. If a retailer’s inventory turnover ratio goes down from 10 to 6, it indicates that the inventory is not turning over as quickly as it had in the past. This also indicates that the retailer now has excess inventory.
It is important for all retailers to identify and track the top KPIs for their business and identify people within the organisations who are responsible for these KPIs. Whether this involves knowing what a customer is going to buy, helping with stock control, competitive advantage, stock wastage, customer approval rate or store rental, KPIs allow the retailer to predict and gain a better understanding of their current and future position.
ServiceClarity specialise in monitoring your data and turning it into actionable metrics and KPIs, driving a more data-centric strategy towards building your customer portfolio.
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