How to define key numbers to make your retail business efficient and profitable

In the era of mass insanity on the MBA and foreign business formats, it has become incredibly fashionable to count everything. We consider efficiency in all its manifestations: conversion, correlation, sales plan, payback and financial ups and downs due to the changing economic situation in the country ... This is a big step forward - not just living today as a business, but trying to figure out various options, which means - minimize risks. However, the situation is often not so rosy. Either the mentality lies in our mentality, or the habit is in force, but often entrepreneurs turn to large-digit methods not in advance, but at the last minute, when “It is important, urgent, burning!”. We look at the situation in business, we see that something is going wrong (sales are not good enough, customer flow has decreased, conversion and the average check are not satisfied) and we understand the need for change. It is not always clear to us what to change, because we begin to sort through all key indicators and randomly strengthen each of them. SR expert - business trainer Kristina Wojciechowska - recommends identifying key numerical indicators that will make your business successful.

We offer to pause and calculate everything.

We highlight 4 of the main numerical indicators that make the retail business successful:

1. The number of incoming customers.

2. Conversion from incoming to those who bought.

3. Average bill.

4. Repeated purchases.

To increase, say, the gross sales turnover, it is worth understanding which criteria are most important to us and which are responsible for the most effective business development. For this, it is worth considering external factors and internal guidelines.

Example 1. A company has a partner with several mid-range shoe stores in a small town. The shoes are quite expensive and the competition is fierce. Clearly, being "just one of the regular shoe stores in town" is a losing proposition, so we need to determine what criteria are most important.

We think logically: the price of the goods is decent, the circle of customers in this segment is limited by the boundaries of a not-so-large city, which means that you need to hold onto each client, shift the maximum benchmark to increase the average bill and repeat purchases, attract the client’s friends, receive recommendations among your friends and conversion from incoming to those who bought. That is, instead of massive advertising throughout the city, we create an internal strong customer loyalty system and promote the store purposefully in our customer base through specialized programs and cross-marketing.

Example 2. An individual entrepreneur has shoe stores in the resort town, where tourists make the main revenue. It is logical that if our guideline is mainly “holiday-makers” and not local residents, then repeated purchases are of little interest to us. The main thing is to attract as many visitors to the store as possible and increase the conversion, perhaps also the average check. This means that all efforts will be devoted to making the shop window dynamic and selling, to advertise in tourist places and to teach sellers to be welcoming and welcoming.

Count customers by head

It’s simple: we fix the entire number of people who went to the store. A permanent assistant for us will be special counters that are installed at the entrance and count how many people have visited you. Standard: 20% is subtracted from the final figure - these are sellers who went out and went in, those who stood at the door and did not go in and others. Do not forget to divide by 2, if the indicator on the equipment does not do it automatically (if a person entered the store, he must exit it). For example: 850 (the figure issued by the counter based on the results of the store’s working day) ÷ 2 = 425 - 20% = 340 people - potential customers who visited for one specific day. It makes sense to analyze the data on different days of the week and hours (to understand the dynamics of demand), in different months (to understand seasonality) and compare the indicators of similar periods for previous years (which will show us the trend of needs in the long term).

What affects the number of visitors?

1. Advertising. It's not enough to simply distribute an advertising message across various media outlets; you need to monitor the effectiveness of both the media itself and the advertising message—its quality and relevance to your target audience. Your promotional channel staff can provide you with data for analysis, or you can track how many people clicked on an ad based on specific distinguishing features: a coupon, a flyer, a code word used in a commercial, etc.

2. Store Appearance (Facade, Window Display, Announcement of Current Promotions). Take a look at your store from the outside. Does it look inviting and appealing to your potential customers? What makes it stand out from the crowd? Why should a customer choose yours among the many stores available? Your window display should appeal not only to those with a clear goal—to buy shoes right now—but also to those simply strolling through or even going about their business unrelated to shopping. Many helpful articles have been written about shoe store window display design, so I'd like to briefly emphasize the importance of math and specificity here, too. Announcements seen by customers should be noticeable and clear at first glance. It's best if they contain numbers and have a time limit. For example: "1 + 1 = 3. Buy two pairs of shoes and get the third free! Only 3 days/only until July 25th." Remember: you only have 8 (!) seconds to capture the attention of a potential client passing by - that's how long it takes for a person's attention to focus on a background object.

3. Your store's location. Is your store visible? It may be that the display window is well-designed, the staff is trained, and the shelves are stocked with top-of-the-line models, but the store is difficult to find, located in an inconvenient location for pedestrians or drivers, or the facade is obscured by trees, billboards, or other buildings. If this factor is affecting the number of visitors, it may be worth taking action—increasing advertising, adding eye-catching navigation, or even relocating to a more attractive location.

4. Word of mouth. Especially in smaller towns, recommendations from those who've already visited and made purchases are crucial. This can be a gold mine for you if you prioritize it correctly. Every aspect is crucial: product selection, pricing, quality and speed of service, promotions and discounts, customer comfort, convenient store location, customer loyalty program, and a host of other seemingly unimportant details that can backfire later.

IMPORTANT: The “inbox” includes not only people who have visited your store, but also those who called you to inquire about something. Tracking the number of incoming calls, the purpose of each caller and the quality of working with them will help special programs that are simple enough to use and invaluable to improve the quality of service and understanding of customer demand.

How to convert incoming to bought?

Perhaps one of the main indicators of the correct operation of your business machine is the percentage of conversion. Simply put, how many people from those who came to you bought something. Calculating the conversion is easy. Let's say 800 people came to you in a day, bought 55 people from them, which means we multiply 55 by 100 and divide by 800, we get 6,9% - this is our conversion. By the way, a very good conversion for a retail shoe store. A conversion from 6,5% to 10% is considered good, from 4% to 6,5% it is tolerable, but requires some measures (advertising, training, rearrangement, promotions), if the conversion falls below 3,5% - time for radical changes and in-depth analysis .

What affects the conversion:

1. Product range. Of course, this is the most important point: what you sell and whether it meets customer demand. Analyzing demand is essential. Sales data, bestsellers, remaining stock, competitor analysis, trends, and the overall fashion market can help. When analyzing sales, it's a good idea to create a summary table showing sales data in different segments (shoe type, style, price), across different seasons, months, and days of the week. Track how sales this season compare to similar months in previous years.

2. Pricing policy. Where does the final price come from? Is it a calculated figure or just something plucked out of thin air? While price is an important factor influencing customer demand, it's far from the primary one. In most cases, customers buy value, and this isn't so much a price advantage as a combination of factors that influence their decision to "like" or "dislike." While price gouging is fine, don't follow the example of the low-price segment or large online players who can afford very steep discounts. If your business isn't built around a "low price is key" model, this isn't the right tool for you. While offering discounts and promotions is certainly necessary, trying to compete with discounts and accustoming customers to the idea that you always have discounts isn't a good idea.

3. Service. The quality of your sales staff's service (quickly, efficiently, and unobtrusively) plays a huge role in a customer's decision to buy. How do you train, motivate, and monitor your staff so everything runs like clockwork? The answers are many and varied, and can be found in business literature and in numerous training sessions for managers and sales staff. Managers must understand the key: no matter what skills we demand from people, it's important to communicate our specific expectations. Simply being proactive is a very vague concept for people, but greeting every customer who enters and establishing contact with every third person is a very specific expectation and an easily verifiable requirement. A clear understanding of what we want from employees will help us find targeted methods and tools for training.

4. Atmosphere. Few people think about how pleasant it is for customers to be in your store. You may have well-trained salespeople, current models on the shelves, and competitive prices, but certain details—say, it's too cold or too hot, an unpleasant odor, a lack of maintenance, greasy rugs, dirty mirrors, or even too-low ceilings—can distract many from making a purchase and be quite irritating. Needless to say, returning to such a store will only be desired if there's a truly pressing need.

5. Merchandising. Much has been said and written about the art of product display, so we won't go into detail here. It's recommended that you consider this point when analyzing your store's operations and, if you don't have an in-house merchandiser, consult with experts for the necessary information and assistance.

6. Navigation. In-store navigation is just as important as in-store navigation. Try to organize the store's zones so that customers can quickly and easily navigate and find their way from the entrance. If necessary, order POS materials and place them throughout the store along the customer's route.

7.    Weather, seasonality. Of course, the retail segment, especially the fashion segment, is very dependent on some external circumstances, for example, on seasonality and weather. These circumstances are taken for granted, it is in our power to accept that sales are lower in certain months, commensurate with the decreasing traffic of the outlet, or, having analyzed the features of the store and the needs of your target audience, come up with ways to increase the attention of customers to your company, stimulating promotions for customers and staff, some, perhaps only your "steps" and finds.

Increasing your average bill is no easy task

The average check is the average sales for one payment transaction: the total amount is divided by the number of checks (arithmetic average). The main information that interests us is the amount of the average check and the number of items in the check. It is these two components that make sense to work out in more detail.

What affects the average bill:

1. Promotions that encourage the purchase of more than one pair of shoes/item. These typically involve in-store advertising and promotions, along with proper product display. For example, discounts can increase with the purchase of more pairs. Alternatively, you can offer a gift for a purchase of a certain amount or run special promotions on specific product groups.

2. Selling related products. Although inexpensive, this item can generate a significant financial boost overall. Check whether related products are clearly displayed and whether your employees (usually cashiers) are making an effort to sell related products, offering personal care products, wallets, gloves, laces, and insoles to everyone.

3. Grouped display. And once again, we return to merchandising. Proper product distribution in the sales area will not only help customers quickly navigate the space and focus their attention on the desired item, but will also help sell products in groups, for example, pairing a scarf with a handbag or a clutch with shoes.

4. Salespeople's work. This is one of the biggest stumbling blocks to increasing the average order value. A salesperson's phrase, "I see he doesn't need anything," deprives us of at least 30% of our revenue. Moreover, customers often buy only one item simply because they're not being sold anything else. Consider the dialogue that takes place in almost every store between customers and salespeople: the salesperson handles objections, ensures the customer is comfortable, likes the product, and is happy with it, asks the customer to "go to the checkout," where they complete their purchase and say, "Goodbye, come again." In other words, they bid the customer farewell instead of inviting them to continue shopping. What's a decent person to do after being bid farewell? Just leave.

If you manage on your own or with the help of invited training experts to direct the actions of the staff in the right direction, believe me, a positive result will not take long.

“How glad we are to see you again!”

In a good way, with these words you need to meet every customer who comes to your store again. This is a welcome situation for any seller - to see again and again a smiling, satisfied and, most importantly, customer ready to buy something again. Repeated sales, customers who return to you - you and your team should strive for these goals with all your might.

I would really like to have some kind of magic button or phrase that will make customers come back to you again and again, bring friends and relatives, but, alas, such a button is not yet known to the science of efficient retail. I will take the liberty to declare that this button is in an integrated approach and a detailed study of each of the points listed here, as well as in a clear understanding of the strategy and vision of your business. If everything is in order with this - the matter is small: follow your goal, born of the needs of your target audience, be faithful to your mission and success will definitely come!