Weathering the storm with performance indicators
Giovanna Dezza and Gloria Narrante
Why bother with KPI (Key Performance Indicators)? What do they have to do with the weather? In our experience KPIs are used in-store on a daily basis, if not several times a day. In other words, KPIs are commonplace, so what else is there to say?
What often happens is that a stores figures are used as an indicator of its health – is it sticking to the budget, is it performing better or worse than planned, how does it fare when compared with a similar store, is it overspending or wasting resources, etc.
Such information enables immediate decisions to be made. If the figures tell me that I am selling less of a particular product than expected, I can take action to promote sales, whatever form that may take. I could decide to hold a promotion, increase the margin or sell in bulk or larger formats, all may be effective means of boosting sales, but it is essential that such decisions are made with an eye on the near future, as well as the short-term impact; if a customer buys a multipack today, how much will they be buying next week?
My company tells me that I have to increase the average number of items per receipt, and I get my staff to propose a minimum of two products per customer. There will be those that offer the client two of the same type of item, and those that offer them two different items, but you can be sure that in the store across town, sales staff are already offering them three!
As pointed out by one of our clients, KPI assessment in store often leads to knee-jerk reactions: like firefighters we see a fire and try to put it out. However, each number is merely a snapshot of the situation as is.
Our idea is that a store's figures are clues to possible outcomes, helping us to understand what is going on and what then to do about it.