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Customer retention in retail is a long-term growth strategy that not only boosts brand loyalty but also improves your bottom line. For small businesses, repeat customers are critical acquiring new ones can cost 5–10 times more than retaining existing customers. And repeat visitors don’t just spend more they come back more often, creating steady sales and predictable revenue that’s essential for retail growth.
So if you’re asking, “How do I keep my existing customers coming back?” weighs more than “How to acquire new customers?”. In this blog, we will discuss 7 low-cost, yet powerful strategies for customer retention. These strategies help you build lasting customer relationships and achieve long-term success.
Retaining customers is essential for long-term retail success. In today’s competitive market, building loyalty is more than just offering discounts; it’s about creating meaningful connections and experiences that bring customers back. Below are seven proven retail customer retention strategies that will help you boost repeat sales, strengthen customer loyalty, and grow your business sustainably.
Retail loyalty programs are a marketing strategy that rewards consistent customers for their repeated purchases and continued engagement. It is a powerful marketing strategy with proven results in improving customer retention, customer engagement, brand loyalty, and better data collection. In short, a good loyalty program is like a silent salesperson, whose ongoing influence lets the customers keep coming back. Loyalty members are known to visit up to 20% more frequently than non-members, which is especially impactful for small retailers aiming to build consistent, repeat foot traffic.
Remember, simple and direct loyalty programs are more effective as they urge increased customer participation.
SMS marketing is one of the most effective retail strategies for customer retention, with open rates as high as 98%. Even better, SMS drives conversion rates that are 3 to 5 times higher than email, making it one of the strongest tools for turning engagement into actual sales. By delivering timely, personalized messages, SMS campaigns help retailers stay top-of-mind and build lasting customer relationships.
Use SMS to inform customers about restock alerts, exclusive discounts, flash sales, and early access to new products. Personalized messages re-engage inactive shoppers, increase repeat purchases, and drive customer loyalty. Time-sensitive SMS notifications create urgency, encourage immediate action, and significantly improve conversion rates, making SMS marketing a powerful tool for growing your retail business.
Bounce-back deals are time-limited incentives that create a sense of urgency and motivate customers to return after their initial purchase. From encouraging repeat purchases to increasing customer lifetime value, bounce-back offers are critical in improving the customer retention rate.
Here are some examples of bounce-back offer that compels the customers to make a second visit and purchase from your retail store:
This creates immediacy and entices the customer to spend $50 on the initial purchase to obtain extra discounts on the next purchase. By giving the customer a reason to return within a specific time frame, your business can benefit from repeat traffic, more sales, and improved customer relationships with the brand.
Converting a first-time buyer into a loyal subscriber reveals the credibility of the brand and its services, and how well the brand interacts with the customers. More than a business strategy, these conversions indicate the relationship between the brand and the consumers.
Transitioning a customer to a subscriber is a continuous process, with several factors taking a key role:
Pro tip: Communicate and deliver value to the customers through regular outreach, but ensure you don’t spam their inbox and disrupt their experience.
Building brand loyalty and enhancing customer satisfaction often involves psychological marketing strategies, such as offering customers freebies, unexpected rewards, and surprises that create a positive emotional connection with customers. This creates a sense of exclusivity and belonging that fosters customer interest in investing in the brand.
Beyond giving freebies with purchases, hooking customer interest and making them feel valued can be as simple as sending a thank-you video, a handwritten note, or wishing them a happy birthday.
Businesses can also use this strategy to introduce new products to their customers, boosting the potential for future sales. As a key aspect of customer retention, it enhances overall customer experience, bolstering loyalty and emotional connection, and generates curiosity among loyal customers, ultimately turning them into passionate brand advocates.
Referral marketing is one of the most cost-effective and impactful customer retention strategies for growing your retail business. Referral marketing is impactful, cost-effective, and drives better results, which is why retail marketing emphasizes building a base of satisfied customers to support ongoing customer acquisition. By simplifying the referral process, businesses make it easier for customers to share their experiences, promote the brand, and recommend products to their family, friends, and professional connections.
Implementing a streamlined referral program allows customers to easily share product links or codes, enhancing brand visibility and simplifying the acquisition process. By offering mutual incentives for both existing and new customers, referral programs drive engagement. For example, the ‘Give $5, Get $5’ program incentivizes referrals by rewarding both the referring customer and the new customer, fostering increased participation and brand promotion.
Obtaining accurate insights and feedback from customers is the most direct method for identifying customer expectations, areas of improvement, and potential enhancements to the overall experience. Implementing feedback collection through surveys, via QR codes, or SMS is both efficient and effective, offering benefits such as ease of deployment, cost-effectiveness, and the ability to gather actionable, data-driven insights.
Making positive feedback visible to the public, by sharing it on platforms like Google or Yelp, enhances credibility and brand reputation. Redirecting negative feedback to a private channel helps protect your reputation while allowing you to address customer concerns and identify areas for improvement.
Utilizing customer segmentation allows for the identification of customers who have not made a purchase within a defined time frame (e.g., the past three months), enabling targeted feedback collection. This segmentation strategy provides valuable data for analyzing product strategies and optimizing offerings to better align with customer needs.
The retail sector is an extensive arena with numerous strategies playing a key role in its success. Understanding the indispensable role of customer retention and implementing the right strategies to satisfy existing customers is the ultimate way to empower your business. By building a positive connection with your customers, delivering the value they expect, and making them feel important, you can establish a strong foundation of loyal customers and enhance your brand reputation.
Empowering your business through impactful, result-driven solutions, retailcloud provides optimal retail management systems that streamline operations, enhance customer engagement, and drive business growth. Moreover, we have built a free Loyalty Launch Kit that includes:
Leverage the right roadmap to implement effective customer retention strategies with retailcloud. Schedule a demo with us for tailored strategies and a clear pathway to achieving your business goals.
Customer retention strategies are essential in retail because retaining existing customers is 5–10 times more cost-effective than acquiring new ones. Loyal customers not only make repeat purchases but also spend up to 67% more than first-time buyers. They are more likely to recommend your brand to others, helping increase sales, brand loyalty, and long-term business growth.
One of the most effective strategies is implementing a well-structured loyalty program that rewards repeat purchases and customer engagement, encouraging long-term brand loyalty.
SMS marketing allows direct, personalized communication with customers, offering time-sensitive promotions and updates that boost repeat purchases and keep your brand top-of-mind.
retailcloud provides a free Loyalty Launch Kit, SMS marketing templates, referral and feedback workflows, and a win-back sequence—all designed to help retail businesses retain more customers effectively.
Successful business strategies depend on numerous tactics, with retail metrics being crucial among them. Retail metrics are integral in evaluating business performance, tracking growth, and developing sustainable strategies that benefit the business in the long term.
For small and medium enterprises, timely tracking of retail metrics and implementing the right business approaches have proven to increase sales, optimize operations, and keep them competitive in the marketplace. In this blog, we will discuss 12 retail metrics that every small and medium-sized business should consider to drive profitable growth.
Retail metrics refer to quantifiable data that businesses can assess to gain insight into diverse aspects, including performance, operational efficiency, employee productivity, customer satisfaction, and inventory management. These metrics can be useful in making informed decisions, identifying areas for improvement, and integrating strategies that tackle challenges.
For small businesses, key metrics span areas such as sales, operations, inventory, and customer service. Consistent evaluation of these areas provides actionable insights, including:
Sales per square foot is a critical metric used to determine the efficiency of businesses. By calculating total sales or revenue generated per square foot, businesses can estimate the accuracy and efficiency of their retail operations and strategies.
Sales per square foot can be calculated with the following formula:
Sales per square foot = Total revenue generated / Total square feet of the sales space
Sales per square foot is an efficiency indicator, where a higher result signifies greater efficiency, space utilization, and operational efficiency. This metric is more useful for brick-and-mortar stores, where measuring the performance and efficiency of physical stores is critical. By understanding the performance of store layout, businesses can address the shortcomings and develop better approaches to boost sales and maximize space productivity.
Gross Margin Return on Investment (GMROI) is a retail metric that measures the profit businesses make from the amount invested in inventory stock. In simple terms, GMROI is a measure of inventory profitability.
GMROI = Gross profit/Average inventory cost
By calculating the total profit per average inventory cost, retailers can measure the profitability of specific products in the inventory. The specificity offered by this financial metric can be beneficial in identifying the profitable products and categories in the inventory, giving retailers insight into items worth investing in.
Average Order Value (AOV) is a performance metric that indicates the average customer spend on each order within a timeframe. As the right marketing plans play a crucial role in driving sales and maximizing revenue, AOV is an indispensable tool for small-scale businesses.
AOV = Total sales revenue/Total orders
AOV, as an essential retail metric, helps businesses identify customer purchasing habits, evaluate online marketing efforts, and aid in setting goals and strategies for further growth.
While acquiring new customers is a growth indicator, customer retention is the key to understanding how well the business satisfies its existing customers. Measuring customer retention rate (CRR) provides insight into factors such as customer satisfaction and brand loyalty.
CRR = ((E-N)/S) X 100
Where:
Customer retention rate is a crucial metric that is directly related to customer loyalty and profitability. As loyal customers are more likely to return and invest in more products, retaining existing customers provides numerous benefits to the business, including:
Conversion rates are direct indicators of several factors of the business, including:
Conversion rate = (Number of sales/Number of users) x 100
A higher conversion rate reflects strong and effective business strategies that meet customer needs. On the contrary, a low conversion rate indicates areas for the business to address and improve, including inefficient customer service, inconvenient store layout, and poorly managed inventory. Regular monitoring of these metrics can help businesses make informed decisions that boost business performance.
Inventory turnover is an efficiency ratio that measures a business’s efficiency in managing its inventory. It indicates how many times a company turned over its inventory within a timeframe.
Inventory turnover = Cost of goods sold/Average value of inventory
Monitoring the inventory turnover ratio helps businesses make revised decisions in various aspects, including pricing, manufacturing, marketing, and purchasing. Furthermore, a lower inventory turnover ratio signifies weak sales, whereas a higher ratio indicates strong sales.
Running out of high-demand products can severely impact both revenue and customer satisfaction. Stockout rate is an integral inventory metric that helps businesses track how often they run out of products and fail to meet customer demand.
Stockout Rate = (Number of Stockouts / Total Sales Opportunities) x 100%
By adequately monitoring stockout trends, businesses can adjust their inventory planning and forecast demand more accurately to avoid lost sales.
Assessing foot traffic and website visits reveals several key aspects of business performance and customer engagement. These indicators signify the customer-business relationship, the effectiveness of the marketing strategies, and how well the brand performs in physical and digital storefronts.
Understanding these metrics can be beneficial in creating new approaches and enhancing existing ones to make them more effective and customer-centric. Foot traffic can be measured using manual counters, infrared sensors, cameras, or other tracking systems. Website visits can be measured using analytics tools or built-in insights.
Customer Acquisition Cost (CAC) refers to the average cost a business spends to acquire a new customer. It accounts for diverse costs associated with customer acquisition, including sales, marketing, hosting, and staff costs.
CAC = MCC/CA
MCC = Total marketing cost for gaining a new customer
CA = Total customers acquired
Customer Acquisition Cost is integral for businesses to measure the value of a customer to the company. Moreover, this metric is also helpful in calculating the return on investment (ROI) from marketing and sales strategies.
By knowing your customer, understanding their needs, engaging with them early, and employing proper acquisition strategies, you can provide a positive customer experience that keeps them coming back for continued use of your services.
Although Customer Acquisition Cost (CAC) is a critical performance metric, many small and mid-sized businesses (SMBs) encounter difficulties in accurately calculating it. This is often due to the difficulty in distinguishing between organic and paid acquisition channels. Moreover, without tracking Customer Lifetime Value (CLV), it becomes difficult to assess whether acquisition efforts are truly profitable.
Strategic financial structuring is an important factor that ensures that the team is competitively paid while not compromising the profitability of the business. This is one reason why calculating payroll percentage becomes critical.
Payroll percentage refers to the gross revenue of the business spent on payroll.
Payroll percentage = (Actual payroll costs/Total sales revenue) x 100
Most companies aim for a payroll percentage of around 15%-30%. Finding how much of the gross revenue goes towards payroll aids small and mid-sized businesses plan, organize, and allocate revenue reasonably across different sectors. From cost control and profitability insight to benchmarking, this metric plays an integral role in evaluating operational efficiency and guiding strategic staffing choices.
Same-store sales, also known as comparable-store sales, are a financial metric that measures the revenue performance of existing stores that have been operating for a certain period, typically at least one year.
Same-store sales = [(Sales in the current year/ Sales in the previous year) – 1] x 100
Same-store sales are true performance indicators that highlight the growth of the business over a significant timeframe. A positive number in same-store sales indicates that the business has been performing well with better management practices and follows healthy consumer demand.
Sell-through rate is a retail metric that indicates the performance status of specific products in the inventory. With this data, businesses can evaluate and understand the products that are underperforming and overperforming.
Sell-Through Rate = (Number of units sold / Number of units received) x 100
Sell-through rate is a crucial indicator for businesses to derive precise approaches to stocking and inventory management. Companies can determine whether to run a marketing campaign or promotion to boost underperforming items or restock overperforming products.
Data-driven insights are an advantage for small and mid-sized businesses to keep track of their performance, identify underperforming areas, initiate steps to improve, and facilitate the stronger areas to thrive. Moreover, retail metrics help achieve business objectives by providing measurable benchmarks and aligning strategies with customer behavior and market trends.
Drive business growth through retailcloud’s comprehensive retail management solutions. Let’s turn your store into a data-powered growth engine. Book a 20-minute walkthrough and we’ll show you which metrics matter most for your type of business.
1. Why are retail metrics important for small businesses?
Retail metrics provide data-driven insights that help small businesses make informed decisions and develop effective retail strategies. These metrics are essential for tracking, analyzing, and optimizing key aspects such as sales performance, customer behavior, inventory management, and overall profitability. By understanding these areas, small businesses can identify opportunities for growth and areas needing improvement.
2. How often should I track these retail metrics?
Regular tracking of retail metrics is integral for the growth and success of retail businesses. Metrics like daily sales, foot traffic, and inventory levels are best monitored daily or weekly to make timely adjustments. Metrics such as customer retention, profit margins, and conversion rates can be reviewed monthly or quarterly for strategic planning. Consistent tracking ensures accurate insights and timely action.
3. Which metric is most important for improving profitability?
Gross Margin Return on Investment (GMROI) is one of the most important metrics for improving profitability. As it is more directly linked to profitability, GMROI is considered critical in boosting business performance.
4. Can I track these metrics without expensive software?
Yes. While advanced tools and software can simplify the process, many retail metrics can be tracked manually or using basic tools like Microsoft Excel or Google Sheets. Additionally, many basic POS (Point of Sale) systems include built-in reporting features that help track sales, inventory, and customer metrics efficiently and affordably.
5. What is the best way to start tracking retail metrics?
Start by defining your business goals, then identify the key metrics that align with those goals. Choose suitable tools and begin tracking the metrics consistently. Regular monitoring, timely analysis, and actionable insights enable small businesses to make informed decisions that drive success.
SMS marketing is a powerful tool that can be used to reach a wide audience, increase sales, and boost customer engagement.. In the digital landscape of today, businesses strive to stay ahead of the competition by embracing innovative marketing strategies. While email campaigns and social media advertising have long dominated the digital marketing platforms, SMS marketing has been overlooked as a marketing campaign.
SMS marketing presents a unique opportunity for businesses to connect with their target audience directly through text messages. These text messages can be used to drive traffic to a business’s website. Businesses can include a link to their website in their text messages. This will allow customers to easily visit the website, learn more about the business, and play a pivotal role in driving organic traffic, improving website visibility, and ultimately boosting your online presence.
According to the following statistics, for every 100 text messages sent:
These statistics are much higher than any other marketing campaigns as SMS marketing is personal, timely ,quick and optional.
Collect and analyze customer history: To send targeted text messages, retailers need to know what the customer has purchased in the past or which store they have visited. This history tells you about the customer preferences to leverage and increase conversion rate.
Opt-in and opt-out options: Give customers the option to opt-in or opt out of receiving SMS messages from your retail business. This empowers them to control their communication preferences and ensures that you’re targeting individuals who genuinely want to hear from you. Make the opt-in process seamless and straightforward, and respect customers’ choices to foster trust and loyalty.
Keep your messages precise and include a CTA(call to action): Text messages with CTA should be short and precise to encourage customer engagement an example of CTA will be “ Limited time offer- shop today and get 10% off on your purchase”
Use a variety of messages: SMS marketing is not just about promotional offers but these messages can be reminders to use up loyalty points, birthday wishes or just a hello message to remind customers about your business.
Track your results: It is important to track the results of your SMS marketing campaigns so that you can see what is working and what is not. This will help you improve your campaigns over time to increase engagement and conversion rates.
Customer history can be used to create more targeted and personalized SMS marketing campaigns. By understanding what the customers’ preferences are. Retailers can send them more relevant suggestions and timely messages that are more likely to be opened, clicked on, and converted.
For example, if a customer has previously purchased a dress from your store, you could send them a text message with a special offer on a new dress or matching shoes that you just received in stock. Or, if a customer has recently viewed a product on your website, you could send them a text message with a reminder to complete their purchase. Here are some statistics on why you should use customer history for your text marketing:
The most effective and sustainable way to collect customer history is by using a cutting-edge Point of Sales solution, retailcloud POS solution offers an SMS marketing platform that can help you create and send effective SMS marketing campaigns. retailcloud’s SMS marketing platform includes features such as:
With retailcloud solutions you can even personalize text messages further by offering customer loyalty points for their birthday and also have the ability to see customer responses and respond to them to strengthen customer relationships. With Retailcloud, you can create and send effective SMS marketing campaigns that will help you reach your target audience, increase sales, and boost customer engagement.
SMS marketing is a powerful tool that can be used to reach a wide audience, increase sales, and boost customer engagement. By leveraging customer preferences and integrating them into your SMS campaigns, you can create highly targeted and personalized messages that are more likely to be successful.
Additionally, SMS marketing campaigns can generate user engagement and social signals. When customers receive a compelling SMS offer, they may share it with friends or on social media platforms, thereby increasing brand visibility and potentially attracting new customers. These social signals can positively influence your SEO rankings, as search engines consider them as indicators of brand authority and popularity.
“70% of the customer’s journey is based on how the customer feels they are being treated” (McKinsey). But how do you figure out how a customer feels after they’ve shopped with you? How do you gauge their satisfaction? You get feedback.
Customer feedback is a vital tool for small businesses. It helps them connect with their customers, gain insight into what’s working and what isn’t, and identify areas where they can improve.
Customer feedback allows small businesses to learn about their audience and tailor their products and services to meet their needs.
This leads to higher levels of engagement, satisfaction, loyalty, and repeat purchases — all of which contribute to growth.
“According to Survey Monkey research, 85% of customers will like to give their feedback when their experience went good with the brand or company, and 81% will give feedback when their experience went bad”.
Customer satisfaction surveys typically ask questions related to how likely a customer is to recommend a business based on their experience
Happy customers are looking for ways to tell others about their experience with a company. They’re more likely to buy from you again and recommend your business to others — which can lead to increased sales over time. According to Forbes, “companies that are customer-centric are 60% more profitable than companies that are not”.
“89% of consumers are more likely to make another purchase after a positive customer service experience” (Salesforce Research). It’s important to keep your existing customers happy so they continue doing business with you instead of leaving for other options. Furthermore, “68% of consumers say they are willing to pay more for products and services from a brand known to offer good customer service experiences” (HubSpot).
For all businesses, especially those just starting out, the impact of bad customer experience can be devastating. The loss of a single customer is more than just the loss of one sale; it’s the loss of an entire lifetime of revenue.
The biggest drawback of a bad customer experience is the damage it does to your brand. Customers who have had poor experiences with your business are unlikely to recommend you or buy from you again. This means that they will not promote your brand through word-of-mouth marketing or online reviews and ratings. In a survey conducted by Khoros, “65% of customers said they have changed to a different brand because of a poor experience”.
In addition to hurting your ability to attract new customers, negative reviews can also make existing customers leave for another company that offers better service. According to Zendesk, “after more than one bad experience, around 80% of consumers say they would rather do business with a competitor”.
“72% of companies believe they can use analytics reports to improve the customer experience” (Deloitte). Feedback analytics are an effective way to measure and improve customer experience. Every business can use data from customer feedback and surveys to drive profits and grow.
Here’s How:
1. Improve your customer experience with NPS surveys
2. Measure satisfaction with CSAT (Customer Satisfaction) surveys
3. Use NPS data to make strategic business decisions
retailcloud’s platform, combined with its cloud-based pos systems, allows business owners to directly engage with their customers by sending them surveys via email and text receipts. They can personalize their messages and prompt customers to give specific feedback.
Data on customers can be very beneficial to businesses and can help them in giving the customer exactly what they want with their products and services. “According to Genesys, 9 out of 10 customers give values to a company having knowledge of their previous purchase and preference”.
Customer feedback is a powerful tool that businesses should embrace to foster growth and success. By actively listening to customers, analyzing their feedback, and acting upon it, companies can drive positive change, improve customer satisfaction, and differentiate themselves from competitors. Remember, customer feedback is a continuous process, and businesses that prioritize it will not only survive but thrive in an increasingly customer-centric marketplace. So, listen, learn, and evolve to create remarkable experiences that leave a lasting impression on your customers.
With retailcloud, business owners can access customer data and feedback from anywhere, utilizing their retail cloud POS system. It has never been easier to view CSAT, NPS as well as customer preferences, and make informed business decisions.
At retailcloud we love lists; our support team keeps a list of all features that are requested by users, our partner team keeps a list of what is important to our partners and our product team keeps yet another one on what are key industry drivers.
Recently our AI and analytics team was playing with some models to mash up all the data and see what features should be developed based on these three lists as well as what could have the greatest impact on our customer’s bottom line.
If you have been following our blogs you will see that we, and our industry, have been talking a lot about the impact of customer retention and building brand loyalty and experiences, and so while a feedback and rating system was not on our product roadmap we were not altogether surprised that our AI modeling told us that an application where customers could provide instant feedback to merchants, AND where merchants had tools and insights to make customers into fans made sense.
And so feedbk (pronounced feedback) was born; feedbk is a real time rating application that allows merchants to easily obtain feedback from their customers at the Point of Sale. It keeps track of 3 metrics for a retailer;
This feedback is automatically combined with segmentation which is critical in allowing operators to immediately identify problem areas and rectify them; it is also able to provide retailers with the ability to gauge opportunity costs that are related to such issues. feedbk operates entirely on the retailcloud platform so it can provide operators with actionable analytics on how to increase units per transaction, identify ideal product mixes, and in general, identify their most valuable customers.
It’s just version 1.0, but we are excited about feedbk and the machine learning opportunities that come from it. We believe that it is the first of many pragmatic analytic solutions from our AI team that will allow small and mid size retailers to quickly access where their staff can best focus their efforts.
As part of the retailcloud sales team, at least 2-3 times a week I speak with a business owner who tells me that their biggest issue is staying on top of the cash flow; in fact a not to uncommon statement is that we just had a great month but I don’t know where the money went.
Managing your Cash Flow and effectively converting inventory into cash are the most important things that small business operators do. With that in mind I thought I would put together a very high level post on some basic practices on cash flow management. If you want some complexity we have other posts on managing cash flow, GMROI and sales to stock and cash to sales ratios that can take you to the next level but this for the basics.
Let’s begin by taking that money and putting it into some piles
Paying Sales Tax – this is often overlooked, but start first by running your sales tax settlement reports and put that aside for the tax man – there is no getting around that. While you are doing that, make sure that the amount you are reserving is in line with what your sales are – often items are not properly set up in your system and you may have neglected to collect the correct taxes.
Paying your Employees – Look at your time clock reports and forecast what you need to pay your employees, remember to carefully set aside withholding amounts and any other employer contributions. These are monies that you don’t want flowing into your operating accounts.
Keep your doors Open – Know what your fixed costs are (Rent, Utilities, Business Operation Fees) and prorate them so you are setting aside enough to cover these fixed expenses. Having accurate projections will allow you to forecast what your minimum sales are on a daily basis to cover overhead.
Replacing your Inventory – Finally set aside enough to replace your inventory, if you are buying on account you will need to pay your vendors and if you are paying on delivery you need to keep your items stocked at optimum levels. While doing this, consider what you stock on hand is and determine if you are better off investing in complementary products. Have a look at our posts on Increasing per Unit Sales.
See what’s left over – This is for you if there is not enough to go around, you only have a few choices
These are 4 simple checkpoints – having these good practices will help you build a strong and profitable business. The majority of business failures occur due to poor cash management.
The key to retail success is having a plan you can implement, reducing the variables and executing the plan to perfection! Ok So you knew that already, but how do you go about doing that.
Since you are reading this, I will assume you are part of the 20% of retailers that have put processes in place to monitor your expenses, manage your inventory levels and are reviewing your product mix and performance.
You might even be part of the 20% of the 20% that has implemented a CRM that tracks customer preferences and is aware of slippage activity; if you are just doing loyalty that’s not good enough.
So you are now part of the 20% of the 20%, now what – how do you get to be 20% of the 20% of the 20% that is executing to perfection. Let’s look at one of the simplest ways to get there.
Put another way :
80% of all small business are content with opening the doors and waiting for customers to come in – when they do they focus on selling them what they have and meeting whatever needs they ca,
20% of them are looking at their product mix and managing their costs and inventory levels on a regular basis – They are aware of a key KPI’s and are looking for ways to increase margin and ROI.
20% of that 20% (4% of all merchants) are taking it a step further they have implemented a CRM and have launched an online commerce store – they work hard at trying to increase their foot traffic, focusing on marketing, making their inventory visible and doing what they can to match their stock levels to customer preference.
The difference makers – the ones who seem to have all the luck the 20% of the 20% of the 20% (thats .8% or 80 out of a 1000 businesses) are focused on doing more with what they have – seems simple but often misunderstood it’s focusing your energy and efforts on where they make a difference. Make every action count! What does that mean.
How many customers come in and how many are buying – if for example 10 out of every 50 customers who come in buy something, focus on what it takes to get that to 11 – that immediately reflects a 20% increase in sales. Are they looking for sizes, color or product you don’t have – can you meet those needs using retailcloud’s endless aisle or predictive reordering to ensure you have the right mix? Does your clienteling system allow you to suggest substitute products?
Yes again you are right everyone says that , but what kind of insight does your POS system give you on similar customers, are you using machine intelligence to recommend items based on what customers have selected as well as what that customer has previously purchased? If your average units per transaction are 1.67 and you get 1 out of every 5 customers to buy one more item this could result in a 12% increase in sales.
Look at what how many customers are coming back and how often, does your POS system allow you to reach out to them with targeted offers (promos or experiences) to drive them back – the better you know your customers the more effective experience based marketing is; say for instance you know they love UnderArmour shoes, invite them back for an early preview of the new shoe line; or if they like a certain wine – allow them to reserve part of that allocation before it comes in – (use the retailcloud prepaid feature). Utilize the valuable information in your customer preference profiles. If you can increase your customer retention by 10% this again would have a huge impact on your bottom line.
So what does it take to be the 20% of the 20% of the 20% – it’s the little details; while your competition is using a scrambling approach you can focus on the details and successfully execute a winning strategy.
retail Key performance Indicators ( KPI ) in combination of recommendation & pragmatics analytics are key to solve sales challenges retail companies are facing. If you would like to learn more about the how you can improve your retail performance bookmark our blog and keep watching this space.
Units Per Transaction (UPT) is a key performance indicator in retail that measures the average number of items a customer buys in a single transaction. It provides insights into customer purchasing behavior, highlighting how effectively a store encourages shoppers to add multiple items to their baskets. A higher UPT indicates a successful upsell or cross-sell strategy, as customers are purchasing more items per visit.
Retailers often track UPT to assess sales associate effectiveness, optimize store layout, and develop promotional tactics aimed at increasing sales volume. Understanding and boosting UPT is crucial for maximizing revenue and improving overall store profitability in the competitive retail landscape. Increasing your units per transaction is often what determines success versus failure for the small to mid size retailer. How best to do this hinges primarily on understanding and engaging with your customers. This article identifies key practices to increase your units per transaction covering different aspects of your interaction with your customers.
Selling more is a direct reflection of you and your staff. Placement and signage are only so effective. The key is engaging with your customers starting with the interaction from your sales personnel on the floor. They are the first point of interaction a customer will have with your business. Besides hiring sales associates with experience and providing training, now they need the tools for retail management solutions. This not only will build the trust and result in additional add ons being purchased but also increase return visits.
Units per transaction (UPT), also known in another name as items per customer (IPC), is a sales especially in the retail sales sector to measure the average number of items that customers are purchasing in any given transaction. The higher the UPT, when the customers purchase more items for every visit. Increasing UPT is an excellent way for a retailer to increase sales using existing traffic.
Units Per Transaction (UPT) is determined by dividing the total quantity of items sold by the total number of transactions.
For example, if a retail store has the following sales data for a week:
Then, UPT = 450 / 75 = 6
This means that, on average, customers buy six items per transaction at this store.
Drop the “Would you like a … (scarf to go with your sweater)”, customer are so tuned to this that they have the “No thanks” formed before you have completed the sentence.
Try suggesting
Notice that these techniques do not ask the customer to buy the product but instead the sales associate is asking if they have tried, noticed, or been told about the item. The phases are conversational and encourage the customer to consider the option brought forth by the sales associate.
Cross-selling, upselling, and recommending add-ons are powerful strategies to enhance the customer’s shopping experience. It’s essential that salespeople are skilled and experienced in making thoughtful suggestions that add value for the customer. These techniques are most effective when a salesperson establishes a genuine connection by approaching and engaging the customer sincerely. Through attentive listening and understanding of the customer’s needs, they can provide tailored recommendations that benefit the customer and improve the overall shopping experience.
This is a prime opportunity to solidify your relationship with the customers. It’s no longer enough to complete the transaction, bag the merchandise and politely say good bye. You have a captive audience from your customer and one final opportunity to increase your units per transaction (UPT)and ensure a repeat customer.
The customer is generally relaxed and impulse items are easier to sell. Your POS may have custom tailored recommended items prompts, similar to your Amazon on line purchasing experience. Ask your retail POS software solutions provider to add this vital feature, if available.
Does your POS has customer history, this provides another opportunity to reach your customer on a personal level. By mentioning recent purchases, the sales associate can remind the customer that they may need to replenish the purchase or have a related product that enhances their experience with the original purchase. This type of personal interaction is reminds customers as to why they still shop in the traditional brick and mortar shops.
Focusing on a particular product line, or area for a week or a month can also help generate add on business. Sales Associates are motivated to recommend these items and the internal contest keeps it fun for the employees. Your POS Solutions should be able to track sales by employee so you can update your employees as the contest runs.
This blog covers a number of techniques to improve your UPT, but wouldn’t it be great to tie it all together with matrix so that you can see how effective these improvements are to your success. Focus on Key Performance Indicators (KPI) to track from a retail store perspective. Your POS System will provide reports and/or a mobile app so that you have immediate access and can tweak your approach to get the desired effect.
These positive sales experiences all hinge on your salespeople being able to build solid customer relationships built on authenticity. Your goal is for your sales associates to be seen as trusted advisors to your customers. Sales isn’t an art, it’s a science. Teach your sales associates the basics and with continued mentoring will tweak and develop their authentic approach. Use the tool provided by your POS system to give your employees access to the knowledge about your customers to further build that relationship.
A customer who is enjoying their experience in your brick and mortar store is easier to upsell and more likely to buy add-ons. That’s what raises your UPT – not promotions and discounts that might increase units sold but destroy overall profitability.
The fact that retail is no longer just about product is not a secret, that it is all about engagement is not a surprise, that customers expect a unified experience is natural; but how retailers should pivot and aggregate all this data into one view remains a mystery and keeps many small and mid sized operators up at night. This has created a pressure on businesses to revisit their online strategies even those whose primary focus is their local market.
“It’s like watching an accident in slow motion, you know you got to do something but the question is what and how and for how much”
There are many sources of data to consider but let’s focus on a few simple yet meaningful places to start with. Before we get started, let’s talk a little bit about tracking or customer preferences; while no doubt most consumers do not want their every activity tracked and stored, they do not mind doing so if they can receive something of benefit and the data is stored securely. Think about how willingly we allow the cell providers to track our every movement so long as they know exactly where we are when we need directions.
To begin aggregating this data you need to start with a reliable CRM software. Ideally this is will be built into your POS application as that will solve the instore piece of it, assuming that it has the functionality of a CRM software.
In Store POS sales activity is the easiest and simplest to do; does your POS provide robust segmentation so you can classify your products into departments and categories, as well as flexibility in creating item attributes (in apparel for example size, color, style, season, brand) and does it provide you with flexibility in creating customer groupings across all channels, so you can group customers based on initial channel of the relationship or other groupings. Remember that there has to be some benefit for a customer to provide you this detail and loyalty programs are the most common, however perhaps more effective has been club pricing (like in grocery stores) or access to premium experiences (like with airlines or hotels). As you design this pick the one that works best for you.
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Other benefits can be more lenient refund policy to know customers or a more restrictive return policy to anonymous transactions.
Getting your store online with insight to up to date product availability will provide you with a trove of data; encouraging customer to quickly register and login to get special pricing also rewards and encourages customers for sharing their data with you.
Customer expect to connect with their favorite retailers on their terms; when they are available and from the devices of their choice. As a result retailers are experiencing a lot of pressure to deploy online stores; unfortunately too many do this as a reactionary move and not part of a strategic move.
It is commonplace for customers to go to sites and get real time access to products and their availabilities from any device. Just think about the increase in “some product” stores near me searches in Google. Does your store appear with images that accurately represent the product and the quantities; as inventory is added or depleted from your POS system is your online store reflecting it. Does your Retail CRM aggregate customer and transactional data no matter where it happens? Does it make it available to online and offline stores easily.
Sounds complicated but it’s not, in fact any POS, Cart and CRM solution that you are using should be able to do this as a matter of fact, without much work on your end.
It’s true that most small and mid-sized operators are not doing future planning beyond the next order; however your retail CRM should be able to generate reports based on classification and attributes to not just determine what to buy buy for whom to buy it for.
In retailcloud for example our Grow and Pro users can filter product to 3 classifications and 5 attributes to determine with a fair amount of accuracy who is likely to buy new product; or to include a discount modeling to see who is likely to buy overstocked product. Your retail crm should help you minimize your investment in inventory at a product level which should free up investment in complementary inventory to increase units per transactions. Having a CRM that just stores the data is pointless, how can you utilize the crm to create personalized offers to customers, and to plan stock levels to meet your customer needs.
Retail CRM is a must have for retailers today, it does more than just give you a historical perspective of your transactional data; it should establish the relationships between the variables that affect sales and revenue; such as product mix, availability, trends etc.
Ideally it should provide tools to drive revenue growth, such as identifying tailored upsell opportunities or other methods to increase units per transaction, while helping identifying ideal product mix using overstocked and understocked algorithms.
Most crucially it should serve you all the information in a clear easy to digest and use manner , so all your operators have to do is act.
Gone are the days that the businesses relied on conventional cash registers; cloud-based POS systems has taken the industry by storm. No matter whether you run a retail store or a restaurant, a POS system can increase the productivity significantly. Other than playing just the role of a point of sales, these systems are capable of generating vital reports for a business. But what such reports can you run on your POS system, you ask?
No matter what the type of your business is, the ultimate goal should be sales. Having a perfectly generated, detailed sales report is highly beneficial for a business. In fact, such facility should be a prerequisite of any POS system. A comprehensive sales report should emphasize sufficient information enabling you to draw a clear picture about your business. Which items make most profits for your business, which period you experience a boost in your business and which items needs to be eliminated from your product list are some of the facts you can determine referring a sales report. Below is a list of facts that can be found in a sales report.
Although sales are the bread and butter of a business, the amount of actual payments determines the amount of money you have made during a particular period. Again, POS can help you to track critical information like cash flow, credit card payments and other information that affects your payments. Such report is a great way to prevent employee theft, errors in billing, preferred payment methods of customers and determine the discounts applied on sales. POS payment reports include information such as:
Integrating CRM software to a POS is a very effective way to monitor information pertaining to important customer activities. You will be able to monitor repeat customers, develop specifically targeted marketing campaigns and develop customer loyalty programs. Modern CRM software programs are capable of capturing the customer details real-time and update the databases accordingly. Standard CRM reports include information like:
Modern POS systems come with inventory management software too. This is a great way to manage and maintain adequate stocks to be compatible with the sales volume. A report generated via this inventory management software emphasizes information like the quantities, values of the inventory and items that you are running low. Those who need in-depth reports can rely on third-party software integration to the POS.
Having understood the benefits these reports can bring to your business, it is a wise business owner to use an up-to-date, hi-end POS and rectify the potential mishaps. What you spend on a POS as a business owner is a wise investment that associated both short and long term benefits.
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