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What are retail KPIs?

Retail KPIs (Key Performance Indicators) are measurable values that help retailers evaluate and track the effectiveness of their retail operations. These metrics are essential for understanding various aspects of the business, from sales performance to customer satisfaction, and are critical in making data-driven decisions to optimize the sales process and improve the bottom line.

Key areas of retail KPIs:

1. Sales metrics

  • Measures related to sales performance, such as total sales, sales per square foot, and the number of transactions.
  • Critical for understanding the effectiveness of marketing campaigns and sales strategies.

2. Profitability metrics

  • Metrics like profit margin, gross margin, and GMROI (Gross Margin Return on Investment).
  • These help in assessing how efficiently the retail operations are converting sales into profits.

3. Métricas de clientes

  • Metrics focused on customer behavior, such as customer retention rate, customer satisfaction, and average customer spend.
  • Important for tracking customer loyalty and the success of customer engagement strategies.

4. Inventory metrics

  • Includes sell-through rate, stock turn, and the formula cost of goods sold (COGS).
  • Helps in managing inventory levels and understanding the efficiency of stock utilization.

5. Operational metrics

  • Measures related to the efficiency of retail operations, including sales per employee, transaction value, and operational costs.
  • Crucial for optimizing retail spaces and improving overall operational efficiency.
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What are the 5 KPIs in retail?

Here are the five most important KPIs in retail, along with their significance and how they are tracked:

1. Sales per square foot: This KPI measures the amount of revenue generated per square foot of retail space.

  • Formula: Total Sales ÷ Total Retail Space (in square feet)
  • Importance: It helps in assessing the productivity of retail spaces and optimizing store layouts to increase sales.

2. Gross margin return on investment (GMROI): GMROI is a measure of how much gross profit a retailer earns for every dollar invested in inventory.

  • Formula: Gross Profit ÷ Average Inventory Cost
  • Importance: It indicates the profitability of inventory investments and helps in making informed decisions about stock levels and purchasing.

3. Customer retention rate: This metric tracks the percentage of customers who return to make repeat purchases over a given period.

  • Formula: (Number of Returning Customers ÷ Total Number of Customers) × 100
  • Importance: High retention rates indicate customer satisfaction and loyalty, which are essential for sustained growth and profitability.

4. Sell-through rate: The sell-through rate measures the percentage of inventory sold within a specific period compared to the amount of inventory received.

  • Formula: Units Sold ÷ Units Received × 100
  • Importance: It helps in understanding how quickly products are selling and assists in inventory management and replenishment decisions.

5. Profit margin: Profit margin measures the percentage of sales that has turned into profit after deducting the cost of goods sold (COGS).

  • Formula: (Total Sales - Cost of Goods Sold) ÷ Total Sales × 100
  • Importance: It reflects the overall profitability of retail operations and is a key indicator of financial health.

How to increase KPIs in retail?

Increasing KPIs in retail requires a comprehensive approach that focuses on optimizing various aspects of retail operations. Here are some strategies to enhance key retail metrics:

1. Optimize store layout:

  • Calculate sales per square foot: Ensure efficient use of retail spaces by optimizing product placement and store layout to maximize customer flow and sales.
  • Action: Use heat mapping and customer flow analysis to redesign store layouts, highlighting high-margin products and seasonal items.

2. Enhance inventory management:

  • Sell through rate: Improve the sell-through rate by managing inventory levels effectively.
  • Action: Utilize demand forecasting and historical sales data to optimize stock levels, reducing overstock and understock situations.

3. Improve customer experience:

  • Customer satisfaction: Focus on providing excellent customer service to enhance customer satisfaction and retention.
  • Action: Train staff on customer engagement, offer personalized shopping experiences, and implement loyalty programs.

4. Implement effective marketing campaigns:

  • Marketing campaigns: Use targeted marketing campaigns to drive traffic and increase sales.
  • Action: Leverage digital marketing channels like social media, email marketing, and influencer partnerships to reach a wider audience.

5. Enhance sales process:

  • Total number of transactions: Increase the number of transactions by optimizing the sales process.
  • Action: Streamline checkout procedures, offer multiple payment options, and reduce wait times to enhance the shopping experience.

6. Monitor and adjust pricing strategies:

  • Profit margin: Adjust pricing strategies to improve profit margins while remaining competitive.
  • Action: Use competitive pricing analysis and dynamic pricing models to set optimal prices for products.

7. Boost employee performance:

  • Sales metrics: Train and motivate employees to enhance their performance and contribution to sales.
  • Action: Provide regular training sessions, set performance targets, and offer incentives for meeting sales goals.

8. Utilize data analytics:

  • Tracking retail KPIs: Continuously track and analyze retail KPIs to identify trends and areas for improvement.
  • Action: Use tools like Google Analytics and POS systems to gather data on sales, customer behavior, and inventory performance.

Encuestas sobre el pulso de los empleados:

Se trata de encuestas breves que pueden enviarse con frecuencia para comprobar rápidamente lo que piensan sus empleados sobre un tema. La encuesta consta de menos preguntas (no más de 10) para obtener la información rápidamente. Pueden administrarse a intervalos regulares (mensual/semanal/trimestral).

Reuniones individuales:

Celebrar reuniones periódicas de una hora de duración para mantener una charla informal con cada miembro del equipo es una forma excelente de hacerse una idea real de lo que les pasa. Al tratarse de una conversación segura y privada, te ayuda a obtener mejores detalles sobre un asunto.

eNPS:

eNPS (employee Net Promoter score) es una de las formas más sencillas y eficaces de evaluar la opinión de sus empleados sobre su empresa. Incluye una pregunta intrigante que mide la lealtad. Un ejemplo de preguntas de eNPS son ¿Qué probabilidades hay de que recomiende nuestra empresa a otras personas? Los empleados responden a la encuesta eNPS en una escala del 1 al 10, donde 10 significa que es "muy probable" que recomienden la empresa y 1 significa que es "muy improbable" que la recomienden.

En función de las respuestas, los empleados pueden clasificarse en tres categorías diferentes:

  • Promotores
    Empleados que han respondido positivamente o están de acuerdo.
  • Detractores
    Empleados que han reaccionado negativamente o no están de acuerdo.
  • Pasivos
    Empleados que se han mantenido neutrales con sus respuestas.

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