Simply explained retail KPI’s 

“KPI’s can truly help you to get insight of your business performance, “What gets measured, gets managed”

KPIs are also known as performance metrics, business indicators, and performance ratios. A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs to evaluate their success at reaching targets.
  
The Most common retail KPI’s are, or at least the ones your team should master and know how to leverage are :

  • CONVERSION RATE
  • AVERAGE BASKET
  • AVERAGE SELLING PRICE
  • UNITS PER TRANSACTION
  • SALES PER STAFF HOUR RATIO

Let’s look at each one in details a provide a simple explanation.

CONVERSION RATE

What is conversion rate? 

It is simply the percentage of visitors that get converted into spending customers. Simply transactions / traffic x 100 = CR %

How is conversion rate affected?

With Customer Service truly at 360 degrees, store presentation standards, communications amongst the team and with customers, replenishment of the sales floor, the perfect and proved formula would be,asking during the trading day is the store is Full, Priced,Tidy and Providing a premium shopping experience.

AVERAGE BASKET

What is the Average Basket?
It is simply the average value of each transaction that take place into your business. It is calculated dividing the total sales by the transaction made Total revenues / transactions = ATV in value. 

What does affect ATV (average transaction value) ?

Once again Customer service, staff knowledge of products sold , ability to sell complementary items, and to propose alternatives (also known as cross and up selling) Selling items with higher individual price or sell more units per transactions.

AVERAGE SELLING PRICE

What is AGV (average good value, in fashion retail the G usually stands for garment)?
It is the average price of each unit sold in your business. It is calculated dividing total revenues by the units sold. Total revenues/ units sold = AGV in value. Sometimes this KPI is also called ASP ( average selling price)

How is AGV affected ? 

By excellent (or poor) Customer service, staff knowledge of products being sold, ability to shift consumer to highly priced alternatives and propose always full priced merchandise vs. discounted one. 

UNITS PER TRANSACTION

What is UPT?
It is the average units sold per each transactions in your business. It is calculated by dividing total units sold by the total transactions that were made. Total units / total transactions = UPT 

What does affect UPT? 

The ability to sell the complete package at all time is definitely the main driver of this KPI, and of course Customer service, staff knowledge about products being sold, ability of complementing each item sold with another.

SALES PER STAFF HOUR RATIO (SPH)

What is SPH?
It is the average of how much of each hour invested is translating into sales. Total sales generated / hours worked expressed in monetary value. Workforce productivity is improved trough accurate staff planning evaluating KPI’s, business trends and workforce training,motivation and development.  

Download the simple PDF at the link below

Up-Biz® 2016 – all rights reserved 

Published by Raffaele Felaco

I am an enthusiastic leader with strong background in direct and indirect sales with an exten- sive experience in both retail and wholesale business. I have been fortunate to have worked alongside teams in structured environments both in Italy and abroad over the last 20 years, en- abling me to develop strong leadership skills, a natural approach in effective communication, the ability of positively influencing others and master complex business negotiations.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: