A KPI is a quantitative measure of progress toward a specific business goal. To introduce KPIs in a store, define the result you want to change, choose relevant metrics and data sources. Record the measurement conditions and set a target based on your store’s historical results.
After measuring, make decisions based on the data. Check the outcome of each action, adjust your approach and repeat the cycle. This way, working with KPIs connects a business goal to specific changes in the store.
Choose metrics for the current task
Write down the result you want to achieve. For example, if the goal is to increase net revenue from goods, use it as a progress metric.
Start with a limited set of metrics for the chosen goal. For each one, write down which decision you will review based on its results. After choosing the metrics, identify the data sources for the consolidated report.
Describe the measurement rules for each KPI
Write a short description of each metric using this template:
- Business goal and metric name.
- Definition, formula and unit of measurement.
- Data source: report name and required fields.
- Start and end of the period, and time zone.
- Transactions and order statuses included in the calculation.
- Rules for accounting for discounts, returns and other adjustments, including the date on which they are assigned to the period.
- What the amounts include: whether delivery and taxes are included; calculation currency.
- Starting value, target and review frequency.
Complete this description before your first comparison of results. Match the metric definition to the fields in the selected report.
Example: net revenue from goods
For an analytical metric, you could use the following definition:
Net revenue from goods = sales − discounts − sales reversals.
Under this definition, delivery and taxes are excluded from the amount. Use it as the calculation rule for the selected KPI.
In your metric description, state where you get each component. Record which transactions you include in sales and sales reversals, and which date you use to account for them. Check that the selected fields match the defined composition of the amounts.
To compare with the previous result, keep the same calculation description. If you change the metric definition, record the new conditions together with the result.
Set the starting value and target
Calculate the metric for a selected completed period. Save it as the starting value together with the data source and calculation conditions.
Use your store’s historical results to set a realistic target. Record the target value and the period in which you plan to reach it.
Choose a tracking frequency that suits the nature of the business and its goals. If a report covers the current day, that day’s data is still provisional. Take this into account when comparing periods.
Record an action after reviewing a metric
For each review, use a brief record:
- Actual KPI value for the defined period.
- Comparison with the starting and target values.
- Action chosen based on the data.
- Date of the next measurement.
- Outcome of the action and the next decision.
At the next review, check whether the result improved after the decision. Adjust your approach and measure again.
As the business changes, review your KPI definitions. Check whether each metric still matches the goal whose progress you need to measure.
What data is available for analysis in Torgsoft
In Torgsoft, analysis for a selected period covers the results of a retail network or accounting centers, including gross income, product profit and expenses.
The list of capabilities is available on the Torgsoft store sales analysis page. For your chosen KPI, match its definition and required components to the data available in the analysis.
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