Customer Growth Strategy · Customer-centric · Retail

My Wish for a New Retail Metric: “Comparable Customer Sales”

Every month followers of retail performance await the monthly comparable store sales reports.  If you aren’t familiar with this metric, it’s simply the year over year sales performance of stores open at least a year.  Not a bad metric, but not really all that helpful.

A better metric would be “comparable customer sales.”

Is your company’s sales growth coming mostly from the segment that is the least loyal and only buys when you run a huge promotion?  Or are you doing well with the full-price customer who is most willing to recommend your brand to a friend?  How are you doing acquiring and engaging that younger customer demographic you always tell the analysts you aspire to grow?

Ultimately the only asset that really matters for most companies is the strength of its customer portfolio.  This metric would give a much better indication of just how well your company is growing that asset.  Not performing well with a strategic segment?  Now you have the call to action to delve into the underlying performance driver.

I realize that even if your company had these customer driven metrics you might not be so willing to share them with Wall Street.  But what’s your excuse for not having them for your own internal use?

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One thought on “My Wish for a New Retail Metric: “Comparable Customer Sales”

  1. Good point here and reminds me of another retail phenomena I’ve experienced: “Sale Conditioning”. In order to meet last year’s comp numbers, you have to match the same sales promotions/periods you had from last year. So, anytime you add a new promotion or sale to the calendar, you have to perpetuate it in the coming years. Pretty soon, your customers can start “setting their watches” by your sales promotion calendar and withholding purchases until the sale date.

    You get to the point where “sales” are so regularly scheduled, that the stores start “pre-selling” on the sales markdown to the point where much of the “air is out of the balloon” before the party starts. This then creates a vicious cycle of adding more “sales” to make up for lost ground.

    Ir really gets bad when your customer walks in and says “I want to buy these 3 items, but tell me, when does your next ‘sale’ start?” Or “Can you hold these for me until your next sale starts?”.

    Comp sales is a great retail metric, but (imho) it really needs to be driven by one or two questions: “How many new customers do we need to convert, or how much more do we need to increase ticket average (at full price) to beat last year’s profit numbers?”

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