There are ghosts that haunt the aisles and stalk the shelves of your establishment.
In the retail industry, there are many retailers who incorrectly use sales data as a proxy for traffic and conversion, or aren't interested in traffic and conversion metrics at all. Thankfully, there are also many retailers who understand the importance of gathering traffic and conversion data. However, despite the good intent of these retailers, they sometimes fail to use this data correctly. This problem usually arises because they weren't asking the right questions.
In this blog, we'll look at the 13 questions you should be asking in order to make the best use of your traffic and conversion metrics.
1) How busy is the shopping centre or store location?
It's important for retailers to understand the context that their store exists in, which is why it's important to have information about passing foot traffic. Measuring traffic outside your stores often doesn’t provide highly accurate counts, but will provide you with enough information to help you identify trends. For example, it will be able to help you identify peak periods of traffic outside your store at different times of the day.
If a detailed foot traffic solution is used by multiple customers in a shopping centre, it can also be used by retailers to identify the busiest parts of the mall. This way, they can choose the location that's offers the greatest amount of traffic.
If a retailer is located in a shopping centre, understanding foot traffic can also be useful if centre management decides to increase your rent and you need to confirm that the increases are in line with their claims.
2) Does in-store traffic follow outside traffic trends?
In an ideal scenario your in-store traffic would follow outside traffic trends; but in reality, this often isn’t the case. Having a clear understanding of in-store and passing traffic will help you to identify whether in-store traffic declines are as a result of reduced passing traffic, or poor VM or windows.
3) Is marketing having an impact on my sales?
What many retailers fail to understand when it comes to their campaigns is that success is relative to the increase in traffic. For example, you launch a campaign and it increases your sales for the year from $1 million to $1.1 million. For many retailers, they would consider this level of growth a success.
However, what they fail to see is that their campaign actually increased their traffic 30%, meaning that they had a potential increase in earnings of $300 000, bringing the total for the year to a possible $1.3 million. Unfortunately, they failed to convert each of these new customers into sales.
In order to make the most of this opportunity, retailers must take steps to match the increase in demand. For example, they can increase the number of sales staff and ensure they are properly trained during the campaign to cater for the additional customers.
4) How does my peel off rate vary when I change window displays?
Peel off rate refers to the percentage of people who walk past your store and decide to enter. For example, if 50 people walk past your store every day and 5 of them come inside, then you have a peel off rate of 10%.
This can be influenced by window displays, and it's important for retailers to understand how their different window displays affect customers so they can maximise potential sales. For example, you might be able to pick up a trend that you get a greater peel off rate when running a specific type of promotion such as a two for one special.
5) Are my business hours optimised to match the needs of my customers?
This question will be less applicable to retailers in a shopping centre, where business hours are likely set by centre management. However, for retailers whose business is located on the street or have a greater degree of flexibility, setting your business hours to match foot traffic trends is one way to ensure optimal sales and to cut back on costs.
6) How long are customers spending in-store?
It is vital for a retailer to understand how long it takes for a customer to complete a sale in their store – all the way from the customer researching their options to paying for the product.
For example, if your store sells high-end mens footwear, it's likely to take 20 to 40 minutes for a customer to complete a sale since they will probably try on a few pairs of shoes before making their final decision. By measuring customer dwell times in your stores, you are able to identify how long the average customer takes to buy, as well as the impact of a lower customer dwell time on conversion and basket size. You can then take steps, such as offering additional training to your sales staff, particularly focused on customer experience and cross-selling, to ensure you maximise every opportunity.
Dwell times in a successful store will look different to that of a less successful store. Retailers can use this data to identify additional good practices to implement in their other stores and even set dwell time KPIs for their network that will improve sales and average transaction sizes.
7) Do we have the appropriate number of sales staff at different times of the day?
Using your foot traffic tools, it's possible to identify both peak and off-peak hours of business to ensure you have suitable numbers of staff to meet the needs of your customers. You can accomplish this by analysing your foot traffic over time – a minimum of a month is the length of time we recommend. Once you have established a pattern, you can then reallocate staff or bring in additional staff as necessary.
8) How are my sales staff performing?
The majority of current POS systems give the retailer the ability to track sales metrics for their sales staff. This allows retailers to track sales for each individual member so they can track their sales performance. You will be able to identify sales outliers (both in a positive and negative sense) using this system and take the necessary steps: for example, reward for positive performance and additional training if their sales numbers are slipping.
9) What is our sales conversion rate?
When it comes to online stores, companies are tracking every little piece of data that they can. How many people are visiting the site? Which products are the most viewed? Which customers are buying which products? Businesses understand that this data is vital in an online space, but seem unable to transfer this approach to their brick and mortar stores. This leads us to a major problem when it comes to conversion rates: many retailers don’t know what their conversion rates are, because they’re not tracking the relevant metrics.
10) At what point am I losing sales?
Most retailers would not be able to give you an answer to this question because they aren’t tracking their traffic; all they are tracking is their sales. Traffic gives you context. For example, let’s say you run a campaign to drive sales on your website and you get 200 new sales. How would you be able to judge whether your campaign was successful without knowing how many new visitors were driven to your site because of the campaign?
11) Which stores have the highest bounce rate?
Similar to a website, some traffic counters can measure the bounce rate (the number of people who enter the store and then leave really quickly) of a retail store. Bounce rate is affected by a number of factors, such as poor staff engagement or if the store is understaffed. If you run multiple stores, it’s important to identify which have the highest bounce rate so you can identify and resolve the cause.
The tools that are able to track this metric should ensure the threshold is adjusted to suit the context of the store. For example, someone picking up groceries for the day is likely to spend far less time in store than someone who is interested in buying a car at a dealership.
12) What percentage of customers shop in more than one of my stores?
Few foot traffic tools can help you track this information, but this metric allows you to look for specific patterns or trends, or give you answers to specific questions. For example, are customers visiting certain branches more frequently, or is another store in the same area or shopping centre cannibalising sales?
13) Are my highest revenue stores actually my best performers?
Retailers generally measure success using metrics such as Like-for-Like, comparable sales, and ATV (Average Transaction Value). These metrics are used to power two systems for most retailers. The first is sales rank, which is simply a list of the which stores made the most to least gross revenue. The second is contribution margin, which factors in the costs associated with running the store, such as rent and staff salaries, and then evaluates how much profit they contributed.
With the proper traffic analysis and conversion rate tools, you can develop an in-depth review of all your stores to identify which are doing well not only in terms of sales, but also in foot traffic and conversion rate. With a greater understanding of these metrics, you'll be able to gain a much better picture of which of your stores are actually succeeding and which ones are your "leaky buckets".
For retailers who are looking to grow their profits, these 13 questions will help you identify the critical information you need to understand when it comes to traffic, conversion and the retail environment.
If you currently don’t have a foot traffic and analytics tool and are looking for a solution, Blix offers an all-in-one package that uses anonymous smartphone data to offer you greater insights into your retail businesses. Visit our website today to find out more about our product or to get in touch with our staff.
There are ghosts that haunt the aisles and stalk the shelves of your establishment.
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