How do you measure success?
The truth is, there is no single answer to that question. Every product you ring up, every customer you see, every sale you run and every square foot of space you have — all are elements that can be tracked, monitored and quantified. These metrics, also known as key performance indicators (KPIs), are not just numbers on a page; each one reveals a snapshot of the current health and success of your company.
The tricky part, especially for pool and spa retailers who face a regular swell of customers during the busy season, is figuring out which KPIs are worth listening to at any given time. Complicating matters further is the organic nature of metrics — your analytical priorities can shift regularly in response to business needs.
“Metrics are something I keep a close eye on, and my managers do too,” says Mallory Wachowski, retail operations manager at DesRochers Backyard Pools & Spas in Northern Illinois. “But sometimes what we look for example, I had a feeling our winter covers weren’t selling as fast based on how many I ordered and how many we had left, so I started digging into our system. What did we do differently last year? I saw that I did order more this year, so that tells me I wasn’t completely off base. Then I dug in more: Is it a specific size that isn’t selling as well? What did we do differently in marketing?”
RELATED: Business Success = People Success
It’s easy to get bogged down in lengthy business reports. To help cut through the noise, we take a look at some of the KPIs Wachowski and other top-tier retailers use to keep their businesses on track.
1. PERCENTAGE INCREASES PER PRODUCT LINE
“That is important for me to track because you can see where your weak points are,” Wachowski says. “Based on what you learn, you can look back at your marketing efforts and ask yourself what you’re doing differently.”
In a recent AQUA story, Dan Lenz, vice president of All Seasons Pools & Spas in Orland Park, Ill., described how he used this metric to his advantage in a service environment. Upon noticing his vinyl liner jobs were on the rise, he analyzed his records and learned two important things: those sales were most often for vinyl liner replacements, not new builds; and most of those sales came from new customers rather than existing ones. Ultimately, after reviewing past marketing campaigns and customer records, he created a new marketing campaign that targeted customers with aging vinyl liners. As a result, sales doubled in that category. (For more, See “Case Study: How to Grow Your Moneymaker” on the AQUA site.)
2. REVENUE GENERATED FROM NEW PRODUCTS
Pool and spa retailers are constantly shifting product lines — but how do you know if those new products are carrying their weight? You can calculate it with the Vitality Index, which is simply the percentage of revenue from new product sales compared to total sales.
3. SALES PER WATER TEST
Putting aside the issue of whether or not you charge customers for their water tests, the water testing counter is among a retailer’s strongest revenue sources. When your sales/water test figure begins to dip, take it as a sign to examine your training and team expertise.
“If you’re seeing a low average sale per water test, first of all, is that because your staff needs training? Are we not solving the customer’s problem? What is the underlying issue?” Wachowski says.
4. RETURN ON INVESTMENT, BROKEN DOWN BY MARKETING CAMPAIGN
Investing in marketing can be costly, so it’s imperative to review each effort and see how it performed. How many sales did your campaign generate? How many new customers were added to your database as a result of your campaign? If your campaign targeted multiple channels — e-mail, direct mail, social media, etc. — which was the most successful?
5. SALES BY EMPLOYEE, BY PRODUCT LINE
Given the education required to perform the job, each sales associate at a pool and spa store can make a distinct impact on your bottom line. Tracking how each staff member performs can provide eye-opening insight.
“I really try to use it as a training tool. I never go to someone and shame them by saying, ‘Your sales are down!’” Wachowski says. “But if you do notice two people at the same skill level, one of them selling a lot of equipment and the other one not, you have to ask why? Is it the location they’re in? Do they need more training? Sometimes just going to them and saying, ‘Let’s role play, tell me how you would sell me this pump,’ you might catch something small that’s hindering them, and once you help them fix it, they’re better for it.”
6. AVERAGE TICKET SIZE PER TRANSACTION
This pairs well with the above metric as it is another way of explaining who on your team is a great (or not-so-great) salesperson. Average ticket size can vary widely — one cashier may happen to sell an automatic pool cleaner one day while another only sells chemicals that same day — but it is still a helpful KPI because employees with high average tickets are successfully promoting the benefits of your products, skilled with upselling and/or a whiz with add-on sales. These are people who can train their fellow salespeople and should be the focus of your retention efforts.
7. CUSTOMER RETENTION RATE
A loyal customer base is the foundation of a specialty retail business. And while you’re never going to retain every single person who walks through your door, a low retention rate would be cause for self-reflection. Are staff members well trained? Are customers leaving unhappy? Is there more you could do to improve your customer service?
This is by no means a definitive list of KPIs; every business is different, and analytical needs vary from one company to the next. (A company with a super small showroom, for example, may focus on sales per square foot as a way to maximize every inch of their space.) But no matter which metrics you emphasize in your company, the act of regularly monitoring the data behind your company can keep your oversight and improvement efforts in the right place.