Why and why is a KPI system needed in a retail store
08.10.2019 5455

Why and why is a KPI system needed in a retail store

As a rule, in retail the effectiveness of the store and sellers is evaluated based on the sales plan. Fulfilled the plan - work efficiently, did not fulfill - not effective. And material motivation is tied to revenue and plan, that is, the seller, as a rule, receives some minimum salary, and the rest - as a percentage of personal or total sales. But this approach is not always effective and does not always reflect the real situation with the work of a person or the whole team.

Why should the performance of the store and its sales floor employees be evaluated not only by their financial indicators, but also by KPI, says SR expert, business trainer Daria Artyukhova.

Daria Artyuhova Daria Artyuhova - Started her career in advertising and marketing in the 2006 year, from the 2007 year she moved to HR. During her work, she managed to gain experience in the field of recruitment, C&B, management, the creation of an HR brand, T&D. Launched several successful start-up projects. I stood at the origins of creating the KEDDO franchise network in Russia. Management experience over 6 years. Certified business coach, business consultant, speaker, webinar host, author of articles and training materials. Education: MBA-Professional City Business School, magistracy of the Russian State Social University, Moscow City Law Institute.

Minimum salary plus interest on personal or general sales is indeed the seller’s most commonly used pay scheme. On the one hand, the scheme is simple and working: it would seem that with this approach, sellers should be motivated and only do what to sell. And revenue should grow every month. But, as practice shows, this is not always the case. And even the completed plan is not an indicator of the 100 percent effectiveness of the seller or team. How so? Fulfilled the plan, what more could you want? Everything is simple. Do not forget about the service and customer focus, as well as the seller’s loyalty to the client. After all, the store or the seller could fulfill the plan by supporting the advertising campaign, due to the sale or the presence in the assortment of a popular model that “sells itself.” Large companies have long realized that it is impossible to evaluate the effectiveness of sellers only by financial indicators. And they began to introduce KPI (Key Performance Indicators) - both personal and collective. What are the pros and cons of this, let's figure it out.

Before introducing KPI, you need to understand how you will translate into calculable what is not so easy to calculate: the same customer-oriented and loyalty? With the number of pairs sold and the availability of money at the checkout, everything is clear. There are numbers. But how to count "air"?

It’s worth saying right away that having one indicator is not enough. For example, you decide to evaluate the effectiveness of employees by the number of entries in the book of complaints and suggestions, because they are easy to count. But the presence or absence of praise or complaints in a book about a particular seller will not be an objective indicator on 100%. Many customers prefer once again not to get in touch with a rude or not very qualified seller. They were poorly served - they just won’t come to your store next time, and they will tell all their friends and acquaintances not to come to you. Such a negative word of mouth will work. It is rare that a client requests a complaint book specifically to write a complaint. This should be an out of the ordinary case. But at the same time, the customer can often leave the store unsatisfied.

Mystery shopper is your eyes and ears

One of the most effective ways to monitor the work of the store and, as a result, evaluate its effectiveness, is to resort to the services of mystery shoppers. The cost of the service is not as high as it might seem, and the result that can be obtained with its help is simply stunning. Essentially, you have an extra few pairs of eyes and ears in your store. And the great thing is that they tell you something that may not happen to you. All checks are conducted with an audio recording, which then can not only be listened to, but also presented to the disloyal seller as evidence. Also, a mystery shopper fills out a checklist based on your wishes, and you get a ready-made point system for evaluating the effectiveness of your sellers.

Press the button - you will get the result

For the most accurate and highest result, the so-called “loyalty buttons” are used. These buttons are now more common in banks and government agencies, but today they can be found in many stores. Of course, these buttons help to consider the overall effectiveness of the store rather than each specific seller. But the settings of these buttons allow you to display a separate button for each seller. When making a purchase at the checkout, the client can evaluate the work of the seller or cashier, as well as the store as a whole.

KPI: believe, evaluate, analyze

All this data is then used to build the KPI system. For example, you have decided that KPI will be evaluated according to the plan, the number of positive reviews in the complaints and suggestions book and with the help of mystery shoppers. Accordingly, for the implementation of each item the employee is assigned certain points. If he scores enough points for the month for all indicators, he can count on an increased pay ratio this month. If the required points are not scored, this employee receives the usual coefficient or even reduced.

Many also wonder how best to evaluate the effectiveness - individually of each seller, the overall effectiveness of the store, or take into account both of them. Of course, it is necessary to take into account both individual performance indicators and general ones. Otherwise, you can get a “war” inside the team, when each employee will be interested to fulfill only their performance indicators. Therefore, it is important to take into account indicators that will be assessed as general. For example, cleanliness in a trading floor, order in a warehouse, store appearance, conversion, store plan. For administrators, in addition to sales and technical support indicators, KPI indicators can be supplemented with items such as the presence of conflicts within the team, staff turnover, and the number of training events.

Advantages of implementing KPI

With KPIs, employees understand that they can influence their earnings. At the same time, in order to earn the desired salary, it is not enough just to sell. You need to be as effective and customer-oriented as possible.

Such a system helps to improve service and adhere to standards. After all, sellers will know: they are evaluated immediately according to several criteria. It’s easier to do what they want from you according to the job description and accepted company standards.

Not every person is able to work on the KPI system. Therefore, your state will have strong and ambitious people who are aimed at making money. As a result, revenue will grow. And you can save on the salaries of inefficient employees. You no longer have to pay for the fact that the seller is “idle” his shift in the hall, knowing that he will still receive some kind of salary.

Cons of KPI Implementation

Perhaps the most important minus of the KPI system is that it only works with absolute transparency and correct compilation. Before you implement this system, you need to accurately calculate everything and make sure that these indicators can be met, that the number of points is real, and the conditions of this system will be clear to absolutely all employees.

Also get ready for the change of staff and the additional costs of finding new staff. As mentioned above, not everyone can work on such a system. But these costs will quickly pay off when effective employees enter the staff.

Another serious drawback of KPI implementation is the fact that it requires a lot of time for the development and testing of the system. However, in the future, all costs will pay off, provided that the system was built correctly.

It is up to everyone to decide whether to switch to a similar system for assessing the effectiveness of personnel or to leave the old and proven method. But in the conditions of constantly growing competition, it is necessary to give all the best not to 100, but to 150%. And the KPI system can just become the tool that will help achieve such indicators.

This article was published in the 156 issue of the print version of the magazine.

As a rule, in retail the effectiveness of the store and sellers is evaluated based on the sales plan. Fulfilled the plan - work efficiently, did not fulfill - not effective. And material motivation is tied to ...
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