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Mauricio Duran 07.27.2018 4 min read

Retail and sales performance management

Quick formulas and tricks for having the right measures

Retail refers to the provision of good and services to final consumers. For instance, supermarkets, butcher shops, and department stores are some examples of retail. Moreover, it is the mature state of a product’s industrial lifecycle. Nonetheless, many retail businesses operate on small margins. And, they don’t have time, money or knowledge of how to do a proper sales performance management.

As a matter of fact, it is hard to tell where your retail business is doing good and where it needs to be enhanced. In some cases, sales directors may not be able to quantify this. The only indicator of success will only be when you have a big number of customers and revenues grow. But, there’s a way to make this easier. Retail sales performance management metrics are the way to know exactly about your business productivity.

It is important to set benchmarks and build context around your sales performance management. Consequently, you will have a clear idea of what it takes for your retail business to be successful. And, the data you need can be obtained by using math formulas and calculations. With this accurate information, you will grow your business wisely and make the right decisions.

Useful formulas for a good retail sales performance management

Measure performance of selling space

  • Sales per square foot: Total net sales ÷ Square feet of selling space = sales per square foot of selling space.
  • Sales per linear foot of shelf space: Total net sales ÷ Linear feet of shelving = Sales per linear foot.

Measure inventory performance

  • Sales by department or product category: Category's total net sales ÷ Store's total net sales = Category's % of Total Store Sales.
  • Inventory turnover: Sales (at retail value) ÷ Average inventory value (at retail value).
  • Gross margin returns on investment: Gross Margin (dollars) ÷ Average Inventory (at cost)

Measure staff productivity

  • Items per transaction: gross sales ÷ number of transactions = sales per transaction.
  • Sales per employee: net sales ÷ number of employees = sales per employee.
  • Accessory percentage: net sales ÷ accessory sales = accessory % of sales.

Let’s resume this last point. For measuring staff productivity and proper sales performance management, it is important to use a sales commission tracking software. Moreover, a retail business depends on its salespeople. Therefore, it is crucial to measure staff productivity through automated processes. An automated commissions tool like Blitz is excellent for determining the number of sales a retail business needs to generate when increasing staff motivation and performance levels. Almost forgot, here's the secret behind sales productivity.

Numbers don’t lie, they will guide you in knowing what’s happening in your retail business. Look at your sales performance management metrics and take action. Use the formulas to identify improvement areas, and level up your game.


The balance