How to measure the performance of your business?
Measuring the turnover of your store is essential to have a clear vision of how business is going. Very often, however, the mistake of many retailers is to consider only these financial metrics exclusively as performance indicators. These data, such as the total sales or the number of receipts issued (no doubt fundamental), show us only a part of the story, that connected with the final turnover. However, they do not provide us with suggestions to improve, for example, our customers’ buying experience, how to increase sales of a particular product, or whether our promotion campaign worked.
If, for example, we notice a sudden increase in turnover … what will it be? Will it have been the merit of the staff? Will the windows have been? Would you like my product?
To answer these questions, you need to analyze a variety of KPIs, or Key Performance Indicators, to get an idea of the 360 ° store results.
The attractiveness ratio represents the value of the tickets in store, divided by the external traffic. This represents the proportion of customers who are attracted to our point of sale, and therefore it is a direct indicator of the effectiveness of shop windows and promotions.
If the attractiveness ratio represents the proportion of customers entering the store, the conversion ratio in the retail sector represents the number of tickets depending on the consumers that have entered the store. This KPI allows detecting the commercial efficiency and represents a pertinent indication to compare different points of sale and the evolution during a certain period.
The location of the commercial premises is a very important factor for the success of a trade, since in the physical retail the potential clients are those that pass in front of the establishment. The Cost per Potential Client (CCP) is not a ratio itself, but the marginal cost that we pay for each potential customer that passes in front of our shop windows. This indicator allows comparing the cost per m² of different places based on pedestrian traffic, and therefore not assessing a location based on its gross cost, if not the potential of the establishment to attract customers. The CCP is a very useful indicator for the expansion directors, responsible for finding a location for new commercial establishments.
All these indicators allow you to better understand the behavior of your customers and optimize the decision making to improve the results, design the best organization of your staff and know the immediate response of your campaigns and launches at each point of sale.
From TC Group Solutions we provide the necessary tools to measure all these metrics.