The festive season is just around the corner and with it comes end-of-year sales. In this blog you’ll get tips on how best to optimise your sales during this period. The more advanced your knowledge about generating sales, the more effective your strategies for growing them will be. In the end, all of this translates into more profit! You can use these five KPIs to optimise sales during the holidays.
1. Measure staff’s performance
Turnover per employee helps you gauge which employees are generating the most sales. With this information, you can create staff schedules with the highest ROI (i.e., prioritise the sales staff who generate the most sales). Calculate the revenue per employee with this formula:
Net sales (£) / number of active employees (#)
Why measure revenue per employee?
To get your staff working as efficiently as possible, it’s important to know how they’re performing. You can do this with an ePOS that tracks employee performance. Start by determining which employees sell the most, then look at exactly what they sell and when. Match your best performing employees to the busiest shopping hours to establish the most profitable staff rota possible.
How can you improve sales per employee?
The most efficient ways to improve revenue per employee include,
- Setting more challenging (but achievable) sales targets
- Providing sales or product training
- Rewarding incentives
- Giving your employees the right technology for success
2. Measure conversion
Conversion rate indicates the percentage of store visitors who make a purchase. Use this formula to calculate the conversion rate:
Number of transactions (#) / total number of visitors (#)
Why measure the conversion rate?
Conversion shows how efficient you are in converting visitors into buyers. Put simply, it demonstrates how skilled a salesperson you are!
How can you improve the conversion rate?
It all starts with your sales staff. They should be friendly, approachable and should know a lot about the products they’re selling. The real skill, however, lies in demonstrating the value of a product without coming across as pushy or intrusive.
3. Measure profit
Your gross profit is how much you’ve earned once you’ve deducted the costs of manufacturing and selling a product. Use this formula to calculate the gross profit:
Sales turnover (£) – cost of goods sold (£)
Net profit, on the other hand, shows how much you’ve earned after you have deducted inventory and overhead costs. Use this formula to calculate the net profit:
All income (£) – all expenses (£)
Why would you measure the gross and net profit?
It’s this data that shows whether or not you’re actually making money. Turnover is good, but to be successful you need to be making a profit. By keeping track of your gross and net profit, you can make smarter decisions for your business. For example, if your gross profit is low, you might consider looking for ways to reduce costs. When the net profit is low, you can look for ways to reduce overhead costs.
How can you improve gross and net profit?
Consider taking the following actions to increase your profit:
- Increase prices
- Increase the average transaction value,
- Decrease overhead costs
- Purchase from more cost-effective suppliers
4. Measure transactions
The average transaction value is the average amount spent per in-store transaction. To calculate your average transaction value, use this formula:
Total revenue (£) / number of transactions (£)
Why measure average transaction value?
Transaction value provides insight into how much, on average, each customer spends in your store. A high value can mean that customers are either buying a high volume of items or a lower volume of more expensive one. A good ePOS will tell you which situation applies to you.
Transaction value can also offer insights into how to improve sales. If you have a low average transaction value, this may indicate that you may need to rethink your pricing strategy or train your sales staff in upselling so customers spend more.
How can you increase your average transaction value?
The most effective way to do this is by training your staff to upsell (additional sales) and cross-sell (combined sales). When done right, this can greatly benefit both the store and your customers. However, what we mean by “done right” depends on the situation. Upselling or cross-selling irrelevant items, or items that lie outside the customers budget, is intrusive and makes for a bad customer experience.
Thew role of salesperson is to offer value to the customer. For example, if you run a shoe store, sales staff can offer the customer different shoes at different price ranges, making it easier for the customer to find the best pair for them. Customer can then compare items themselves, and ask staff any questions if needed. To increase conversion, employees can recommend shoe accessories (such as wax, deodorisers, etc.) to complement their initial purchase. In this example, the employee increases the average transaction value by offering the customer more value.
5. Measuring growth
Is your business headed in the right direction? Find out by keeping track of your annual growth. Calculate the year-on-year growth with this formula:
[(Current period income (£) – income previous period (£)) / income previous period (£)] x 100
Why measure year-on-year growth?
Any entrepreneur wants to see annual growth. The best way to measure your progress is to compare your current results with earlier ones. When you see that you are on the right track, this is a good indicator that your current strategy is working. However, when you see that you are losing market share year after year, you now have the tools to solve any problems.
Increase annual growth
First, figure out why you’re not growing as fast as you’d like. Perhaps the trends are shifting, or one of your competitors is eating up your market share. Once you’ve found the root of the problem, you can make a plan to fix it.
KPIs for the holidays
The insights outlined in this blog help you invest your time and resources in the most important aspects of your business, and maximise your ROI. It’s crucial that you make use of your business data. Use a comprehensive ePOS that lets you to export and download clear reports about inventory, staff and sales.
It is best to start preparations for the holidays as quickly as possible. That way, you reduce risk, increase profit, keep staff up-to-date and proactively meet customer demand during this period.