3 KPI's to better manage your employees
3 KPI's to better manage your employees
Being a manager or a store owner can be a daunting task. Utilising your time effectively is hard enough as it is however it is up to the store owner/manager to make sure the employees are working and not slacking off. You should have a employee performance review with each employee at least once a year! These sessions allow you to have a 1-to- 1 with each employee and track/set objectives for them, it also allows for general feedback to the employee and things they can improve on before the next meeting!
In order to provide feedback and monitor their performance, you will need information or indicators to see, which is called ‘Key Performance Indicators’ (KPI’s). With KPI’s you are able to implement strategies to improve overall staff productivity which will ultimately lead to a business goal e.g. Increase Sales. If you provide incentives for reaching their goals, you will notice a spike in productivity in the sales team as other members will want those incentives as well! By managing staff performance, you are able to find out who is meeting your expectations and who isn’t. With this, you are able to provide additional training to your newer sales members.
Here are 3 key performance indicators (KPI’s) that we recommend to manage employees performance.
Sales per Employee.
Lets start with the most obvious employee performance metric. Sales per employee will allow you to assess and compare performance on the sales floor. Before you start to benchmark employees, make sure they are aware of what is required/assessed. When you look at the sales, there maybe some variables such as a sales member on a the weekend may have 3x more sales than a sales member working in the weekday. So set your targets effectively and make sure it is achievable and relevant to each sales member. Last thing you want is to create an unfair target since the sales member on the weekend will have more footfall traffic which will lead to higher chance of sales than the weekday employee who doesn’t have that much footfall traffic.
To avoid this, you will need to look at past sales history and use this as a benchmark. If you don't have any sales history because this is a new store then ask similar retailers in the same verticals as you to make an informed guesstimate! Ideally, you want to make sure the retailers you choose are similar to your store if you’re getting information outside your business. This includes choosing stores that have similar products to you, similar size store and similar footfall traffic. Furthermore, these metrics can be used to partner employees together such as strong and weak sales people partnered together!
Sales per Hour
Sales per hour is a useful KPI for any business because it shows when you make the most sales in the day and when you make the least sales in the day. This means you can plan the number of staff you need throughout the day and the week. If you have low sales per hour, try to find the cause of it and solve it!
If footfall traffic is lower than normal at a certain hour, try to utilise your shop window more. A rule that most visual merchandisers will often refer to the rule of three. This means creating a display that works in sets of three for example, if we have 3 products on our window, we will arrange them in height order so small, medium and large. The reason behind this is because our eyes will most likely keep moving when we’re looking at something asymmetrical however when we see something symmetrical or balanced, we stop moving which forces us to look at the shopfront more!
Number of Complaints
Number of complaints is an interesting KPI. When a customer complains about something, you can normally tie it to a human error such as a member of staff being rude to customer (Which I hope won't happen to anyone…). You can use this KPI to address issues about your staff but also to have regulations in place so that if an issue like this does occur, then you know how to tackle it in an effective and efficient manner.
You can link this in with another metric called ‘Net Promoter Score’. Net promoter score measures customer satisfaction of your business by simply asking a question such as ‘How likely would you recommend [Your Brand] to a friend or family member out of 10?’ With this, you are able to see where your customers fit into. If they score between 0-6 then they are Detractors which means they are not loyal and will go to your competitors. If they score between 7-8 then they are passive so the won't be loyal customers but they can also sway to your competitors. If they score between 9-10 then they are Promoters which means they are very loyal customers and will keep buying your products which encourages growth!
You will find a trend in your employees between number of complaints and net promoter score. If the number of complaints is high and NPS (Net Promoter Score) is low, then you can give advice to your employees on how to improve! On the other hand - you will notice the employees performing well since they will have a low number of complaints AND a high NPS (Net Promoter Score). In the short and long term this is important as you want to attract more loyal customers to your retail store which in turn will increase your revenue!