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Technology Corner

CUSTOMER ANALYTICS in RETAIL - Know Thy Customers

PART III


Key Performance Indicators for Customer Analytics in Retail

  • Average Sale per Customer/Transaction:
  • Total sales $ for a given period divided by the number of customers or transactions for the same period
  • Units per Customer/Transaction:
  • Total number of units sold in a given period divided by the number of customers or transaction for the same period
  • Conversion rate: The number of transactions in a given period divided by the total number of customers who entered the store during the same period
  • Sales per Hour (for store or associate) – selling hours only:
  • Actual sales $ for the store divided by the number of selling* hours during the same period
  • *selling hours are used here rather than total labor hours
  • Sales per Hour (for store or associate) – total labor hours:
  • Actual sales $ for the store divided by the number of labor hours used during the same period
  • Time Spent in the Store: Average time spent by customers in the store can be measured through sophisticated techniques utilizing RFID and wireless technologies or manually. Reason for this measurement: There is a direct correlation between time customers spend in a store and how much they buy.

Retail Customer KPIs
  • Customer Gross Profit Customer GROSS Profit = Customer Sales - Customer Cost of Goods Sold for a period
  • Customer Lifetime Purchase Value - Monetary value of each customer's life time purchases from the retailer
  • Customer profitability - Customer Profitability = Customer Sales - (Customer Returns - Customer Cost of Goods Sold + Customer Promotion Expenses + Activity Based Cost of Servicing Customer) for a period
  • Customer Purchase Freq Count - Count of customer purchases transactions over a period of time
  • Customer Purchase Value - Monetary value of each customer purchase during a period with an average value for all purchases for the period
  • Customer Reference question - A rating from 0 to 10 that indicates if the customer would recommend the store
  • Customer Sales by Segment - This formula is dependent upon defining customer segments (based on age, education, lifestyle, income and other factors) and associating individual customers to specific segments
  • Customer Service Staffing - Face to face customer service staff count / total staff count
  • Visit to Buy Ratio - Sales Transaction Count per period / Visit Count per Period

Customer Service
  • Total number of customer claims
  • Customer profitability
  • Cost per delivery per customer
  • First request versus agreements
  • Orders delivered in full
  • Orders delivered on time
  • Documentation
  • Accuracy of the sales forecasting
  • Service performance against standard criterion

Other Customer-Centric KPI's in Retail
  • Conversion Rate - tracks how many visitors to the store are turned into customers.
  • Average sales per customer or transaction - Total sales for a given period divided by the number of customers or transactions for the same period
  • Inventory Store conversion rate - The number of transactions in a given period divided by the total number of customers who entered the store during the same period
  • Coupon conversion percentage - Percentage of coupons that have been used by customers
  • Profit per Customer Visit - Profit obtained from each customer visit. This way you can easily - set goals for your sales team in order to increase profits!
  • Units per customer or transaction - Total number of units sold in a given period divided by the number of customers or transactions for the same period
  • Customers per day/week
  • Items per customer
  • Average sale per customer/transaction
  • Units per customer/transaction
  • Conversion rate (customer into sale)
  • Percentage of income from return customers
  • Percentage of returning customers within measurement period

Customer loyalty KPI's in Retail

1. Total customer lost

  • The total number of customers do not buy your goods again
  • Number of customers includes: the number of first customers and customer loyalty removed

2. The rate of lost customers lost after purchasing first time

  • With total customer purchase first time removed / total customer purchases first time
  • This rate is low that may be due to some causes: your product is not suitable, good product but not good advertising

3. The rate of customer loyalty loss

  • With total customer loyalty lost / total customers loyal available
  • This is one of the most serious ratio that you need to note: the causes may include products and services more expensive, new better products with competitive prices appeared

4. The life cycles of a customer

  • Formula: a total relationship with customers / total client relationship

5. The rate of customers back

  • The rate of customer purchase up 2 / total customers
  • This rate is high that will let you know your products are attractive to customers

6. The rate of new customer

  • The number of new customers you gain in a time
  • The high rate prove that: either you're expanding a business or you are lost customer loyalty