Using two KPIs for promotions

"You Can't Manage What You Don't Measure"

Retail big sale

Every now and then, you are going to have a big event in your shop, a local fair, a major sporting event near your shop, some advertising that you surged on. Etc ., You need to measure your shop to see how it went for you.

Here are two KPIs that I recommend you use in your shop as an absolute minimum for shop management.

Foot traffic

If you are in a shopping center, you may get this figure from the center management, if not or want personalised figure to measure this you need a simple counter that can be purchased from many electrical shops. Now what you do is set it up and generally last thing every day, you record the number of people that entered your shop on that day. You can get dearer ones that automatically do this but people counters, I have noticed is if you want something better then simple, the price and complexity goes up dramatically. As such I would suggest going with a cheap one first and afterwards if you discover you need more, look for a better one at least you will, then know what you need.

Now what you need to establish is a base count which is what you are your staff do everyday. Say, for example, you establish that you and your staff cause about 20 counts a day; you need to deduct this from the recorded number.

Profit per day

There are three measurements usually used - Number of sale, Turnover and Profit. The main reason that people use turnover is because marketers rarely get access to profit figures so most of the books and reference material work on turnover. This is not a problem with most SMB shops. So I would suggest my clients concentrate on Number of sale and Profit and ignoring turnover.

Now there are a number of profit reports in your POS system, check a few until you find one you like. I like the top sales report as it gives all the information, but you may prefer something else.

After a while, you can start doing the analysis.

Select a day say a week before the promo and compare its foots traffic to the promo foot traffic.

Similarly compare the profit figure to the promo.

This gives you six points to consider.

Foot traffic Profit Possible causes
Up Up A great result - you need to figure out what you did right
Up Similar People came but maybe those promo people did not like what you had or maybe you did not present the promo correctly.
Up Down Almost certainly the discounts you offered were too large for what it was
Similar Up No-one came because of the promo but interestingly your regulars brought more
Similar Similar Nothing, promo was a waste of time and money. Unfortunately, this is all too common.
Similar Down No-one was interested in the promo but your clients who are bargain hunters took advantage of the promo
Down Up Probably something stopped people coming like the weather, but I would not write off the promo yet as those people that did come did buy more
Down Similar Again, something stopped people coming, but this needs investigation as less people and you have more sales per person
Down Down Again, probably something stopped people coming, but less people so less sales is in this case a normal result

This sort of analysis is commonly done by professional marketers. So have a play and see how you go.