Monday, February 10, 2014

Boost Your Profits With Key Performance Indicators (KPI)

Business owners should use key performance indicators (KPI) to make smarter professional decisions regarding their professional operations. If you own or manage a retail store, you can use this data to boost revenue and turn a higher profit. Unfortunately, far too many business owners gather mass amounts of data, grouping it into one big meaningless mass. A smarter approach, however, is to look for specific data and metrics which hold the most weight in your line of work.


Shrink is one of the biggest KPIs in the retail industry. If you keep up with our blog here at, you're probably well aware of the importance of shrink in retail businesses. When a store if forced to write X amount of dollars off as “shrink,” their profits drop and they're forced to raise prices to make up for the loss.

Analyzing your business's shrink on a regular basis allows you to monitor the problem. If the numbers continue to grow over the course of several months, then perhaps you should make some changes to reduce your store's shrink.

Net Profit

Of course, net profit is a major KPI that business owners shouldn't overlook. Just as the name suggests, this metric is the actual profit that your business creates. Not to be confused with gross revenue, which is the amount of money your store generates, net profit is the actual profit that's left over after paying payroll, taxes, overhead, insurance, etc.

Return on Investment (ROI)

We really can't talk about KPIs in the retail industry without mentioning return on investment (ROI). Whenever you open a new store or launch a new business, you are investing your money into what you hope is a successful establishment. ROI is the percentage of money based on your initial investment that's returned.

ROI can be used in a countless number of applications. Let's say you want to purchase a radio commercial advertisement to drive sales to your store. You could announce a special radio coupon code during the commercial to track which sales came from this medium. Once the promotion is over, you can then measure the ROI of your radio commercial campaign by determining exactly how much revenue it generated.

These are just a few of the most commonly used KPIs in the retail industry.

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