Do you have a KPI dashboard in store?
Key Performance Indicators are the drivers for your business.
There are a lot of similarities between a business journey and a road trip. Every business needs a map, which we call a business plan, directions, which we call the budget, and an idea of your current location, which we call Key Performance Indicators.
Key Performance Indicators, or KPIs, essentially become the GPS of your business.
Sharing your KPIs with the team ensures everyone knows the destination and how to get there.
If you are in retail or hospitality the general KPIs you need to track include:
- Sales: Your sales each day.
- Comparative Growth Sales: Generally you are comparing sales to same day last year sales.
- Average Transaction Value: Measure as a whole and for each employee individually.
- Labour Cost: Calculate both as a percentage of sales and as a dollar figure for the day.
- Sales per Labour Hour: This measures the “busyness” of your staff, or productivity.
- Average Hourly Rate: Use this to ensure you have a mix of younger and older staff.
- Unders or Overs: You may call it cash up or cash down. This is not technically a KPI, but it’s good to monitor anyway to avoid staff theft.
So now that you know which KPIs to track, how do you track them?
My first suggestion is to write your KPI targets on the whiteboard in your office; on a laminated business card to share with each staff member; and perhaps even on the bathroom mirror so that you see them every day.
Naming and seeing these KPIs every day places them front and centre for you to focus on.
Next is making your team accountable for meeting them on a daily basis. As with any good road trip, you need to plan out your route. My route was always the roster.
To give the team an even chance of meeting the KPIs, you need to prepare the roster with the budgeted sales figure — use the comparative growth figure you want to meet from last year’s sales.
Next up, using this comparative growth sales figure, cost out the daily roster so that if the sales are achieved then the labour percentage and sales per labour hour KPIs will also be met. Also put on there the Average Transaction Value (ATV) you would like to achieve.
If you know how many people you served on the same day last year, the ATV is easy to identify; simply divide it into the budgeted sales figure and you have the ATV you are aiming for.
By simply putting all these figures on the daily roster then the staff know what the targets are for the day. They don’t have to ask anyone; they just simply read the roster.
Dealing with deviations
But as we know with any route there are always diversions, distractions along the way. If this should happen in your business, how do you get your team to respond and get themselves back on track?
This is a matter of training and sharing tactics to increase the ATV by using an upselling strategy. Train staff on when to reduce or increase staff hours in the roster by using the sales per labour hour KPI.
Having staff understand KPIs, what they are, how they work and how to use them is paramount to achieving business success.
When you have put all that time into training, it is essential that you put a system in place in your store that makes your team accountable for meeting the targets you have set. I do this in the form of a KPI Dashboard that must be completed at the end of each day.
Training your staff to complete this dashboard allows them to see if they have reached their targets, with the added bonus that you can quickly see how your business is tracking.
You can put your dashboard on Dropbox, in a Google doc or in any dashboard software for the staff to complete each day. But be consistent. Make sure that they do complete it each day. Make them comment on why they missed or smashed a target.
Open the dialogue for three reasons:
- it helps you to determine your staff training needs
- it gives you the opportunity to congratulate the team on a job well done
- most importantly, you will know that your business is on track in as few as five minutes each day — that’s peace of mind!
The ulterior motive, of course, is that you are getting to your final destination on time and on budget. You will be achieving the profit that your budgets showed you could achieve.
Your success is guaranteed.