TO SHINE BRIGHTER than your competitors, it’s essential to keep an eye on key metrics — but not all of them are found in your Profit and Loss and Balance sheet. So, let’s dive into five metrics that can help you drive peak performance.
Sales Per Square Foot
This nifty metric tells you how effectively you’re using your retail space. Simply divide your total sales by the total square footage of your store. If you’re not hitting those high numbers, it might be time to rethink your layout or inventory. Are there areas that could use a little more love? Do you have your highest profit items in the busiest foot traffic areas? Maybe a new display for your best-sellers could do the trick!
Average Transaction Value (ATV)
This metric gives you insight into how much customers are spending each time they shop with you. To calculate it, divide your total revenue by the number of transactions. If your ATV is lower than you’d like, consider upselling complementary items or bundling products together.
Customer Conversion Rate
This metric shows how many people who walk into your store actually end up making a purchase. To find this number, divide the number of sales by the total number of visitors and multiply by one hundred. You will need a door counter to do this. If you notice a low conversion rate, it might be time to evaluate your sales tactics or store ambiance. Are your staff welcoming and knowledgeable? Is your store inviting? A friendly atmosphere can work wonders!
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Percentage of Fast Sellers
The 80/20 rule is alive and well in retail! A small percentage of your inventory will drive the vast majority of your sales — but you need to have this product in-store in order to achieve this. What percentage of your inventory is fast-selling items? If fast sellers aren’t at least 10% of your total inventory, you could be leaving money on the table.
Customer Retention Rate
This metric tells you how well you’re keeping your customers coming back for more. To find this figure, subtract the number of new customers from the total number of customers over a given period, divide by the total number of customers, and multiply by one hundred. Your CRM database will help you with this. High retention rates mean customers love what you offer, while low rates might suggest you need to enhance customer experience. What steps are you taking to re-engage your most loyal customers?
