Global supply chains are more unpredictable than ever before. Consumer habits and loyalty are evolving. As a business owner, you’ve likely dealt with more hurdles over the last two years than you have ever faced since your opening day. As we head into 2022, the retail sector is set to experience massive growth, so it’s time for your business to start looking ahead again.
To help you plan for the coming year, it’s important that you rethink the retail metrics you’re using to track the success of your business. Based on changing behaviors and markets, these retail metrics will likely be some of the most valuable for your business in the coming months.
Sales Per Employee
Many small business owners found themselves having to change schedules or let staff go in order to accommodate tight budgets and distancing policies inside their shops. Others were forced to downsize because they found it difficult to hire new staff throughout the year. Whether or not you changed how many employees are working on any given day, it’s important to know if you have found the right number.
Sales per employee is one of the simpler retail metrics to calculate. Simply divide net sales by the number of employees clocked in on any given day and you’ll have a very basic calculation of sales per employee. Better yet, use a point-of-sale system that allows you to track who is checking out customers and you’ll know how much revenue specific employees (like sales staff) generate.
Once you know how much revenue employees contribute to, you can use the data to inform staff training, promotions, compensation, and hiring decisions. Giving staff members the right tools, motivating them each day, and setting realistic goals for each of them will help you improve this metric throughout the year.
Conversion Rate
If you run an eCommerce website, you’re likely already highly familiar with conversion rate, which is the percentage of site visitors who actually make a purchase. However, physical stores will also find this metric worthwhile.
While it can be harder to accurately track for physical stores, a simple counter installed at the entryway will allow you to approximate the number of visitors your store receives. From there, it’s a basic formula of total sales divided by total visitors. For instance, if you make 12 sales in a day after receiving 200 visitors, you have a conversion rate of 6%.
Tracking your conversion rate is worthwhile because it tells you how many people come into your store each day and how valuable or relevant that traffic is. For instance, you’re better off with 100 visitors and 10 sales than 500 visitors and 10 sales. Traffic means nothing unless it’s converting into business.
Once you know your conversion rate, you can take strides to improve it, like by using signage and window displays so your store sales are more noticeable (helping to attract more relevant traffic). You can also better track how advertisements and promotions impact the flow of traffic into your store.
Of course, you should also have your sales staff engaging each potential customer to help them find something they like. Being convincing and informative without coming across as “pushy” is the key to attracting customers and turning them into loyal clients.
Average TransactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.... Value
Average transaction value tells you the average amount your customers spend each time they make a purchase. This retail metric is calculated by dividing total revenue by the number of transactions you process in a given day, week, or month. For instance, if you brought in $10,000 in sales last week through 700 transactions, you have an average transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.... value of a little under $15.
Depending on what your store sells, $15 could be good or bad. For instance, a coffee shop might consider $15 to be a good target for their average transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.... value. Meanwhile, a clothing store would find that this is extremely low. Once you know your average transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.... value, you can work to improve it.
A high average transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.... value is great because it means that your customers are already buying your more expensive items or buying large quantities of your less expensive items. Meanwhile, a low average transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.... value might mean that you need to reconsider your pricing strategy. Likewise, it’s also a chance to consider loyalty programs, new sales tactics, and bundles.
Average Items Per TransactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account....
If you have a boutique or another store that sells a good mix of small- and large-ticket items, you can add even more value to the average transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.... value metric by tracking the average items per transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account..... Together, these retail metrics can transform and widen your perspective, offering valuable insights.
For instance, a bookstore that has an average transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.... value of $25 might think their customers are picking up a new book or another big-ticket item. However, if the average items per transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.... metric reveals that most customers are picking up four or five items, they’ll be inclined to take a closer look.
The average items per transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.... metric could reveal that customers are opting for the used or discounted section, where books only cost about $5 each, rather than the new section where books cost $10 or more. Now the bookstore will have to consider how they can bring down the cost of new books or offer incentives to get customers away from the sales rack and back to the shelves.
For other stores, average items per transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.... can tell you that customers are opting for large quantities of small-ticket items. This, in itself, isn’t a problem, but if you have a high average items per transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.... and relatively low average transactionAn act between a seller and a cardholder that results in either a paper or an electronic representation of the cardholder’s promise to pay for goods or services received from the act. The action between a cardholder and a merchant that results in financial activity between the merchant and cardholder’s account.... value, that’s when it becomes a problem that you need to solve through pricing, upsells, or other tactics. Using these two retail metrics in tandem is your best bet.
Grow Your Store
As you look ahead to the new year, remember that tracking the right retail metrics is only a small part of the equation. For your business to be successful, you must continue to adapt to the changes that are sure to come, and that requires your plan to look beyond the numbers.
Use this time to make sure that your store is in order regarding policies, layout, inventory, and technology—like your point-of-sale system. By putting in the extra effort, you can set your business up for a great year to come.
About National Merchants Association
National Merchants Association (NMA) is a merchantA business that accepts credit cards for goods or services. advocacy group dedicated to reducing or eliminating the unnecessary fees associated with accepting credit card payments. Since 2004, NMA’s payment processing solutions have been delivering tailored solutions, best-in-class customer service, and high-quality service offerings for businesses across multiple industries. Whether it’s high-risk or low-risk, brick-and-mortar or e-commerce, NMA will create the best processing experience for your company.
For more information, visit us at legacy.nationalmerchants.com or call (866) 509-7199.