Which are the key indicators to measure the real performance of your stores?
The increase in the number of operators in the retail sector is forcing brands to know more and more about the behavior and buying habits of their customers. Analyse point-of-sale data, help define and target products, offers and promotions in the store to increase sales and revenue.
But how can one increase the profitability? Which are the levers that must be activated to boost our turnover? What is the right strategy to put in place? And most importantly, what are the performance indicators that will make it possible to verify the effectiveness of the actions put in place?
In this article we will talk about two performance indicators that every retailer must analyse: the attraction and the conversion rate.
The attraction rate as a key indicator
The attraction rate is the percentage of potential customers who have returned to our point of sale (comparable to the clickthrough rate in digital commerce). A street may have traffic flow due to a variety of reasons, but it is the buying interest of pedestrians that is of interest to a store manager.
The attraction rate makes it possible to measure this: a street with an average of 10,000 pedestrians per day with an attraction rate of 8%, will have 800 potential customers, while a street with 7,000 pedestrians per day and an attraction rate of 12%, will have 840 potential customers. In addition, this information can be used to detect which window displays or campaigns are most effective between different stores.
The conversion rate in the retail sector
Once the potential customer is inside the store, what really matters is “converting” it into a real customer. This is where the famous conversion rate comes in: the percentage of visits that have returned to a point of sale to make at least one purchase. By performing the opposite operation, we find the number of customers who have returned to the store and have not made purchases, a very relevant data, that the total value of receipts does not give.
These two performance indicators have become the main tool of many staff compensation systems. It is not always the shops that make the most sales that necessarily correspond to those who convert the best. This helps to evaluate the staff at the point of sale. If we measure our stores only by analysing their sales, we can draw wrong conclusions.