Understanding the Top 7 KPIs for Footwear Businesses

Introduction

Having key performance indicators, or KPIs, is essential to measuring and tracking the success of a footwear business. But knowing what the top 7 KPIs are and how to calculate them can be overwhelming.

In this blog, we will discuss the top 7 KPIs for shoe line businesses, how to track them, and how to calculate them.

These are the top 7 KPIs to track for a shoe line business:

• Net promoter score
• Income
• Gross / net margin
• Stock rotation
• Average Unit Selling Price
• Customer acquisition cost
• Product yield rate

Keep reading to learn more about each of these KPIs and how to track and calculate them.

Net promoter score

Definition

Net Promoter Score (NPS) is a customer loyalty metric used to measure customer satisfaction and loyalty on a scale of 0-10. It is a key indicator of customer loyalty and useful tool for measuring customer loyalty. NPS is calculated by asking customers to rate their likelihood of recommending the business to friends and family on a scale of 0 to 10.

Benefits of Tracking

Tracking and monitoring customer loyalty is important for any business as it helps identify customer satisfaction and loyalty. Tracking NP helps companies understand their customers’ preferences, needs, and expectations. It can also be used to identify customer trends, measure customer loyalty, and compare performance with competitors.

Industry Benchmarks

The average NPS score for shoe line companies is around 50. This means that the majority of customers are likely to recommend the company to their friends and family. It is important to note that industry averages vary widely and can be affected by many variables, including product type, customer base, and competition.

How to calculate

To calculate the NPS score, simply subtract the percentage of negative responses from the percentage of positive responses. The formula for calculating NP is as follows:

Calculation example

For example, if a shoe line company has 40 positive responses, 10 negative responses, and 50 total responses, the NPS score would be calculated as follows:

Tips and tricks

• Be sure to ask the right questions when collecting NPS data.
• Encourage customers to provide feedback and respond to their feedback.
• Analyze NPS data over time to track customer loyalty.
• Track NPS scores against industry benchmarks.

Income

Definition

Revenue is money earned from the sale of goods and services, before any expenses or taxes are withdrawn. This is the top line or gross revenue figure from which costs are subtracted to determine net revenue. In other words, it is the total amount of revenue generated by a shoe line business.

Benefits of Tracking

Revenue tracking is critical to the success of any business. It helps business owners measure the success of their shoe business and make better decisions. Business owners and stakeholders can track the amount of money coming in and compare it to the amount of money spent. This helps them adjust their strategy to improve their financial performance.

Industry Benchmarks

Industry benchmarks for earnings may vary by industry and company size. However, a good benchmark for shoe line companies is to aim for 20% year-over-year revenue growth. This means that revenues should increase by 20% each year.

How to calculate

Revenues can be calculated by taking the total sales of goods and services and subtracting any discounts or returns. The income calculation formula is as follows:

Calculation example

For example, if a shoe line business had total sales of 0,000 and discounts and returns of ,000, revenue would be calculated as follows:

Tips and tricks

• Be sure to track revenue regularly to get an accurate picture of business performance.
• Compare revenue to industry benchmarks to get an idea of how the business is performing against its peers.
• Analyze the data to identify any trends or patterns that can help make better decisions.

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Gross / net margin

Definition

Gross profit and net profit are two of the most important and widely used financial metrics used to measure the profitability of a footwear business. They are calculated by measuring the difference between revenues and costs associated with a company’s production and sales. Gross profit is the difference between the total revenue earned from the sale of goods or services and the total cost of producing them. Net margin is the difference between gross margin and all other operating expenses, such as marketing, administration, and overhead costs.

Benefits of Tracking

Tracking gross/net margin is important because it provides insight into a company’s financial performance. It helps to track any changes in revenues, costs and margins over time, as well as to assess the efficiency of a business managing its resources. The tracking margin also allows the company to benchmark against industry benchmarks and identify areas for improvement.

Industry Benchmarks

The average gross/net margin for the footwear line business is typically between 30-60%, depending on the type of products and services sold. It is important to compare a company’s margins with industry standards to assess its performance. If a company’s margins are lower than the industry average, it indicates that the company is not making the most of its resources.

How to calculate

Calculation example

For example, if a shoe line business has total revenue of ,000,000, cost of goods sold of 0,000, and operating expenses of 0,000, its gross margin would be:

And its net margin would be:

Tips and Tricks for KPIs

• Regularly monitor gross and net margin to spot anomalies or trends.
• Compare margins with industry benchmarks to identify areas for improvement.
• Analyze costs and revenues to identify cost-saving opportunities.
• Set goals to increase gross/net margin over time.

Stock rotation

Definition

Inventory turnover, also known as stock turnover, is a measure of how often a company converts its inventory into sales over a specific period of time.

Benefits of Tracking

Tracking inventory turnover can help a business identify the efficiency of its resources and can be used to benchmark performance against industry benchmarks. It is also useful for determining whether too much or too little stock is in progress and can be used to identify purchasing, production and delivery issues.

Industry Benchmarks

Industry benchmarks for inventory turnover vary depending on the type of business. For example, grocery stores may have an inventory turnover rate of 12, while furniture stores may have an inventory turnover rate of 4.

How to calculate

Inventory turnover is calculated by dividing the cost of goods sold (COG) by the average inventory for the period. The formula is:

Calculation example

To calculate inventory turnover for a shoe line business, you need to know the cost of goods sold for the period and the average inventory. Suppose the cost of goods sold was ,000 and the average inventory was ,000. The inventory turnover would be:

Tips and tricks

• Monitoring inventory turnover can help identify potential issues such as overstocking or undersupplying.
• Compare your inventory turnover to industry benchmarks to determine how you are doing.
• Analyze changes in inventory turnover to identify any issues with purchasing, production or delivery.

Average Unit Selling Price

Definition

Average Unit Selling Price (AUSP) is a key performance indicator (KPI) used in the footwear line industry to measure the average price of items sold. It is calculated by dividing the total turnover with the number of items sold.

Benefits of Tracking

• AUSP helps in understanding the company’s pricing strategy.
• It can be used to identify trends in pricing or demand for certain items.
• The AUSP can be used to determine the overall profitability of the shoe line business.

Industry Benchmarks

The average auspe in the footwear line sector varies greatly depending on the type of shoe. Generally, high end shoes tend to have higher ausps while low end shoes tend to have lower ausps.

How to calculate

The AUSP is calculated by dividing the total revenue by the number of items sold. The formula is:

Calculation example

For example, if a shoe line business has total revenue of ,000 and has sold 500 items, the AUSP would be .

Tips and tricks

• Regularly monitor the AUSP to ensure pricing strategies are effective.
• Compare the AUSP to industry benchmarks to identify areas for improvement.
• Be sure to include all sales revenue (including rebates and returns) when calculating the AUSP.

Customer acquisition cost

Definition

Customer acquisition cost (CAC) is a KPI metric used to measure the average cost of acquiring a new customer for a shoe line business. It is calculated by dividing the total cost of acquiring new customers by the total number of new customers acquired. This metric is used to understand the costs associated with customer acquisition and to compare the costs to the revenue generated from new customers.

Benefits of Tracking

Tracking customer acquisition costs is important for shoe line businesses because it can provide valuable insight into the amount of money spent acquiring new customers and the effectiveness of customer acquisition efforts. the company. With this information, businesses can better understand their return on investment (ROI) for customer acquisition campaigns and make adjustments accordingly.

Industry Benchmarks

The industry benchmark for customer acquisition cost varies by industry and market. Generally, a lower CAC is favorable because it indicates that the business is spending less money to acquire new customers. In the footwear line business, the average CAC is usually between and .

How to calculate

The formula for calculating customer acquisition cost is as follows:

Calculation example

For example, if a shoe company spent ,000 on marketing to acquire 10 new customers, the CAC would be:

Tips and Tricks for KPIs

• Track customer acquisition costs over time to identify trends and make adjustments as needed.
• Use customer acquisition cost to compare the costs of different marketing tactics and campaigns.
• Analyze the cost of customer acquisition by customer segment to identify the most profitable customer segments to acquire.
• Benchmark CAC against industry competitors to understand spending and acquisition trends.
• Focus on reducing customer acquisition costs while increasing the number of customers acquired.

Product yield rate

Definition

Product return rate is a key performance indicator (KPI) that measures the rate at which customers return purchased products to a shoe line business. It is calculated by dividing the number of products returned by the total number of products sold and multiplying the result by 100.

Benefits of Tracking

Tracking product returns helps shoe line companies better understand how customers interact with their products and why customers choose to return certain products. It allows companies to identify any issues with the product and resolve them accordingly. Additionally, tracking this KPI can help companies determine the effectiveness of their customer service practices and marketing efforts.

Industry Benchmarks

The average rate of product returns for shoe line companies is usually between 2% and 5%. A rate below 2% is considered excellent, while a rate above 5% indicates that there may be issues with the product or customer service.

How to calculate

The product return rate is calculated by dividing the number of products returned by the total number of products sold and multiplying the result by 100.

Calculation example

For example, if a shoe line company sold 1,000 products and 20 of those products were returned, the product’s rate of return would be calculated as follows:

Tips and Tricks for KPIs

• Regularly track the rate of product returns, such as monthly or quarterly, to identify any issues or trends.
• Analyze the reasons for product returns and resolve any issues with the product or customer service.
• Compare your product’s rate of return to industry benchmarks to determine if there are areas for improvement.

Conclusion

Having a clear understanding of what good KPIs are and how to track and calculate them is essential for any shoe line business. The top 7 KPIs discussed in this article that every business should consider is Net Promoter Score, Revenue, Gross/Net Margin, Inventory Turnover, Average Unit Selling Price, Acquisition Cost customers and the rate of return of the products.

By tracking these key performance metrics and ensuring that they are in line with expectations, a business can get the information they need to make informed decisions and steer their business in the right direction.