In a Changing Landscape, What Should Retail Use to Define Success and Measure Their Business

What gets measured gets done. So, measure what matters most.

What does your business need right now? What is most important for your business? What do you need to measure that is critical? What measurements are right for different levels of the organization? What you measure must be relevant and controllable at each level in order to be effective in its outcome.

As you introduce new metrics or emphasize existing ones in new ways, communication to the store behind the scenes will be important. Defining the “WHY” driving the business decisions you are making will be as important as what you are measuring. You may implement policies or promotions that seem out of line with what had previously been in place. Explaining how those are contributing to the immediate success of the organization will be important to bridge the gap in understanding for everyone in the organization.

In the initial article, I discussed how year over year comparisons (comp) is a nearly useless metric for the foreseeable future. Does the current world event give businesses, especially retailers, a unique occasion to change? This could be a chance to reinvent what we measure and how we measure it. This may be an opportunity to move beyond a singular metric that does not always provide the best measure of a business’ health – good or bad.

Comp won’t be right for 2 years – so it’s time to make a shift. Comp never defined what was expected clearly – no one really knew what good was. Just because your comp was positive didn’t mean you were reaching your full potential. It simply meant you were better than a year ago and there are a multitude of factors that could influence that.

As we look at identifying new areas of the business to measure, here are a few areas to consider for approaching the metrics that might provide new insights into how your locations and company overall are performing.

Financial

There are a host of financial metrics that can be measured as an organization. If your business is in a very tight place right now, cash flow might be the most critical element. What can you measure that will give you the best indication of your success in this area? Does everyone in your business understand cash flow and what it means? And more importantly, to the point I mentioned above, do they know how they can contribute to it? The CFO may be concentrating on cash flow; on the front line that translates to top line sales and expense management. What are the steps that can be communicated to store level associates that can make a difference? There may be promotional opportunities or new levels of store level flexibility that can help drive the results you are looking for. There are likely different financial complexities your business may be facing right now. Ensure you keep the messaging simple enough for those who will make the impact on those results. Numbers are just numbers, they are always driven by actions and behaviors. You will want to connect those two together.

Customer

Now maybe a good time to evaluate what you are measuring regarding your customer experience. Do you have the correct metrics to understand what your customers are saying? A survey and a score may not be enough. Are you getting plenty of that feedback? If your response rate is low, you may need to look for alternative ways to capture the voice of the customer. Having a clear view of the customer’s full journey, especially in a changing world, is of the utmost importance.

Impact

Will what you are measuring have a material impact on your business? Do the metrics you have scale to the needs of the overall business? Understanding how individuals can make an impact is also important. What is within their control? It is easy to find new numbers to report the results. The bigger question is which ones will make a difference. Using or scoring metrics that only are relevant in small doses may not be enough to move the needle at the highest level.

New Business

Did you introduce new services in the last few months and how critical are those to your on-going success? For example, many retailers began offering Buy Online Pickup in Store for the first time, or curbside pickup, or even delivery. These may be some of the most important metrics to begin measuring in earnest right now. How are customers connecting to these offerings? Are you embracing these or do you see them as a threat to your previous paradigms?

Behaviors

What actions and activities performed by your team will be necessary to achieve the results you are looking for? How can you capture that in both measurable and behavioral terms? There are many excellent examples of what this can look like in the book 4 Disciplines of Execution. The challenge for behavioral metrics though is that they are not on a report. They must be observed. We will cover this more in a later article regarding qualitative and quantitative measures for your business.

Knowing that comp is a nearly useless metric now for the next couple of years, it is time to identify some new measures that will provide actionable insights that local teams can use to be fully engaged in the business. Defining which metrics will make the most sense for your company right now is the first step is getting ahead of the curve. Connecting to where you can make the most impact on your financial results, customer experience, new business, and through behaviors will help set everyone up for success. In the next article, we will explore how defining the desired outcomes can ensure you have the right metrics for the results you are seeking.

How will you change your measures to make more of a positive impact on your business right now?

I also recently discussed this topic and some of the ideas from this series of articles with Graeme Grant , CEO of Blueday, on their webinar Measuring Store Performance in Turbulent Times: Defining Your Key Metrics for 2020 and Beyond.

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