What are the Most Important KPIs for Retail?

 

Guest post from our partners at Targit, makers of the analytics methodology behind Retail Pro Decisions business intelligence and visual analytics platform.

 

Retail businesses live and die by their numbers. The success or failure of a business in the crowded and complex marketplace comes down to whether your company can meet goals, effectively control inventory, and maintain sales.

Small changes in strategy can create big impacts in the bottom line and no industry rides the waves of trends more than retail.

Consider the prominent U.S. fashion brand J. Crew. In the early 2000s, J. Crew catapulted into women’s closets across the country with their lower cost take on high fashion. It was as if consumers couldn’t get enough sequins, ruffled collars, or chunky costume jewelry. Until, seemingly overnight, they did.

Today, the company is battling increasingly slumping sales, a hefty debt load, and a shakeup of company leadership that has the retail industry wondering if this is the end of one of the most highly sought after brands as they know it.

Only a comprehensive data-driven strategy can help retail companies respond to changing trends proactively to ensure they stay ahead of the curve and aren’t passed over and left to languish like all that chunky jewelry in the bottom my wife””s jewelry box.

Data isn’t just numbers generated by operations. Rather, it is the underlying rationale behind a company’s entire direction.

Fostering a data-driven environment means monitoring and measuring everything, and scouring that information to determine what’s working and what isn’t. This sounds a lot like drinking from a firehose, and without the right tools in place to translate that data, it can be.

With Retail Pro Decisions, powered by the Targit BI and visual analytics platform, you can converge all disparate databases, software tools, and other data sources into one unified view of your retail business – and analyze the data from every department’s angle based on the key performance indicators (KPIs) important to your strategy.

Determining the most important KPIs for your retail company to monitor is a critical first step on that journey towards data-driven optimization. In other words: what questions do you need to answer?

Think of the data that makes up your business intelligence as consisting of cause and effect factors. Those two factors are leading indicators (cause) and lagging indicators (effect).

According to Gartner, 80 percent of companies around the world only measure their lagging indicators. In other words, they don’t know what impacted their results or what to change to improve going forward. The path to unlocking full insight is in measuring both leading and lagging indicators.

Defining the metrics that matter most to your company strategy prevents information overload and ensures employees are focused on the most critical KPIs.

This important first step is often where we see companies struggle most. Many try to focus on too many different metrics without focusing on those that truly matter.

Additionally, companies’ desire to harness big data is increasing, but most aren’t sure where to start with a big data project.

You can learn more about KPIs in this eBook from Targit: The Metrics that Matter.

Our best advice is to start with your goals or the key results that determine your success. Once you know those, you can work your way back to a strategy by clarifying the activities that have the largest impact on reaching those goals. With the objective in mind, it becomes easier to filter the important data from the not so important.

Some questions to help get you started:

  • How do your chosen vendors and distributors effect turnover rates across your locations?
  • How does each new product introduction effect the sales of existing product lines? Is it the same at every location?
  • Are you keeping more inventory on hand than you need? How can you reduce your inventory requirements?
  • Where are the hiccups in your supply chain? Can you apply what you know about one location’s supply chain to correct problems in another location?
  • Can you more efficiently distribute manpower among your locations?

Questions create questions during this process of determining the right KPIs. Often, answers to one question lead to further questions about why the numbers are what they are. The right analytics platform will help you dig down to the details to reveal the why behind the what.

Monitoring the right KPIs are only the first of several steps in building a data-driven retail organization, but every further step relies on these figures for success. Bad decisions are the direct result of bad data, so choose your KPIs carefully.

Which areas of your business are most critical to your success, and how can a better understanding of the metrics provide better results for your company?

Email in to let us know! newsletter@retailpro.com

Retailers at NRF agree: tech needs to solve real business challenges and improve the experience

 

At NRF 2018: Retail’s Big Show, retail IT leaders shared how they pushed past pitfalls in choosing or creating technologies for the business in a panel on digital transformation.

Scott Emmons of Neiman Marcus testified to greater progress once the Business Ops and IT teams became more intentional about collaboration in the ideation and planning phases.

“We had to break out of that [approach of] sitting around waiting for business to come up with lots of ideas that we couldn’t execute on,” Emmons said.

Cross-departmental communication between the business and IT teams opens the path to creating more efficient and effective solutions to bottlenecks and challenges faced on the sales floor.

Armed with a better internal understanding of needs, retailers can evaluate software solutions to find the best fit, whether an all-in-one solution or best of breed.

Some retailers are looking for a turnkey solution that will enable them to get the job done without much thought and customization.

Others are executing a more complex strategy or have unique business challenges and want best of breed solutions that will enable them to build out their exact strategy.

The ultimate consensus: tech needs to solve real business challenges, and the retail team needs to be clear on the challenges they’re trying to solve.

The more specific your challenge, the more tailored your software must be to meet that need – and the more you need to work closely with your technology partners. Retailers are making technology choices for the long term, choosing technology partners with expertise and flexibility to help them scale.

The Hershey Company’s Brian Kavanagh, senior director of insights driven performance and retail evolution, commented in an NRF session on the importance of tech companies understanding what is unique about each retailer’s brand proposition and how they approach the market.

This conversation made its way back onto the Expo floor, where technology providers, including yours truly, showcased their solutions and met with retailers to hear their needs.

 

 

The Retail Pro executive team

 

 

Retail Pro Prism has a customizable UI to help you show your brand.

 

 

From left: Kevin Connor, Mike Bishop, Ket Venethongkham, Rick Fuentes, Kerry Lemos.

 

Kavanagh reminded audiences of the bottom line for retail technology choices: sales.

“Enhancing the customer experience is important to physical retailers, but more important is converting foot traffic into sales,” he said.

One retail expert pointed out, “Of the 174 million shoppers over the five-day holiday period post-Thanksgiving, the omnichannel shopper spent, on average, $82 more than an online-only shopper and $49 more than an in-store only shopper.”

Findings from NRF’s Consumer View report, discussed in a panel featuring IBM, showed most shoppers (73% for stores, 54% for online) come with purchase intent toward a particular item, rather than just browsing. 58% ranked ease in getting what they need as their top factor for determining where to shop.

 

Source: NRF

 

Levi’s President James ‘JC’ Curleigh spoke to this culmination of technology, experience, and sales in his session at NRF:

Let’s be simple. In a world of difficult decisions picking out your favorite pair of jeans should not be one of them. We need to put you on a simplified course to either keep you in Levi’s or introduce you to Levi’s in a simple way. To deliver that simplicity, we have to take a level of sophistication – in our supply chain, in how we show up in retail, and in productivity solutions so we can continue create that simple frontside of your favorite pair of jeans but delivered in a more sophisticated way than ever before. Simple in the front, sophisticated in the back.

Retailers optimizing their technology to increase shopping convenience across channels are making progress in both customer experience and sales.

 

Experiential retail drives revenue & growth.
Build it with Retail Pro POS.

Learn more >

 

Overcoming the data deluge: 3 steps for retailers to cut through the noise and drive success

Overcoming-the-data-deluge

 

 

Retailers of a certain age will be able to cast their minds back to the 1990s, when they didn’t need to look much further than the trusted combo of a ‘POS’ and supply chain management tool. A lot has changed in the decades that have passed since: an ever-increasing amount of functions are running in the back end, so a typical retailer now uses a multitude of systems, including marketing systems, communications, RFID, ECMS, ESS, IMS, ICMS, DSS, WMS and many others. There’s been talk of Big Data across multiple business sectors in recent years, and retail is clearly an area where vast amounts of it have been created.

The growing amount of systems are the cogs that have made the wheels of the omnichannel retail explosion turn; however, for all the benefits they bring, it can prove easier said than done to manage all of them in tandem before you even start thinking about the impact the data generated can have on wider performance.

Put simply, failing to put that data to use means retailers are missing out. As the amount of data has grown, businesses have begun to offer to run analyses for retailers, using data to feed into decision-making, or even predict which American malls might be set to close. Specialist data analyst firms can certainly bring value, but it’s also crucial that as a bare minimum, retailers are on top of their own data, and able to put it to use themselves. Here are three steps retailers can take to ensure they overcome the data deluge:

 

1. Eliminate siloes

The first step is to make sure all the information generated by the various systems they use is fed back into the wider organization. Without this, the data points gathered will only benefit one isolated part of the organization, and will not be able to inform wider analyses.

Not all retail systems will be built with this in mind, so retailers should not just assume that everything will already be interconnected. They could even consider it as a potential selling point of new retail systems that are brought into the business in the future.

 

2. Get a holistic view

Once the data points have been connected, retailers need to ensure they are able to look over them from a top level, so they can see the bigger picture. This means having a system in place that allows them to plug all the data insights into one central pane.

This will put them in a position to make sense of it all, whether that’s for a quarterly update meeting with board members, or a luxury retailer being able to check all channels and locations for a specific item, so that it can be supplied to a high-net-worth customer at the drop of a hat.

 

3. Cast a critical eye

The final and most important step is for retailers to start drawing insight from what the consolidated data points are telling them. This is process turns ‘Big Data’ into ‘Smart Data’. For this to work, retailers must look to use the data to help draw an accurate picture of exactly what has been going on, what’s happening right now, and future trends.

 

 

Driving progress

Having taken these three steps, retailers can cut through the noise and be clear on exactly what the data points are that they have access to, and start to think about what they mean. Most serious retailers already have years’ worth of data to begin this process. Learning can come from customer data and their purchasing history, inventory data, vendor performance and brand preferences which then in turn can be used to feed marketing, clienteling and inventory management decisions. Then retailers can think increasingly smarter about the trends and opportunities that will drive future successes. Then they will be able to manage that knowledge in the longer-term, putting them in a great position to be confident they know what their customers want, and satisfy their needs.

 

 

3 Variables to Measure When Optimizing Customer Experience

A photo by Lechon Kirb. unsplash.com/photos/yvx7LSZSzeo

 

The number one area every company needs to improve is customer experience. Customer experience can make or break any retailer, but it is especially true with brick and mortar establishments.

Most retailers think they are doing an awesome job with their shoppers — but research shows just the opposite, and in a resounding way. One study said that more than 80% of retailers thought customer satisfaction was high, but only eight percent of customers surveyed agreed. Eight percent is very dismal.

Think online competition will lessen the importance of knowing your customers? Think again: As according to a Walker study, by the year 2020 customer experience will overtake price and product as the key brand differentiator.

But, you say, your customers are the eight percent! Let’s see:

• Are they loyal? What is your customer retention rate?
• What are customers saying on social media and what is your strategy for replying?
• How are sales?

It’s likely that the answers to those questions indicate your customers are outside the could use improvement.

If customer experience (CX) is in a few short years going to be so important, it’s crucial to start preparing now. There is plenty of time if you start crafting a plan immediately. Here are areas to consider studying.

1. Measure loyalty

How many customers are repeat shoppers from a year ago? How many times have they shopped in the past year? If you go back two years, can you find a pattern? Good results and bad ones are both insightful. If you don’t have a loyalty rewards program, now might be the time to implement one. Make the sign-up process simple, and keep reward offerings fresh to keep customers interested. Loyalty programs should never lose money — so be careful about what is offered to customers.

2. Research the customer & competition

Look at sales details. What is selling and what is languishing? Good point of sale software can make running that type of report easy, and the payback is immense. Then, look at the competition and discover what it is offering, and at what price. What is the customer experience like at your competitor? Your customer has many choices; figure out why he or she would want to buy from you and then offer those products and services.

3. Monitor Social Media

See what is said about your company by employees and customers. Act on it. Also learn what brands are popular. Can you offer them — or a smart alternative? Respond quickly to any posts directly to your company, even if it is just to let the customer know you are acknowledging the problem and will have an answer shortly. And, be sure to answer promptly — within an hour. In November 2015, Mediapost.com reported that 83% of those reaching out to retail brands on social media don’t receive a prompt response. A slow response makes new or existing customers hesitant in contacting your brand again.

In The Loyalty Effect, author Fred Reichheld said that just a five percent increase in customer retention can lead to a huge 25% to 100% increase in profit. Even if your customers are part of the happy eight percent of satisfied customers, it’s certainly worth the effort to put the effort in to keep them happy and loyal. And if they are in the remaining 93%, it’s a no brainer.

360° Customer View: Why Knowing Your Customer is Mission-Critical

 

img_SM_360-degree-customer-view

Retailers today need to know just about everything to stay ahead. Not only do they need to know who their customers are, but they need to know when they shop, how they shop, and what exactly they are shopping for. Understanding their customers and providing them with tailored experiences allows them to strengthen customer loyalty – a hallmark of greater revenue.
Historically, retailers based decisions on intuition, often planning campaigns around what they thought the customer wanted. Today, data and analytics has taken the place of these gut instincts, and retailers now have factual data observing patterns of behavior. Using in-store data such as past buying behavior can help retailers create targeted campaigns, and accurately cross sell and upsell.

Customer satisfaction is critical to business success. With so many options out there for customers, having accurate data about how to make customers happy is becoming increasingly important. Developing relationships with customers, and providing them with relevant promotions and discounts can help boost loyalty. Having the right tools in place to mine through data allows retailers to better understand where customers are in the purchase funnel and develop programs and offers to meet their needs.

Retail Pro International has written 360° Customer View- Why Knowing Your Customer is Mission Critical. This whitepaper provides insight into how data and analytics can help retailers create meaningful relationships with their customers. It outlines the importance of using data to drive sales by growing relationships, boosting retention and improving customer satisfaction.

Get the 360 Degree Customer View whitepaper today to discover how a 360° customer view can help you:

  • Improve campaign effectiveness with an omnichannel view
  • Create more up-sell and cross-sell opportunities with purchase history
  • Boost retention with relevant offers and special deals
  • Increase customer satisfaction — give shoppers what matters most

 

Get whitepaper

 

 

What Mobile 2.0 Means for the Omnichannel Retailer

Mobile 2 whitepaper

Shopper expectations impact retailer tech choices

For progressive retailers in 2017, it’s clear that the brick and mortar and traditional POS aren’t going anywhere. Nonetheless, advances in mobile technology have created an expectation from today’s savvier smart phone shopper for an omnichannel experience.

Everything from local store inventory visibility, in store pickup, loyalty programs, and social media demonstrate how the instore retail experience is being redefined.

Mobile 2.0 then marks the evolution of mobile technology from an accessory to traditional sales channel to now the driving principle within retail sector.

Redefining the retail experience

Mobile 2.0 technology is redefining POS and the brick and mortar experience for the shopper.

To be competitive today requires retailers to meet customer expectation for how, when, and where they will transact with their business.

In the whitepaper Retailers: Welcome To The Mobile 2.0 Platform, we outline expectations of the modern shopper and how retailers are leveraging mobile 2.0 to provide them with an even greater omnichannel experience.

Learn more about the mobile 2.0 technology that is redefining the customer experience so your business can achieve a successful omnichannel retail strategy.

 

Get Whitepaper

 

 

Retail’s top 2 in customer experience challenges

 

rawpixel

 

This blog post contains excerpts from the whitepaper, Artificial Intelligence: Driving Retail Customer Retention Today, by Retail Pro and AppCard.

Download the whitepaper now to learn more about how artificial intelligence can help retailers improve customer experience and retention.

 

For years, retailers have looked for ways to influence customer behavior, from the early days of paper punch cards to sophisticated, big box SAP and SAS based CRM and ERP systems.

Since then, loyalty programs have evolved from basic check-in solutions to more sophisticated check-in solutions that were able to communicate with customers via mobile app, text or SMS messages, and email.

While such solutions garnered some initial traction, retailers still yearned for a greater understanding of their customers, including SKU-level transaction details.

Today, retailers face two critical challenges in their quest to leverage data for better customer experiences: increasingly demanding shoppers and technology limitations.

 

1. Generation E (Expectations)
Customers—particularly Millennials—have become more informed, less tolerant, and increasingly demanding.

Their ever-increasing ability to shop around, research, compare, share, and explore alternative products, prices and options forces retailers to truly know their customers and understand their shopping motivations.

69% of consumers say their choice of retailer is influenced by where they feel most appreciated and can earn loyalty or rewards program points (Maritz).

Regardless of whether the shoppers are Baby Boomers, Generation X, Millennials or even Generation Z, retailers must realize that all of their customers belong to Generation E (Expectations), where they expect to build a relationship with their favorite brands and be appreciated for their business in exchange for their loyalty.

 

2. Tech limitations
The retail industry’s technological landscape is comprised of web developers, CRM and ERP providers, payment processors, network providers, and many more.

But the technology upon which nearly all brick and mortar retailers are still fully dependent is their Point of Sale (POS) systems, which are often highly fragmented and cumbersome.

With thousands of different POS providers in the market, and no true standardization, many retailers struggle or fail to integrate multiple data sources and retail channels (Mobile, eCommerce, In-store).

Furthermore, while the POS gives retailers access to critical KPIs like daily sales numbers, top selling products, and returns by cashier, but retailers need the ability to associate transactions to an individual customer in an actionable way.

This level of insight is integral for retailers to provide a truly personalized customer experience.

 

To address both of these retail challenges, SMB retailers are evaluating alignment and fit of the following trends and tasks to their retail strategy.

 

To continue reading more about the challenges and opportunities of improving the retail customer experience, download the whitepaper now.

Artificial Intelligence: Driving Retail Customer Retention Today

AI-for-retail-retention

 

 

 

 

Get Whitepaper

 

 

Brick and Mortar Retail Is On Its Way to Becoming a Media Channel

 

shutterstock_218766175

 

Many brick and mortar retailers have invested in providing customers exciting, engaging and satisfying shopping experiences in order to effectively compete against e-commerce.

Online retailers have done a remarkable job of offering shoppers the goods, pricing, and availability they want. The most recent figures available show continued strength for e-commerce sales: According to the U.S. Census Bureau, total e-commerce sales for 2016 were estimated at $394.9 billion, an increase of 15.1 percent (±1.8%) from 2015. Online orders increased 8.9% in the third quarter of 2016. 

Retailers with a base of operations in the physical world are now not only deftly entering the e-commerce arena, but they are leveraging their physical presence as well.

Brands becoming part of the in-store experience

Today, brick and mortar retail is on its way to becoming a media channel. In fact, some have suggested that retailers will not simply offer products for sale, but actually charge brands an upfront fee for the privilege of being a part of the in-store experience. So retailers might have a larger selection available online to customers, but a few, select lines are actually available to see “in person” on the showroom floor.

Think of brand boutiques in larger stores as a similar example of the strategy, but more curated, and the brands pay the retailer for the privilege.

Beacons used for personalized suggestive selling

Beacon technology is another way retailers can learn about shopper behavior.

These devices can learn where shoppers linger within a store and also provide shopper-specific information if a client agrees to opt-in to that type of data collection. That information can then be used by retailers to personalize the in-store experience, for example, suggesting available merchandise. 

Beacons can also remind shoppers of products they may have overlooked during the current shopping trip that they have previously bought. Beacons can also spotlight products a customer has previously expressed interest in, as the technology detects customers’ lingering in particular locations. 

Instead of associates spending all their time and energy on duties such as stocking shelves, counting inventory, cleaning, etc., they can instead focus on providing the best customer service possible. Managers can then invest more time learning how the store functions as a destination and how it can improve to exceed customer expectations.

2 Things Retailers Forfeit By Foregoing Employee Training

shutterstock_166783751

 

Providing customers in-store experiences that are unique, fun and yet still profitable is the challenge retailers with physical stores continue to face. The cornerstone to providing that vision to shoppers are employees.

Good employees keep a retailer running; great employees are its heart and soul. They believe in the product, brand or mission of the company. And they are customers themselves, so the know how to make shoppers feel special, convert browsers into buyers and cultivate loyalty.

But too many retailers underestimate the value of trained employees.

Just 35% of employers trained low-skill workers and hired them for high-skill jobs in 2015, and slightly fewer — 33% — plan to do the same this year, according to CareerBuilder. And while 68% of firms say they offer training programs, 50% say the budgets have not changed and 11% say budgets have decreased.

Here are 2 things retailers forfeit when they do no invest in training.

 

1. Cost Savings

Training can save retailers money. It reduces turnover, and staff retention reduces costs. It’s expensive to hire staff. It also provides the worker with the precise skills needed for his or her current position. It’s obvious that higher-end retailers, such as Nordstrom’s, think of service as a culture and use training to reinforce that ethic.

But smaller and lower-margin retailers are also embracing training for employees.

For example, Dollar General this month announced its full-year sales rose nearly 8%, and noted part of the reason for the sales bump were its managers.

During a conference call, CEO Todd Vasos said: “To strengthen our position for the long-term, we are making significant investments, primarily in compensation and training for our store managers given the critical role this position plays in our customer experience, as well as strategic initiatives.”

Dollar General saw a nearly 1% increase in same-store sales in 2016, and the discounter plans to open 1,000 more outlets this year. “In fiscal 2017, these investments will be focused on an increased compensation structure and additional training for our store managers, as they play a critical role in our customers’ experience and the profitability of each store.”

 

2. Staff Loyalty

Investing in employee training is a great way to improve your in-store service and get employees “on the same page” about what is expected, desirable, etc. In addition, employees expect some sort of training – Accenture found that 80% of 2016 college graduates expect some formal training from their employers.

Unfortunately, only 14% of employees would grade their company an “A” for the availability of training resources, according to another study from Spherion.

Training can make workers feel more marketable, which is appealing to staff but is often the reason employers shy away from it. Too many are concerned about training staff who will leave for a competitor. Given the high turnover rate at some retailers, it’s a valid concern.

However, while we think of providing high-quality service as driving customer loyalty, offering relevant employee training as a central benefit of a customer-service driven, flexible and creative work culture may be just the way to increase staff loyalty as well.

Embrace Social – Or Else

pexels-photo-50614

 

Social media is no longer the purview of newlyweds, new parents and kitten videos. It is increasingly used by retailers looking to strengthen their brands. Conversely, as mobile shopping continues to grow, social media is putting new power into the customers’ hands. Customers not only are using their mobile tools to purchase online or even in-store, but also to communicate with retailers. And the majority of them want responses. Now.

Most businesses use social as a way to promote their brand rather than as a true channel for facilitating two-way communication.  But consumers view social media differently: They see it as a way to have a dialogue with the store or brand. According to research from Sprout, 90% of people surveyed have used social in some way to communicate directly with a brand. Retailers are faced now with a very public airing of customer concerns. Email and telephone calls are no longer top-of-mind for the disgruntled customer. Instead, their gripe is online for all the view to see – and, potentially – agree with. Social media is the first option customers turn to when they have a problem with a product or service.

The first option.

One social media complaint can quickly turn into a disaster. Retailers, therefore, must respond quickly and publicly, because the response isn’t just aimed at the unhappy customer, it also must show potential customers and loyal shoppers alike that you care about all of their business. How quickly? Very. According to Convince and Convert, 42% of your customers will expect a response within 60 minutes, and 57% expect the same response time at night or weekends as during regular business hours. There is no rest for the socially weary.

How to respond? Be polite. Don’t try to be cute or funny in most cases, because it’s easy for that strategy to backfire. Then, simply apologize and invite the customer to private message you. Do not remove their critical comment or others’. (Trolls are different. Abusive or irrational commentary should be deleted and the poster banned.)

Once you have established a private dialogue, discover what the issue is, apologize and offer an explanation if appropriate and then come up with a plan to rectify the problem. Follow up to ensure the fix was implemented and satisfactory. The last thing you want is for a second complaint to be lodged on social media.

Unfortunately, brands generally do a poor job of responding to customer criticism. On average, brands reply to only 11% of those posts. And, to compound customers’ frustration, brands send 23 promotional messages for each response provided. That’s a recipe for louder complaints and reduced customer satisfaction.

Retailers face enough competition; they should not be fighting their own social media policies as well. By getting on top of negative posts in an honest and open fashion, they can take negative situations and turn them into positive ones. Even a service problem can be used to improve customer satisfaction, if handled promptly and in a manner in which customers feel is aimed at genuinely helping them.