MMS (17-19)

Welingkar Institute Of Management

 INTRODUCTION

 KPIs are the most important metrics in your

business.
 They help you answer difficult questions so you can
measure the health of your retail store and
determine the steps you need to take.
 Incremental Sales

 The Incremental Sales KPI measures the amount of sales

you've gained as a direct result of marketing and promotional
activities. Every retailer uses promotions to generate interest
and increase sales revenue, whether that's through social
channels, direct mail or advertisements. By measuring the
success and reach of each campaign, you can determine
which campaigns need tweaking and which ones you should
invest more time and money on.
Store Traffic
 One of the simplest KPIs to measure is also one of
the most important: the number of potential
customers coming through the doors of your retail
store. Without store traffic, people physically walking
into your store, your retail business can’t survive.
 Looking at store traffic figures year-over-year,
comparing one month to the same month the
previous year, can give you a quick indication of
whether your business is growing.
Shopper Value
Shopper value= (total sales/ total shopper traffic)

 Do you remember a movie or a cartoon where a

character would look around and see a dollar sign
instead of people? Well, this is the way you can do it
in real life. Find out how much a visitor is worth when
they enter your store. Pair this number with
conversion rate (CVR) and forecast how much your
business can grow if you increase the CVR 0.5%,
1% or 10%.
Average Shopper dwell time
Average shopper dwell time= (total minutes in store
for all shoppers/ total shopper traffic)

 Using location analytics store managers can analyze

how long shoppers tend to stay in the store on
average. A high dwell time and low conversion rate
may indicate that staff is unable to close the sale
either or popular items are out of stock. Pairing dwell
time with other metrics can yield interesting analysis
that helps retailers make informed business
decisions that will grow revenue.
Conversion rate
Conversion rate (percentage)= (total
transactions/total shopper traffic) *100

 This data is simple to collect with a door counter and

the sales information from your Point-of-Sale (POS)
system.
 Analyzing conversion rate trends can be used to
optimize staffing and test promotional offers. You can
even see how well your sales associates perform
across multiple locations.
Sales per square foot

 Sales per Square Foot = Total Net Sales ÷ Total

Floor Area
 This KPI is important when redesigning or
modernizing retail outlets
Shopper to staff ratio
Shoppers to staff ratio= (total shoppers in time
period/ number of staff members on sales floor in time
period)

 Staff optimization metrics can help your store

managers create schedules using hard data. No
more guessing. No more estimating. Pair this data
with conversion rate and you’ll be able to see right
away when the store is understaffed and your sales
associates cannot handle the volume of shoppers.
Customer Satisfaction

 Customer Satisfaction metrics measure the quality of your

customer service and provide 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.Collecting this data can be done by
distributing forms at the point of purchase or by using your call
center to conduct a formal survey
Customer Retention

 The Customer Retention KPI measures the ability of your

organization to retain customers over the long term and to generate
recurring revenue from existing customers. It's hard to overstate the
value of customer retention for any organization, as research shows
that a modest 5% increase in customer retention can increase profits
anywhere from 25% to 95%
 In addition to that fact, generating revenue from loyal customers is
considerably less expensive than acquiring new customers.
Profit Margin
Profit Margin = Gross Profit / Total Revenue x 100

 Profit margin is your main measure of profitability.

 Profit margin can indicate how much money is actually going

into your pocket. You could be making additional sales, but if
it’s costing you more than what you’re earning from those
sales, then you’re not really making money. Your profit margin
can help you see if you need to lower costs or increase
efficiency in your business. To widen your margins, for
example, you can find ways to cut the costs to make your
products. Or, you can perhaps tweak your prices.
Conclusion
 Using the right data for your retail store will help you
generate more revenue and grow the business.
 Analyzing the right mix of sales and shopper-based
retail store metrics will help develop a systematic
approach to key decisions, improve forecasting, and
help you design a plan for growth and expansion.