Welcome to the world of business, where KPI (Key Performance Indicator) metrics play a crucial role in defining a company's success. Whether you're running a small business or a large enterprise, tracking and measuring KPIs can make a significant difference in decision-making. But which KPI metrics should you be tracking? In this article, we will discuss the top seven tailor KPI metrics that every business owner should measure and their significance.

According to the latest statistics, the average revenue per customer has increased by 5% in the last year, making it an essential KPI for any business to track. Additionally, customer retention rate should not be neglected, as it is five times more cost-effective to retain customers than to acquire new ones.

  • Average revenue per customer
  • Customer retention rate
  • Average order value

The inventory turnover rate can give you insights into how well your inventory is performing, while the return rate can help you identify areas for improvement in your processes. Customer satisfaction rate is a crucial KPI that can directly impact the growth of your business, and lead time for custom orders can indicate how well you're meeting customer demands.

  • Inventory turnover rate
  • Return rate
  • Customer satisfaction rate
  • Lead time for custom orders

Now that you know the key tailor KPI metrics, it's time to dive deeper into each of them and learn how to track and calculate them. Scroll down and discover the insights that can boost your business growth!

Average revenue per customer

In any business, knowing how much revenue you generate per customer can help you identify areas for growth and improvement. By tracking this metric, you can determine what products or services are most profitable and adjust your sales and marketing strategies accordingly. Here's everything you need to know about average revenue per customer (ARPC).


Average revenue per customer is a metric that calculates how much revenue your business generates per customer, on average.

Use Case

ARPC is a useful KPI for businesses that sell products or services directly to customers. It can help you understand your customers' spending habits and identify trends in purchasing behavior.

How To Calculate KPI

To calculate ARPC, simply divide your total revenue by the number of customers during the same period.

ARPC Formula: Total revenue / Number of customers

Calculation Example

Let's say you run an online clothing store and generate $50,000 in revenue in a month. During the same period, you had 500 customers. Your ARPC would be:

ARPC Example: $50,000 / 500 customers = $100 average revenue per customer

KPI Advantages

  • Helps identify the most profitable products or services
  • Provides insight into customer spending habits
  • Helps determine the effectiveness of sales and marketing strategies

KPI Disadvantages

  • Does not take into account one-time purchases or seasonality
  • Can be skewed by a small number of high-value customers

KPI Industry Benchmarks

ARPC can vary significantly across industries, but some benchmarks to consider are:

  • E-commerce: $65
  • Software as a service: $5,000
  • Retail: $32


  • Offer incentives for customers to purchase more
  • Consider upselling or cross-selling to increase ARPC
  • Track ARPC over time to monitor changes in customer spending behavior

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Customer Retention Rate

Customer retention rate is a crucial KPI for the tailoring industry. It measures the number of customers who have remained with a tailor or business, over a specified period.


The customer retention rate demonstrates the percentage of customers who have continued their business with a tailor over the long term. It enables tailors to gauge customer satisfaction and loyalty and helps predict future revenue and growth.

Use Case

Measuring customer retention rate helps the tailor understand the need for improvements and adjustments, targeting marketing campaigns that help retain existing customers. It also assists them to identify what is driving customers to leave or move to other tailoring services.

How To Calculate KPI

The customer retention rate formula is:

Number of customers retained at the end of period / Number of customers at the start of period x 100

Calculation Example

Suppose a tailor had a total of 500 customers at the start of the year, and 420 were loyal customers by the year-end. The calculation will be as follows:

420 / 500 x 100 = 84%

The customer retention rate for this tailor is 84%.

KPI Advantages

  • Measuring customer satisfaction
  • Improving customer loyalty
  • Identifying potential issues early
  • Predicting future revenue and growth

KPI Disadvantages

  • Not accounting for external factors like competition or market changes
  • Not measuring customer engagement or experience
  • Not capturing new customers or reasons behind customer acquisition

KPI Industry Benchmarks for the KPI: ' Customer Retention Rate '

The average customer retention rate varies by industry, but in the tailoring sector, the retention rate lies between 80% – 90%.

Tips and Tricks

  • Keeping in touch with the customers regularly
  • Offering loyalty benefits, such as discounts or rewards, to loyal customers
  • Asking for feedback and implementing changes accordingly

Average Order Value

As a tailor, it is important to keep track of the average order value (AOV) to know how much revenue is generated per order. In this article, we will look at the definition, use case, calculation, advantages, disadvantages, and industry benchmarks for AOV.


AOV is the average amount of money a customer spends on an order.

Use Case

Knowing the AOV helps in setting pricing strategies, determining marketing budgets, and understanding customer behavior. For example, if the AOV is low, you may consider offering bundle deals or running promotions to increase the value of each order and retain customers.

How to Calculate KPI

The formula for calculating AOV is:

AOV = Total Revenue / Number of Orders

Calculation Example

Suppose that your tailor shop generated a total revenue of $10,000 in a month from 100 orders. The AOV would then be:

AOV = $10,000 / 100 = $100

Therefore, the AOV for that month would be $100.

KPI Advantages

  • Helps in setting pricing strategies
  • Determines marketing budgets based on customer behavior
  • Identifies high-value customers
  • Helps in predicting revenue

KPI Disadvantages

  • Does not necessarily indicate profitability
  • May not accurately reflect customer behavior for low-traffic shops

KPI Industry Benchmarks

The AOV varies by the type of business and industry. For tailor shops, the industry benchmark is around $150 to $200 per order.

Tips and Tricks

  • Offer bundle deals to increase the AOV.
  • Run promotions to incentivize customers to spend more per order.
  • Monitor AOV regularly to understand changes in customer behavior over time.

Inventory turnover rate

Inventory turnover rate is a crucial KPI for tailors to track as it measures the frequency at which a tailor's inventory is sold and replaced within a given period. This KPI helps tailor business owners keep their inventory at an optimal level and ensures that the inventory is neither overstocked nor understocked. Let us dive deep and see why inventory turnover rate is important, how tailors should calculate it and its advantages and disadvantages.


Inventory turnover rate is defined as the total number of times a tailor's inventory is sold and replaced within a given period. The period can be weekly, monthly, quarterly or annually. This metric indicates how efficiently the tailor is managing their inventory and how quickly it is being sold.

Use case

By tracking inventory turnover rate, tailors can ensure that they are stocking the right products in the right quantities. If the inventory turnover rate is low, it means the inventory is not selling as quickly as expected, and the tailor needs to either lower the prices or reduce the stock of those items. If the inventory turnover rate is high, it means the tailor is selling products quickly, which can be an indicator that they need to increase their stock of those items to avoid stockouts.

How To Calculate KPI

Here's the formula to calculate the inventory turnover rate:

Inventory Turnover Rate = Cost of Goods Sold / Average Inventory

Where cost of goods sold includes the cost of materials, labor, and overhead expenses related to producing the finished goods. Average inventory is calculated by adding the beginning and ending inventory levels in a specified period and dividing by two.

Calculation Example

Suppose a tailor has a Cost of Goods Sold of $100,000 and an average inventory of $20,000 for a year. The inventory turnover rate can be calculated as:

Inventory Turnover Rate = $100,000 / $20,000 = 5

This means that the tailor was able to sell and replace their inventory 5 times per year.

KPI Advantages

  • Helps in managing inventory
  • Indicates efficiency of the business
  • Helps in pricing decisions
  • Evaluates the success of marketing and sales strategies
  • Helps in identifying deadstock and eliminating it

KPI Disadvantages

  • Does not consider the profit margins
  • May not be accurate in situations where tailor businesses have low sales, seasonal sales patterns, or stockouts
  • May not provide accurate results for high-end custom tailors

KPI Industry Benchmarks

Inventory turnover rates vary from industry to industry. In the garment industry, the average inventory turnover rate is 2-6.

Tips & Tricks

  • Having a lower inventory turnover rate may be preferable as it ensures the tailor always has stock available for customers to purchase.
  • Comparison of inventory turnover rate to industry average is a good way to evaluate if the tailor is performing at par or if there is room for improvement.
  • Tracking the inventory turnover rates over time can help in forecasting future needs, especially when preparing for seasonal sales and ensure the tailor can meet the customer demand.

Return rate

The return rate is a key performance indicator (KPI) used by tailors to determine the percentage of garments returned by customers. In the fashion industry, returns can significantly impact the bottom line as they cost time, effort, and money that could have been used elsewhere. Hence, determining a business's return rate will provide valuable insights into the purchasing habits of customers and tailor business practices.


The return rate involves measuring the percentage of items returned to the tailor after being purchased by customers in a specific period. This percentage helps tailor businesses to determine the success of their sales efforts.

Use Case:

The return rate is used primarily to assess the tailoring business's effectiveness of their sales tactics. If the return rate is high, the tailoring business could be experiencing some fundamental issues such as quality control or sizing errors.

How To Calculate KPI:

The formula for the return rate is:

Return Rate = (Number of Returns / Total Number of Sales ) x 100%

Calculation Example:

If a tailoring business sells 1,000 garments in a month, and 70 garments are returned, then the return rate calculation would be as follows:

Return Rate = (70 / 1000) x 100% = 7%

KPI Advantages:

  • The return rate KPI enables a tailor to determine which products are more likely to be returned by customers
  • Helps to identify where improvements in operational efficiency are required
  • Aids in making more informed decisions about products and their manufacturing process

KPI Disadvantages:

  • The return rate KPI may not necessarily be an accurate representation of the quality of the product but could point to customer preferences or marketing issues
  • Various external factors can impact the return rate, such as the quality of the delivery service or other parts of the supply chain beyond the control of the tailor's business.

KPI Industry Benchmarks for the KPI: ' Return rate ':

The average industry benchmark for the return rate KPI is approximately between 3%-8%. However, this range can vary significantly depending on the product line and industry niche. It's essential to use the benchmark relevant to the product line or industry segment while comparing the return rate.

Tips & Tricks:

  • Use data and analytics tools such as Google Analytics, Facebook Insights, or data mining technology to identify areas of high returns.
  • Participate in customer feedback surveys to know more about customer preferences and what they might be returning items, for example overstretching or color disorientation.
  • Determine what factors are leading to returns, whether due to incorrect sizing, communication issues, or quality.

Customer satisfaction rate

Customer satisfaction rate is one of the most important KPIs to track for tailoring businesses. It measures how satisfied customers are with their experience at your tailor shop. A high customer satisfaction rate indicates that your customers are happy with the quality of work and service you provide. This leads to increased customer loyalty and repeat business.


Customer satisfaction rate is calculated by dividing the number of satisfied customers by the total number of customers surveyed. The result is expressed as a percentage.

Use Case

Measuring customer satisfaction rate is essential for tailoring businesses that want to grow and stand out from their competitors. It allows tailor shops to identify areas for improvement and make necessary changes to improve customer experience. Tailoring businesses can use customer satisfaction rate to track customer loyalty, which can help in predicting future business growth.

How To Calculate KPI

Customer satisfaction rate (%) = Number of satisfied customers / Total number of customers surveyed x 100

Calculation Example

Customer satisfaction rate (%) = 400 / 500 x 100 = 80%

For example, if a tailor shop surveys 500 customers and 400 of them report a positive experience, the customer satisfaction rate would be 80%.

KPI Advantages

  • Helps in identifying customers’ needs and preferences
  • Enhances brand reputation and loyalty
  • Allows tailoring businesses to improve customer experience and increase retention rates

KPI Disadvantages

  • May not reflect the honest feedback of the entire customer base, as it only captures the responses of the surveyed customers
  • Does not always measure the impact of satisfaction on business revenue
  • Results may vary depending on the time of survey and the customer base

KPI Industry Benchmarks for Customer satisfaction rate

According to industry benchmarks, a customer satisfaction rate of 80% or higher is considered good for tailoring businesses. However, tailoring businesses should aim for a 90% or higher customer satisfaction rate to stand out from their competitors and increase their business growth.

Tips & Tricks

  • Offer incentives for customers who complete the satisfaction survey to increase response rates.
  • Respond to negative feedback promptly and professionally to show your customers that you value their opinions and are committed to improving their experience.
  • Use customer satisfaction rate in combination with other KPIs, such as customer retention rate, to get a complete picture of your business performance.

Lead time for custom orders

If you're running a tailoring business, you know how important it is to deliver custom orders within a reasonable time frame. Lead time for custom orders is a KPI metric that measures the time it takes for a custom order to be completed and delivered to the customer.


Lead time for custom orders refers to the duration of time taken from the moment a customer places an order to the point they receive their order. This KPI metric helps you track how efficiently your tailoring business can deliver custom orders to your customers.

Use Case

This metric is vital for tailoring businesses that want to provide timely delivery to their customers. Measuring lead time allows the business to see how quickly they can fulfill custom orders and whether it meets or exceeds customer expectations. By monitoring lead time, tailoring businesses can spot areas of inefficiency, identify bottlenecks, and prevent delays in delivering orders.

How To Calculate KPI

To calculate lead time for custom orders, take the date the customer placed an order and subtract it from the date they received their order.

KPI formula: Lead time for custom orders = Date delivered – Date ordered

Calculation Example

Suppose a customer orders a custom-made suit on January 1st, and the tailoring business delivers it to them on January 25th. The lead time for the custom order would be:

Lead time for custom orders = 25th Jan – 1st Jan = 24 Days

KPI Advantages

  • Helps you gauge customer satisfaction levels based on the time taken to deliver custom orders
  • Allows you to identify bottlenecks in the order fulfillment process and take corrective action
  • Enables you to set realistic expectations with customers on the expected delivery time for a custom order

KPI Disadvantages

  • Does not account for external factors that may delay delivery such as shipping carriers, weather conditions, or supply chain disruptions
  • May be influenced by the complexity of the custom order
  • Does not measure the quality of the custom order

KPI Industry Benchmarks

Lead time for custom orders varies depending on the industry and type of garment being made. However, the general benchmark is 21 days for a custom garment.

Tips & Tricks:

  • Train your staff to prioritize custom orders and set realistic deadlines
  • Invest in technology that can speed up the custom order processes, such as digital pattern making software
  • Continuously monitor and track lead time data to make data-driven decisions and improve future customer satisfaction levels.

In conclusion, measuring and tracking KPI metrics is essential for the success of any business. The seven tailor KPI metrics highlighted in this article are average revenue per customer, customer retention rate, average order value, inventory turnover rate, return rate, customer satisfaction rate, and lead time for custom orders. By tracking and analyzing these metrics, business owners can make informed decisions that can greatly impact their bottom line. It is crucial to prioritize the KPIs that are most relevant to your business and consistently monitor them over time. With the insights gained from measuring KPIs, businesses can identify areas for improvement and implement strategies that will lead to growth and long-term success.

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Tailor Financial Model
  • 5-Year Financial Projection
  • 40+ Charts & Metrics
  • DCF & Multiple Valuation
  • Free Email Support