There’s a famous quote which says: “You can’t improve what you don’t measure.”
The problem is, with so many systems, so much data and so many different things to measure, what should you, as a forward-thinking, smart retailer, be measuring to optimize the performance of your stores and maximize success?
In this article we’ll show you:
The importance of real-time data in retail
How to improve visitor conversions
What Average Transaction Value shows you about the effectiveness of your sales process
How to benchmark store performance with Average Sales per Visitor
By constantly monitoring, forecasting and planning various Key Performance Indicators (KPIs) with help of modern business intelligence and planning tools, you can improve overall alignment between store strategy, plans and operations.
Combined with moving towards standardization and automation, you can also shift from being focused on data-entry to being more effective and quicker in your decisions and operations.
All this results in better decision making quality and, ultimately, improved performance.
The value of real-time data in retail
As Bernard Marr also states about real-time analytics: “Companies know that most data has a short shelf life, so the faster they can turn information into insight, the more valuable all that data will be”. Enabling retailers with real-time dashboards gives businesses the opportunity to make decisions within seconds after a real-life action occurs.
Typically, this data has been collected and used online. However, thanks to advances in tech, you can now see, in an instant, exactly what’s happening in your physical stores at any given time.
For example, you can see the impact your staffing levels have on queue times and sales, you can see a customer’s order history and preferences, and your store associates can react instantly to what’s happening in front of them to boost your CX.
Your customers expect to move seamlessly between touchpoints and sales channels - often completing a purchase in-store that began online. This is only possible if data from these different interactions is instantly available in your different systems.
It’s not just your customers who benefit from real-time data; it’s your business too. Real-time KPIs can help drive better decision making and lead to a profitable and more successful business. As a starting point, besides sales and margins you should also be measuring visitor conversions, average transaction value and average sales per visitor.
Visitor Conversion (%)
No. of Visitors - or footfall - is a measurement of the number of people entering or exiting a store.
As Zoined CEO and retail analytics expert, Sasa Moilanen says: “By counting how many people enter your store, you can determine other key metrics which are crucial for survival in today’s retail climate – such as Visitor Conversion Rate.
“No. of Visitors is typically at its most beneficial when evaluated as a year-over-year performance metric. By monitoring No. of Visitors and Visitor Conversion Rate, your store managers can focus on key areas to improve store performance. Today, this can be taken to the next level with counting sensors that maximize accuracy by reducing noise from the data by excluding your own employees’ movements from the counting.”
Visitor Conversion Rate is the percentage of transactions made by the counted No. of Visitors. It can be calculated by the formula: Visitor Conversion (%) = No. of Transactions / No. of Visitors.
Visitor Conversion Rate is among the most important store controllable metrics and can also be used for benchmarking one store against other, similar stores.
To increase No. of Visitors in a store, an effective marketing strategy and brand reputation, both online and offline, are essential. Thus, No. of Visitors typically is not considered as a store controllable metric.
With No. of Visitors nd Conversions data, your store operations management team and individual store managers can:
Find out if marketing initiatives delivered more traffic to stores
Discover which stores provide the greatest opportunity for growth
Measure the effect that training programs have on improving Visitor Conversions
Evaluate loyalty customer events – do they drive additional traffic, when should you have them, are visitors buying or simply just enjoying the event?
To increase Visitor Conversion, proactive sales and product training and dedicated retail floor coverage plans are incredibly important.
Average Transaction Value
Average Transaction Value (ATV) = Units per Transaction (UPT) x Average Selling Price (ASP)
Units per transaction (UPT) is a sales metric used to measure the average number of items that customers purchase in any given transaction. The higher the units per transaction (UPT), the more items customers are purchasing during every visit
Sasa Moilanen adds: “Retailers encourage people who enter the stores to also buy items that they had not originally planned to buy. Those would typically be some kind of add-ons and/or other extra in-store items. By engaging customers and having a clear understanding of customer behavior patterns, retailers can potentially reach higher selling prices and earn better profit margins.
“Average Selling Price (ASP) is an important, partly store controllable, sales indicator used to measure the average price a certain class of goods or service is sold for. It is affected by the type of product and product lifecycle stage. Retailers must consider ASP to better control how new products should be positioned. However, trying to focus on selling only high value items can lead to lost sales opportunities as well.”
Together with Visitor Conversion, Average Transaction Value (ATV) is one of the two critical (at least partly) store controllable sales indicators used to measure the effectiveness of the sales process and the sales team in the store.
With the majority of costs being fixed in retail business, improving ATV - and therefore sales - means most of the increase will translate into profit. Therefore, many retailers have invested money in sales training programs for their employees to improve cross-sell and upsell performance.
Average Sales per Visitor
Sasa Moilanen concludes: “Average Sales per Visitor is a measure of the average monetary value generated by each unique visitor entering a store. So, it is a bit of a theoretical metric but has a lot of use in store operations performance improvement initiatives analysis. Because Average Sales per Visitor removes the impact of Number of Visitors, it is the most complete single metric to understand the “store controllable” performance. “
Average Sales per Visitor should be used primarily for benchmarking store performance against its own baseline from the previous year, a corresponding period, or between similar campaign periods. Product mix, type of customers and demographics of the area where the store is located- as well as store brand positioning- have a lot of impact on Average Sales per Visitor results.
In Summary
By using an integrated cloud based Store Analytics and Planning solution, you can properly address your business challenges and turn them into strategic opportunities to gain profit.
The time of manual reporting and planning requiring huge amounts of unnecessary working hours has gone by thanks to the evolution of modern SaaS based business intelligence and planning tools.
Dedicated Business Intelligence (BI) and planning software gives retailers the potential to forecast their sales better and plan their store operations in an optimal way. Such software will act as a powerful extension to your Point of Sale, for example. In the case of a Unified Commerce Platform with POS - like Sitoo - you can access this data in real-time. This means you can act on facts and make better, data-driven decisions in an instant.
Zoined’s business intelligence software gives retailers actionable real time insights and foresights - easily and visually. By visually combining different data in a way that’s easy to understand, Zoined helps retailers save time, increase sales, improve margins, and make better decisions.
