The 7 Best KPI Metrics for Aftermarket Stores

Introduction

If you own an aftermarket store, KPIs are essential to track in order to ensure store success. KPI metrics can be used to measure and analyze a variety of different things including revenue growth, marketing ROI, customer retention rate, inventory turnover, average order value , customer acquisition rate and net profit margin.

In this blog post, you’ll learn about the top seven Service Parts KPI Metrics, the different ways to track and calculate them, and the insights they provide to help optimize business performance.

Let’s start by taking a look at each of the top seven KPI metrics for aftermarket stores.

Revenue increase

Definition

Revenue growth is a KPI metric that measures the increase or decrease in total revenue generated by an aftermarket store over a period of time.

Benefits of Tracking

Tracking revenue growth is important because it provides insight into the performance of an aftermarket store. It allows business owners to assess the effectiveness of their sales strategies, pricing policies, and promotional activities. Moreover, it can be used to compare the performance of an aftermarket store with other similar businesses in the same industry.

Industry Benchmarks

The industry benchmark for revenue growth will vary depending on the type of aftermarket store and the industry it is in. Generally, a revenue growth rate of 5-10% is considered healthy, however, some stores may have higher or lower growth rates depending on their performance.

How to calculate

Revenue growth is calculated using the following formula:

Calculation example

For example, if an aftermarket store had total revenue of 0,000 in the prior period and 5,000 in the current period, revenue growth would be calculated as follows:

KPI Tips and Tricks

• Monitor revenue growth over both short-term and long-term periods to better understand performance.
• Compare the revenue growth of different stores to get an idea of which ones perform better.
• Analyze changes in revenue growth over time to identify trends and take corrective action if necessary.
• Focus on maximizing revenue growth to increase profits.

Marketing ROI

Definition

Marketing ROI, or return on investment, is a measure of how profitable your marketing initiatives are. It is calculated by dividing the net profit generated by the marketing campaign by the total cost of the campaign. The result is expressed as a percentage or a ratio.

Benefits of Tracking

Marketing ROI tracking allows businesses to evaluate their marketing campaigns to determine their effectiveness and efficiency. By tracking marketing ROI, businesses can identify which campaigns are successful and which are not and make adjustments as needed. This can help companies maximize their marketing budgets and ensure they get the most out of their marketing efforts.

Industry Benchmarks

The average marketing return on investment across industries is between 1:1 and 3:1. This means that for every dollar spent on marketing, businesses should expect to generate between one and three dollars in net profit. Depending on the type of marketing and industry, companies may have a higher or lower return on investment.

How to calculate

The formula for calculating marketing ROI is as follows:

Calculation example

For example, if a company spends ,000 on a marketing campaign and generates ,500 in net profit, the marketing ROI would be:

Tips and tricks

• Focus on campaigns that generate the highest ROI.
• Track ROI over time to identify trends and adjust marketing strategies accordingly.
• Test different marketing tactics and campaigns to determine which generate the highest ROI.
• Regularly monitor ROI to ensure campaigns are performing as planned.

Customer retention rate

Definition

Customer retention rate is a KPI metric that measures the percentage of customers who make a repeat purchase from your aftermarket store. This is a key indicator of your store’s success in providing a satisfying customer experience and building customer loyalty.

Benefits of Tracking

• Provides insight into customer loyalty
• Helps identify areas to improve the customer experience
• Identifies customers who need more attention
• Shows how well a store is doing in engaging customers

Industry Benchmarks

The average customer retention rate for aftermarket stores is around 79%. The best performing stores have a retention rate of over 90%.

How to calculate

Customer retention rate is calculated by dividing the number of customers who made a repeat purchase during a given time period by the total number of customers who made a purchase during that same time period.

Calculation example

For example, if your store had 100 customers who made a purchase in a given month, and 80 of those customers made a repeat purchase, your customer retention rate for that month would be 80%.

Tips and Tricks for KPIs

• Send surveys to customers after purchase to find out why they chose you over competitors and what could be improved.
• Offer incentives such as discounts or loyalty programs to encourage repeat purchases.
• Provide excellent customer service to ensure customers have a positive experience.
• Analyze customer data to identify patterns in customer behavior.

Stock rotation

Definition

Inventory turnover is one of the key performance indicators (KPIs) used to measure the efficiency of an aftermarket store. It is calculated by dividing the total cost of goods sold (COGS) by the average inventory value over a certain period of time. This KPI helps measure a company’s effectiveness in controlling its inventory levels and replacing sold items.

Benefits of Tracking

• Inventory turnover helps you determine the optimal inventory level for a spare parts store.
• This lets you know if you are investing too much in stocks or not enough.
• It also helps you identify areas where you can improve your store’s efficiency.

Industry Benchmarks

The industry benchmark for inventory turnover varies depending on the specific industry. Generally, a higher turnover is desired because it indicates that the business is moving its inventory quickly and efficiently. For example, a spare parts store that has an inventory turnover of 8 or more is probably doing well.

How to calculate

Inventory turnover can be calculated by dividing the total COGs of an aftermarket store by the average inventory value over a certain period of time. The formula for this calculation is as follows:

Calculation example

For example, if an aftermarket store has a total COG of 0,000 and an average inventory value of ,000 over the last year, its inventory turnover would be 4 (200,000 /50,000). This indicates that the store was able to turn its inventory over four times a year.

Tips and Tricks for KPIs

• Regularly monitor inventory levels to ensure that you are not investing too much or too little in inventory.
• Compare your inventory turnover against industry benchmarks to gauge how your business is doing.
• Set goals for inventory turnover and measure progress over time.
• Implement inventory management software to track stock levels and ensure you have the right number of items.

Average order value

Definition

Average order value, also known as average order size, is a key performance indicator (KPI) metric used to measure the average value of an order placed at a store. This metric helps store owners understand how much money customers are spending per purchase and provides insight into the effectiveness of their marketing and pricing strategies.

Benefits of Tracking

Tracking average order value provides store owners with valuable insight into customer behavior, including which products are popular, how customers are responding to promotional and pricing strategies, and how to optimize pricing and sales volume. It can also help store owners identify up-sell opportunities and sell products, as well as identify the most profitable products.

Industry Benchmarks

The average order value is different for each store and industry. Typically, e-commerce stores have an average order value of around , while brick-and-mortar stores typically have an average order value of around . It’s important for store owners to track their average order value over time to gauge their performance against the industry average and make improvements as needed.

How to calculate

Average order value is calculated by dividing a store’s total revenue by the total number of orders placed. The formula is:

Calculation example

For example, if a store has total revenue of ,000 and the total number of orders placed was 500, the average order value would be .

Tips and Tricks for KPIs

• Monitor average order value over time to identify trends and gauge performance against the industry average.
• Analyze average order value by customer segment to understand how different types of customers buy.
• Testing promotional and pricing strategies to optimize average order value.
• Identify selection and cross-selling opportunities to increase average order value.

New customer acquisition rate

Definition

New Customer Acquisition Rate (NCAR) is a metric used to measure the number of new customers acquired by an aftermarket store over a period of time. This metric helps track the effectiveness of marketing campaigns and customer acquisition strategies.

Benefits of Tracking

Tracking the rate of customer acquisition helps determine the success of an aftermarket store’s customer acquisition efforts. It is an important indicator of overall store health and can provide valuable insight into the effectiveness of marketing campaigns and strategies.

Industry Benchmarks

The average average customer acquisition rate for aftermarket stores is 4%. However, this rate may vary depending on store type, store size, and store location.

How to calculate

The new customer acquisition rate is calculated by dividing the total number of new customers acquired in a given period by the total number of customers served during that same period.

Calculation example

For example, an aftermarket store acquired 100 new customers in one month and serviced 500 customers during the same period. The new customer acquisition rate for this store would be 20%:

Tips and Tricks for KPIs

• Regularly track customer acquisition rate to ensure the store is meeting its customer acquisition goals.
• Use marketing campaigns and customer acquisition strategies to increase new customer acquisition rate.
• Compare the store’s new customer acquisition rate to industry benchmarks to identify areas for improvement.

The net profit margin

Definition

Net profit margin is a key performance indicator (KPI) used to measure the profitability of an aftermarket parts store business. It is calculated by dividing the net profit for a period by the total turnover generated during the same period. The result is expressed as a percentage.

Benefits of Tracking

Tracking and measuring the net profit margin metric is important for aftermarket stores as it shows how the store is performing in terms of profitability. This allows store owners to make informed decisions, such as raising prices, cutting costs, or investing in more efficient processes. Additionally, tracking net profit margin can help store owners identify areas for improvement and suggest strategies to increase profitability.

Industry Benchmarks

The industry benchmark for net profit margin varies from store to store and depends on several factors, such as store size and the type of products sold. Generally, an aftermarket store should aim for a net profit margin of at least 10%.

How to calculate

The formula for calculating net profit margin is as follows:

Calculation example

For example, if an aftermarket parts store has net profit of ,000 and total sales of 0,000 during a given period, the net profit margin would be calculated as follows:

Tips and tricks the KPI

• Regularly monitor the net profit margin to identify any changes or trends.
• Compare current net profit margin to industry benchmarks to gauge performance.
• Look for ways to increase net profit margin by reducing costs or increasing prices.
• Consider investing in new technologies or processes that could reduce costs and improve efficiency.

Conclusion

KPIs are one of the most important tools store owners have when it comes to understanding business performance, setting goals, and optimizing store operations. By tracking and calculating the top seven KPI metrics for aftermarket stores, you can ensure your store is able to make informed, data-driven decisions that lead to profitable growth.

Ultimately, KPI metrics allow store owners to stay nimble and take advantage of opportunities as they arise. With the right data and information, store owners can make good decisions about their operations and create strategies for long-term success.