What Does It Mean?
Revenue per employee compares each employee’s average efficiency compared to your store’s overall revenue figures. This is a broad measure that can indicate overall performance, optimal staffing numbers, and uncover problems accompanying sales strategies.
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Why Does It Matter?
Understanding how efficient your team is can help you make better decisions about staffing levels, incentives, and budgeting. Revenue per employee KPIs are not necessarily specific—they can’t usually tell you how a specific employee is performing—but they do grant you a broad picture of how well your team is operating and if there is room for improvement.
You can use this knowledge as a foundation to improve upon overall efficiency, either by offering more incentives, understanding if your sales process is slowing down your team, or knowing whether you need more or fewer employees.
How Do You Measure the KPI?
To calculate your revenue per employee, you’ll need to first establish the period you wish to measure. With a timeframe in mind, you’ll simply need to collect the total revenue for that period and divide by the total number of your full-time employees. Generally, a higher revenue per employee is a good sign.
What Sources Would You Use to Measure the KPI?
You can start tracking your revenue per employee directly with data from your retail dashboard. The most obvious place to start is with your sales data, including in-store revenues, e-store sales, and any other source of income your store records. Additionally, you can take data from your ERP or payroll application to determine the total number of employees you have on payroll.
Give Me an Example…
Let’s say you’ve recently gone on a hiring spree as your company expands to new stores and online frontiers. Your sales are increasing, but not as much as you’d like, and you notice that in-store sales have plateaued. You can start to find the problem by calculating your revenue per employee to determine if there is cause for concern.
If your KPI comes back low, you can make smarter decisions about either cutting back on hires until you’ve resumed revenue growth or start finding out why productivity and efficiency are lower than you’d like to implement strategies designed to deliver improvements.
What Benchmark/Indicators Should I Use?
- Total revenues
- In-store sales
- E-store sales
- Employee headcount
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