Starting A Retail Business Retail Key Performance Indicators Kpi
Maximise Sales

Starting A Retail Business Retail Key Performance Indicators Kpi Maximise Sales



Starting a​ Retail Business – Retail Key Performance Indicators (KPI) Maximise Sales
Starting a​ retail business means you’re excited .​
Did you know – by adopting Best Practice Retail Sales Performance Standards you can immediately increase your sales and profit expectations by as​ much as​ 30%!
Why – because achieving sales objectives is​ more than just about what’s on​ your shelves and what your store looks like – it’s about having a​ customer focused mentality driven by key performance indicators (KPI) to​ inform staff at​ every level about the​ condition of​ the​ playing field.
Complicated? Not at​ all .​
Retail Sales Performance is​ just like Sports Coaching .​
How would sports coaches know how to​ focus their athletes without statistics? How would racing car managers know how to​ fine tune their engines and performance – it’s all about statistics .​
When last did you watch a​ game on​ TV without them? They tell us about trends,​ behaviors,​ opportunities to​ increase performance,​ and they forecast the​ short to​ medium term future – enabling us to​ understand why and where we​ are heading.
Statistical measurement of​ fundamental sales performance drivers for any retailer is​ a​ prime need .​
With all manner of​ spreadsheets,​ POS systems reports,​ Dashboards and Scorecards,​ we​ use Key Performance Indicators (KPI) to​ communicate the​ strategy of​ the​ shareholders to​ the​ individuals in​ the​ company and we​ employ feedback systems to​ report the​ results .​
It is​ common practice to​ compare what we​ have forecast with what has actually taken place – statistically – so we​ can make judgments,​ changes and plans.
It is​ important to​ recognise that the​ standard (senior level) business indicators such as​ profit margin and wage costs do not drive bottom line sales on​ the​ shop floor .​
You cannot walk up to​ a​ Salesperson and say we​ did 80% of​ budgeted sales – please increase your performance .​
That’s like the​ manager of​ a​ football team saying to​ a​ player we​ lost the​ past few games – you have to​ do better .​
To the​ salesperson or​ player the​ information is​ useless – they cannot see a​ clear reason for their ‘under performance’.
What sports coaches do is​ take the​ Team Manager’s expectations (of winning) and filter them down to​ each individual player on​ the​ team – so each player can win for them (and the​ team) .​
The coach measures performance of​ a​ few highly enlightening KPI’s that tells the​ players exactly in​ which areas to​ improve .​
In soccer it​ may be recording the​ number of​ times a​ player touched the​ ball,​ or​ number of​ attempts at​ goal .​
In baseball the​ coach could track number of​ players on​ 3rd base or​ number of​ strike outs etc.
It is​ common practice in​ retail to​ employ only five (5) KPI’s to​ track individual performance and deliver the​ on-target information for coaching purposes – more than five and the​ reporting system is​ too complex,​ confusing,​ and ambiguous .​
The five KPI’s for retailers are:
Sales per hour - a​ statistic tells us about the​ speed at​ which each individual salesperson is​ selling or​ attending to​ customers compared to​ everyone else on​ the​ shift.
Average Sale – the​ average selling price of​ each individual salesperson compared to​ everyone else on​ the​ shift – higher averages show a​ greater knowledge of​ product as​ the​ salesperson is​ able to​ sell higher ticket items .​
Low statistics reveal the​ salesperson lacks skill in​ either product knowledge or​ effective probing.
Items Per Sale – tells us about the​ ability of​ the​ salesperson to​ add-on to​ a​ sale.
Conversion Rate – tracks how many visitors to​ the​ store are turned into customers.
Wage to​ Sales Ratio – compares a​ salesperson’s hourly wages to​ hourly sales .​
This KPI identifies your clear performers and underperformers – and their value to​ you.
The most common reason retailers do not track the​ five vital KPI’s at​ a​ staff (team player) level,​ is​ their inability to​ easily and quickly,​ record and calculate data,​ to​ create meaningful reports .​
After all,​ one needs to​ track hours worked,​ set goals,​ track planned versus actual performance,​ and somehow level the​ playing field for all Salespeople .​
It can be a​ lot of​ work.
In a​ sports match the​ playing field is​ level at​ all times because everyone is​ simultaneously on​ the​ field .​
In a​ retail environment some salespeople will work during fast periods and others during slow periods of​ the​ day .​
a​ salesperson working during the​ lunch hours should be expected to​ sell more than a​ salesperson working early morning or​ late afternoon .​
So any realistic reporting system is​ going to​ have to​ weight individual sales targets – otherwise the​ data becomes ambiguous.
Critical to​ any Retail Sales Management Solution is​ the​ ability to​ determine the​ most deficient statistic of​ the​ five KPI’s because it​ is​ logically understood that improving the​ worst KPI first will have the​ greatest increase in​ sales and staff motivation.
Imagine if​ you had a​ really simple to​ use Staff Roster (time and attendance software) that automatically assigned individual,​ weighted,​ sales targets to​ each salesperson,​ based on​ when they were working – then integrated with your POS (point of​ sale) terminal to​ instantly calculate the​ five (5) key performance indicators,​ and figure out the​ most deficient KPI - on​ demand! What if​ that software went further by having integrated sales behavior coaching tips built right into the​ system?
Playing the​ retail sales game to​ win means knowing why you are losing and how to​ go about fixing problem behavior areas .​
It's easier to​ improve retail sales skills than it​ is​ to​ re-stock a​ new product or​ brand.
To win in​ retail,​ measure the​ five principal KPI’s using an​ affordable solution – and put Best Practice in​ place for your fast track to​ success.
Good luck with your brand new store!




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