Still evaluating your store’s success based on Average Transaction Value and the usual hard KPIs in retail? I’m afraid that’s as anachronistic as focusing all your social media efforts on MySpace during the age of Instagram and TikTok!
If you want your stores to succeed during the phygital revolution—and of course, you do—you need to change your focus.
This includes prioritising the retail KPIs that take this new normal into consideration.
Let me show you why (and how).
Some hard KPIs in retail belong to physical-only stores—which belong to the past
Retail is evolving. Too many companies aren’t.
Up until a few years ago, physical stores were the ONLY place to interact with a brand’s products. So, it only made sense to focus on audits and hard retail KPIs like:
ATV (Average Transaction Value)
UPT (Units Per Transaction)
Conversion rate limited to that location
Payroll-related KPIs
and so on.
Looking after and driving these KPIs in retail used to be one of the core responsibilities of store managers.
Another popular strategy to measure a store’s performance was relying on mystery shoppers periodically—I’m gonna talk about them later down the article because I need to try and contain my rage first.
But how is this relevant when shops are no longer the only place to buy products?
Simple: it’s not.
Retail has evolved: the new normal is phygital…
Your customers’ shopping habits have changed, but the largest portion of the high street is lagging behind. No wonder it’s been struggling for years!
On the contrary, the stores that are not only surviving but thriving right now are those that have been evolving to match these new habits. Those that embraced the ‘new normal’ in retail, in other words.
And what does this new normal look like?
An omni-channel and phygital approach: services that combine the perks of physical and online shopping to create a smooth and superior customer experience (for example, ship from store, click & collect, return to store, and endless aisle)
Providing an in-store experience that makes it worth it for your customers to come back to your physical location—even when they could choose to buy everything online
To ensure all this, these brands also rely on a new type of store manager: one whose focus is on guaranteeing this in-store experience by coaching their team and leading by example.
Not one who hides in a back office and is obsessed with those old retail KPIs.
… and this calls for new KPIs in retail
Now, don’t get me wrong: I’m NOT saying that the previous ones haven’t got a place in your store anymore. However, if they’re your only or main focus, you’re gonna be left behind.
The phygital age calls for a mixture of (new) hard and soft KPIs in retail.
And by ‘soft KPIs’ I mean those that centre around people’s experience, from customers to… yes, even your staff.
4 top retail KPIs to succeed in the OMNI phygital age
So, what should your store managers focus on?
Here are some overlooked or new retail KPI examples that actually match the current OMNI reality
1. OMNI conversion rate
The old conversion KPI focused on the customers who bought a piece of inventory within that retail store.
Nowadays, with new in-store technology and endless aisle options, they can also browse your app or e-commerce website.
So, they might not leave your store with a physical item in their hands, but they’ve actually ordered something online whilst they were there!
That’s why focusing on old conversion targets is anachronistic. Instead, it makes sense to separate your physical and OMNI conversion KPIs (and this will probably mean lowering the former).
2. Click & collect upsell
Does your click & collect service consists of your staff grabbing the items ordered by a customer and wishing them a good rest of their day? Then you’ve been missing out BIG time!
Click & collect should be seen as an opportunity to:
Upsell relevant items
Make your customers want to return to your store
For example, you could train your front-of-house staff to ask them more about this product and how they’re planning on using it. This gives them the perfect opportunity to make a connection with them and recommend other relevant items.
So, your click & collect KPIs in retail involve the percentage of customers who end up buying something else when coming to pick up some items they had already ordered online.
3. Employee Satisfaction
Yes, the retail industry is plagued by a higher-than-average turnover rate… but, instead of just accepting this, you can actively do something to lower it in your stores!
Too many managers take employee satisfaction for granted or—worse—overlook it altogether. Instead, it should be one of your core KPIs in retail!
Satisfied and happy employees:
translate into happier customers
stay much longer, avoiding disruptions and saving you money
So, to measure, improve, and guarantee employee satisfaction in your stores, you need to actually talk to your staff.
For instance, you could do so with 1:1 meetings, have a suggestion box, run employee satisfaction surveys, and work on you eNPS (employee net promoter score).
This takes us to what I consider the most important retail KPI in the phygital age.
4. CRM KPIs, especially your NPS (net promoter score)
If you’re not focusing on your interactions with customers and evaluating the entire process of delivering satisfaction to them, you’re basically sabotaging your brand.
So, NPS should be your core retail KPI since it focuses on your audience’s experience in your stores: tracking the percentage of satisfied customers who are likely to recommend your brand, products, or services.
And how can you find that out?
No more guesswork! YOU. MUST. ASK. THEM.
Make the most of your tablets, apps, and in-store technology to do so. Alternatively, if you take a customer’s email address to send them a receipt, you can include it within that message.
Your key question is: “How likely are you to recommend [your brand name] to a friend, colleague, or relative?”
If they vote:
9-10: congrats! You have an active promoter
7-8: these are passive promoters. They didn’t dislike their in-store experience, but it wasn’t pleasant or memorable enough to turn them into virtual brand ambassadors
0-6: unfortunately, these are your detractors. The more negative their in-store experience, the more likely they are to share it with their friends or on social media
To calculate your NPS, all you have to do is: (number of promoters - number of detractors) / number of responses, and then multiply it by 100.
Then, compare it with the average NPS in retail (currently 41%) or, even better, that of your specific sector.
However, calculating it is not enough: you must also use these results to make informed decisions and try to improve them.
For example, once someone leaves a specific score, you can then ask them another relevant question(s):
9-10: what did you especially enjoy?
7:8: what can we do to improve our service even further?
0:6: please, share your negative experience / what can we do to improve it?
Then, review them regularly to identify your store’s strengths, weaknesses, and patterns.
This is also why mystery shopping no longer has a place in retail (although it should have never had one, if you ask me).
Now that I’ve calmed down, I’ll tell you exactly why you should ditch it:
It translates into unreliable and poor-quality data: these shoppers often base their review on a single interaction, and it might even happen to be during a particularly busy time, when you were understaffed, or when an employee happened to have a bad day. It does not paint the overall picture!
It’s biased: sometimes, these shoppers might even have their own personal preferences and prejudices. For example, they might instantly dislike an employee based on their tone or outfit
Mystery shoppers don’t always match your specific target customer
Basically, what I’m trying to say is: why would you take the word of a random stronger over that of your real-life target market?
So, instead, ask the opinion of your actual customers and focus on the retail KPIs that represent the new phygital reality.
Measuring and smashing these retail KPIs in your store
Have you realised that your stores are still trying to survive in the pre-omni reality? Let’s future-proof them so that you can start thriving.
With over twenty years of experience in the retail industry, I can help you:
Identify your store’s strengths and weaknesses
Leverage the former and fix or overcome the latter
Figure out what retail KPIs you should focus on and how to measure them effectively
What most retail consulting firms achieve in 9 months, we’ll accomplish in 3.