How many times have you walked into a meeting to find yourself reporting numbers which are different from the person sitting next to you? Cross-functional teams are working in silos and you, yes YOU, are part of the problem. (Yep, we’ve all been there!) Having clearly defined retail metrics is critical to the organization’s success.
Clearly Defined Retail Metrics
At the very beginning of a recent planning and analytics implementation, I gathered leaders from different parts of the company to discuss which retail metrics we would include in our new planning solution. This seemed quite simple: Make a list of metrics and the meeting would quickly adjourn. This was not the case. We spent an entire day, not only discussing which metrics we would use but more importantly, defining what these metrics were. Two examples from that discussion:
- Is this retail sales? Does the sale include gift cards? Gross sales or net sales?
- Did eCommerce sales include orders or shipments when rolled up to company level?
- How many variations of sales should we include?
- How do we label each metric, so it is crystal clear to the entire team?
- Does inventory include returns?
- What if product is in transit?
I learned so much about our business that day. All assumptions were thrown out the window. While it may seem like a wasted day, it wasn’t. We ended up identifying any and all business metrics we could use to effectively run our business. Our IT team was there to discuss data sources and confirm which ones we would use.
Retail Metrics to Include
Be sure to include all metrics that support the company’s goals, both short-term and long-term. Include all measurable metrics. I found great insight with certain metrics we had never viewed before. This is where we unlocked business potential. For example, reason code information was in our system, we just never had access to it before. This additional metric was quite beneficial when looking for patterns of returns or discounts.
As a reminder, it is critical to include all cross-functional leaders in defining which metrics to include. Get their buy-in. Include team members from all levels of the organization. Include those having different years of experience within the company for valuable insight. Ask lots of questions. Listen and learn. Each person brings different experiences and interesting ways to look at the business. Include those with a curiosity in analyzing their business.
Ensure labeling of the metrics is crystal clear: Sales, Retail Sales, Cost of Sales, Gross Sales, Net Sales, Sales Orders, Sales Shipments, Sales with Gift Cards, and Sales no Gift Card. The consistency of metric naming is essential in keeping all parts of the organization aligned.
Be flexible! Retail changes so quickly. Come up with new ways to look at your business. Continue adding metrics to your company list over time. I love Peter F. Drucker’s quote:
Retail Metrics’ Value
Meet with cross-functional teams to align on metrics, calculations and labeling.
Executive leadership buy into key metrics and calculations.
Teams across all part of the business need to be part of metric identification and definitions.
Recap agreed upon metrics and calculations so leaders can bring back to their teams.
Information and Technology team leadership and support is critical – provide accurate, timely and consistent data.
Company objectives are supported through key metric planning, measuring, tracking.
Success is defined and tracked through measurements.
Download the eBook. Explore why it’s critical for teams across the company to tie to the same goals, the value of alignment on metrics by which to measure the business performance, and how analyzing attributes at a deeper level can be a game changer!