You've worked hard to put new technologies and processes in place to prepare for the holiday shopping season. But are you prepared to measure their impact and identify areas of focus for 2019? Here are five metrics that will help you gauge the effectiveness of your preparations for Black Friday 2018 and also identify areas that you may want to consider shoring up in 2019.
- Year-over-year sales– For now, it’s difficult to measure how many customers engage in one transaction using multiple retail channels, but we know that it’s happening more and more. It’s not effective to simply measure in-store purchases, as a customer may look at merchandise in the store and then order online. In-store purchase calculations give the retailer no credit for sales completed online although in-store visits may well have impacted them. For this reason, it’s important to compare sales on Black Friday, through the holiday shopping season, and sales for the entire year from one year to the next. With another strong shopping year projected in 2018, the comparison of year-over-year sales can provide an indication of the strength of your omnichannel effectiveness.
- Inventory outages– Inventory outages are a fatal flaw during the holiday season. At a time when shoppers come armed with ideas, prepared to spend money, and motivated by a sense of urgency, retail stores that fail to provide access to desired merchandise lose massive opportunities to generate revenue. Tracking inventory turns is easy, but how do you track outages? This may be among the more informal tracking processes you undertake this season. In some cases, out of stocks will be obvious: like that hot new toy that sells out early. In other cases, you may never know. If a shopper is looking for an item, reaches the empty shelf and walks away, well that experience goes untracked. For this reason, tracking inventory outages could mean walking your store regularly and noting where items have run out on the shelves. It may also mean asking associates to note when they are asked by customers to search for an item online and they are unable to find it. Collecting out-of-stock metrics is a messy business, but keeping your eye on the problem may help you realize if you have a situation where you need to invest in additional inventory management technologies, RFID, or other solutions by next Black Friday.
- Average transaction value– Average purchase value is calculated by dividing total revenue by the total number of transactions. Average transaction value can be an indication of marketing effectiveness both in store and online. How effective are your endcaps and promotional displays? Are coupons delivered to shoppers on their mobile devices being used to drive additional purchases? Is effective cross-selling taking place online? Transaction value is particularly useful when measuring change from year to year. If you have not already, start tracking this year to uncover insights in 2019.
- Abandoned shopping carts – Whether physical carts abandoned in-store or virtual shopping carts abandoned online, unfinished transactions can signal customer frustration, long queues or malfunctioning systems. Unfortunately, they always signal lost revenue. By tracking abandoned shopping carts both in the physical store as well as online, retailers can determine where technologies may need to be applied to reduce pain for the customer. Need to invest more in automated checkout to alleviate long queues in the store? Or maybe there is a need to redesign the website for easier checkout? Abandoned shopping carts point the way to shortcomings that can be addressed to increase revenue in the future.
- Number of cross-channel transactions– Many retailers are prepared this year to handle true omnichannel transactions. Whether customers are choosing BOPIS (buy online, pick up in store), product research online with in-store purchase, or in-store merchandise review with purchase to ship in-store, they expect to be able to purchase and receive merchandise on their terms and timeline. If possible, track the number of transactions that involve more than one channel. First, it serves as a good benchmark for tracking growth of omnichannel transactions over time. Secondly, it allows you to better understand and validate the fact that customers are using omnichannel retail, justifying investments in the future.
While there will be plenty of activity and other priorities on Black Friday, it’s a worthy investment to take a moment to take stock of “how you’re doing.” By tracking just a few metrics this holiday shopping season, it’s possible to identify areas that merit your attention in 2019. Here’s to Black Friday 2018 and a great retail holiday shopping season!