Five Things You Should be Measuring About Your Business
Posted by Guest Author on June 26, 2013 in Business Management, Business Technology, POS Systems, Retail, Sales 2.0 [ 0 Comments ]
In my experience, most merchants are motivated by a passion for their chosen field. They start a chocolate shop because they are passionate about making chocolates. Or they open a yoga apparel store because they are genuine devotees of the discipline. I, on the other hand, started a wine store because I love business.
I love wine, don’t get me wrong, but when I was running my store I liked nothing more than taking a deep look at our inventory management or employee scheduling. I enjoy the process of analyzing the numbers, making informed, intelligent decisions and measuring how much they moved the needle. That’s part of the reason why I designed an entirely new point of sale system; I found that the systems available just weren’t giving me the numbers I wanted to see, where I wanted to see them. With that idea in mind, I have aggregated some key metrics that any business owner can and should be tracking.
Related: POS Trends: What’s New for 2013
1. Overall Sales by Hour
As store owners we can all make intuitive guesses about when our businesses are most busy. However, having concrete numbers lets us make more informed and intelligent decisions about critical things like opening hours and staffing levels. For example, if you are seeing dramatically higher sales towards the very end of your business day, it might be worth staying open longer. Similarly, if you are seeing a huge lunchtime peak, it might be time to think about adding staff during the rush.
2. Item Sales by Hour
We all know that coffee is a big seller in the morning, but what should you be asking your cashiers to cross-sell? Which treat should be prominently displayed next to the register? Muffins or Croissants? Cookies or Brownies? Donuts or…well, you get the point. Learning which items are selling at different times of day can help inform your inventory management, your promotional plans and even what time of day you turn the slush puppy machine on!
3. Sales by Employee
It’s crucial that you understand how your employees are performing so you can train and reward them as appropriate. This is particularly important if your business hires skilled or semi- skilled staff, such as at hair and nail salons. I think we’ve all seen how a skilled, knowledgeable and confident sales person can make a big difference in convincing customers to purchase more of your better margin products. Additionally, identifying this employee is a great opportunity to share ‘best practices’ with the rest of your team.
4. Tracking Your Margins
From behind the counter, it’s all too easy to mistake a busy day for a great business day, but just because something is selling like hotcakes doesn’t mean that it’s really growing your bottom line. If only we could all sell nothing but cosmetics or movie theater popcorn, we’d all sleep more soundly at night. Sadly, most retailers have to deal with a product line where the margins range down from the reasonable to the super-slim. That’s why it’s really important to ensure that you are doing what you can to increase sales of high-margin items.
5. Track Your Most Frequent/Important Customers
It is crucial to identify and reward the core group of repeat customers that are disproportionately contributing to your revenue. You can do this by collecting customer emails using a modern point of sale system and sharing offers with them. Not only should you track how much this group spends, but also look at which products they buy. Understanding what your core customers want can really help you streamline your product offering.
With all of these metrics remember the old carpenter’s adage: “Measure twice, cut once.” When making data-based decisions you have to make sure that you are identifying a lasting trend, not just an aberration caused by a holiday weekend or a particularly rainy April. Good luck and happy measuring!
Author Bio: Jason Richelson is the CEO and Founder of ShopKeep POS, a cloud-based iPad point of sale system. Jason is dedicated to creating an affordable, reliable and intuitive POS solution that works for merchants just like him.