Five Minute Friday: The Retail Metrics You Can’t Afford to Ignore

Foreign. Business can be a lonely game, but it doesn't have to be. Welcome to Boutique Chat where we explore community over competition and how to scale your company with the balance and the happiness that we all seek. We'll hear from product based businesses of all types, retailers, e commerce and wholesale brands, along with industry experts shaping the future of our industry. I'm your host Ashley Alderson from the Boutique Hub and and I can't wait to chat. Have you ever heard this saying, when you aim at nothing, you'll hit it every time? Well, it goes hand in hand with how I like to look at numbers and analytics in a business and that is only a tracked number will grow. If you have numbers in your business that are driving your success. We all do. Every business does. If we aren't actually tracking them and holding ourselves accountable to them, they'll never grow. Right. Because we aren't putting our focus there. It's like the law of attraction, right? Whatever you want to attract into your business, the success that you want to see, you got to make it front and center and look at it on a regular basis in order to take the right actions to get there. Only attract number will grow. Well, what are you tracking in your business? Is the question I really want to get you to today in this five minute Friday. So when I think about businesses that are successful in tracking numbers, they all have company scorecards where every single week you're accountable to the same number of metrics through the process of learning. Eos, which our company is an EOS company, entrepreneurial operating system comes from a book called Traction by Gino Wickman. In Eos, they put it to you like this. If you as the business owner were going to go on vacation and there was no communication with your team on this vacation, you're leaving the business, you're leaving the team in charge and the only communication you have from them is in a company scorecard where there's maybe five, maybe seven metrics that are being sent to you on a week to week basis. This scorecard is the only thing that you have to make the decision of should I stay on vacation or should I head home? Only the company scorecard can tell you should I stay on vacation or should I head home? Well, when I think about that and when I first did this exercise for us at the Boutique Hub, I was like, wow, first of all, who even has access to the scorecard? Because if it's just me, if my team doesn't know, it's kind of like me coaching a basketball team. And the team doesn't know what quarter we're in, what the score is, or what they need to do to get there. There's no plays in order to get there. There has to be numbers. There has to be a scoreboard. Our team has to have a scoreboard in order to chase. So that's our company scorecard. So in your business, when I think about retail businesses, some of the most important numbers we can include on our company scorecard are, of course, not just sales. Right. Sales are a lagging indicator. They tell us what happened, but we want to know, well, what's going to happen next? So sales goes beyond what did I sell in this period of time? But what were my sales by vendor? Were my sales by product type? What were my sales by brand? What was my sales by, you know, a detailed product category? What were the discounts that I had to take? What were the returns that I had to bring in? Now, you're not going to maybe create all of that on your number one company scorecard, but those are directions that we can start to go when we think beyond just what did I sell? Sell? Now, the second area is, what was my average order value? Average order value is a huge leading indicator of your marketing and the quality of your sales team. If my average order value is constantly dropping, it tells me, oh, I got an issue. Maybe it's a pricing issue, maybe it's a merchandising issue, maybe it's a sales team and training issue, maybe it's a marketing issue. But I better dig into it. The higher my average order value goes means, ooh, that's less work that I have to do or less traffic that I have to bring in in order to get there. So AOV is critical. Conversion rate is critical. I love to see a conversion rate both for in store and online on a scorecard. So conversion rate will tell me, how is my sales team doing or how is the content I'm putting out there really relating to my ideal customer? Do they trust me? Am I solving their problems? Am I getting them to their end goal with their wants and needs? Or am I just pushing product to push product? So what is the conversion rate? Next is traffic. I can talk about sales all day long, but if I don't know how much traffic I need in order to drive those sales, I am just blowing money on marketing and social media with no end in sight. So what is my actual traffic goal this month? And we love to figure that out through our retail traffic formula. All right, another huge inventory management piece of your Scorecard is this. It's understanding what inventory do I have on hand, what is the aging of the inventory I have on hand. So how many of These products are 30, 60, 90 plus days old and then what do I have on order? If I know that I have, you know, maybe a lower amount of inventory on hand than I need and a lot of it's aged, I better have some stuff on order. Otherwise I know 30, 60, 90 days from now our sales are going to plummet. So those numbers are critical. So when I look across that scorecard, there may be an executive scorecard which have a lot of the sales, um, high level sales numbers or savings account numbers or debt numbers you're tracking that are just for you as an owner. But the rest of your team, especially if you have a manager or a sales team, they need to be on board with average order value and conversion rate. Marketing team has to be on, on the conversation with average order value, conversion rate, traffic, all of that. If someone's helping you go to market and buy, they need to know what's on hand, what's aging and what's on order. So again, only a track number grows. So get that company scorecard into the public hands of your team. Make sure they are accountable to those numbers. And they know as those numbers fluctuate, what are the actions I would take as those numbers go up and down. If I see sales dropping or average order value dropping or traffic dropping, what actions can I take to boost those numbers back up again? Put yourself back in the position, like I mentioned earlier, of coaching a basketball team. If you're the coach, it is your responsibility to train your staff on the plays you're running, right? And you're going to run certain plays in different quarters of the basketball game. Your fourth quarter under two minute Hail Mary play is a lot different than what you're going to run in the first quarter when you're trying to understand what is the defense that I'm playing against. So many sports analogies. So give your team a scoreboard. You give them a company scorecard, get these numbers front and center because only attract number will grow. All right, that's it for this week's five minute Friday. You guys let me know if this was helpful or what questions you have over at the Boutique Hub, on Instagram or @aj Alderson. Of course, we're constantly having this conversation inside of our membership at the Hub, inside of our members only group. Be there, tag me if you have a question and let's continue the conversation. Thanks for listening you guys. Please leave a rating review, subscribe all the things to the podcast. It helps gets it into the right hands, including yours. And I can't wait to see you back here next week. Thanks for tuning in guys. That's it for five Minute Friday, you guys. I hope you found some quick, actionable steps you can put into play in your business right away. As always, if you're not yet a member of the Boutique Hub, I would love to personally invite you to join us. It's where all of the daily conversations happen. The up to date what is working now in the industry conversations, the latest trainings, trend reports, discounts, resources, and of course access to thousands of wholesale brands that you also know and love. So please take a minute, follow the link in the show notes and we would love to invite you to join us inside of the Boutique Hub.