Written by Brett Stephenson
Customer experience is a critical retail business priority. Retailers typically measure their customer experience via customer surveys and mystery shopping. Unfortunately, these techniques are only able to provide a basic insight into the degree of satisfaction of your customers. It’s only when you investigate your in-store sales conversion rates, that you are truly able to see a complete picture of the full customer experience.
While customer surveys can be a quality tool for the measurement of your in-store customer experience, they do have a significant limitation. Customer surveys typically only get responses from people that have actually completed a purchase. This is due to surveys often being located on the point of sale terminal or sent via email after purchasing. What about all the people who didn’t buy?
Arguably, it’s more important to get feedback from the people who didn’t complete a purchase. What went wrong in the sales process to prevent the non-buyers from buying? Some retailers will incentivise the non-buyers to visit their website to complete a survey, in an effort to understand why they didn’t make a purchase, however the response rates from this are usually extremely low. Although customer surveys do provide valuable information, retailers do need to ask themselves what this information means and how they should interpret it.
Mystery shopping can yield useful insights into in-store customer experience. Retailers are able to select where and when to deploy mystery shopping, and as it’s usually performed by professionals the data should be useful and reliable. The two main limitations of mystery shopping are objectivity and cost.
Mystery shoppers are generally consultants, not real customers spending their own hard earned cash. They may be able to recreate what a customer ‘sees’, but will never be able to recreate what a customer ‘feels’. Mystery shoppers can only observe the customer experience and as a result, customer preference and interpretations are not accounted for. There is a lack of depth in the data.
Additionally, mystery shopping is labour intensive and therefore costly. It is typically charged on a ‘per shop’ basis, in the range of $80 - $100. A retailer with 100 stores, performing 2 shops a month, is looking at a cost of approximately $200,000 per year. This is a significant investment for an insignificant volume of data.
Mystery shopping can identify issues on a case-by-base basis, but cannot provide the scope, reliability and validity of data needed to deliver a true picture of the whole customer experience.
While customer surveys provide ongoing insights, the results are tainted by sample error. Mystery shopping may provide rich insights, however this data is infrequently collected and the shoppers are not real customers, meaning their perceptions won’t be a true representation of customer opinion. So if customer surveys and mystery shopping are too subjective, infrequent and unreliable, how can retailers truly understand the experience customers are having in their stores?
The answer lies in foot traffic measurement and sales conversion data. Traffic and sales conversion data makes your customer experience data more meaningful, and more importantly, more actionable. It provides critical context that is otherwise missed.
Sales conversion measures the percentage of shoppers who make a purchase (number of transactions divided by the number of store visitors). As such, it is safe to assume that people who make a purchase are somewhat happy with the customer experience they received, and people who don’t buy are probably not. Whilst this may not be the case in every single situation, it does largely hold true.
Let’s look at a couple examples.
It may seem unusual to have a store with high revenue and a low customer experience score, but this happens all the time. Without the context of sales conversion, this store is likely to be considered an outlier and left untouched due to it’s high revenue. If we add sales conversion data, the retailer gets a completely different insight.
We already know Store A has low customer experience and high revenue, and now we know they also have a low sales conversion rate. This means that Store A has high traffic and is only converting a small percentage into buying customers. This is mostly likely due to understaffing or staff performance issues. With the sales conversion data, the retailer can make a more accurate assessment of Store A. Instead of considering it as an outlier, management should be investigating staff performance and how rosters can be optimised based on traffic.
The likely result will be that Store A will increase revenue, fix customer experience issues and be considered an even higher performer.
Store B has great customer experience scores, but for some reason is not delivering the expected revenue. When we add traffic and sales conversion date, we learn that Store B has low traffic and a high sales conversion rate. This reveals that Store B is in fact maximising it’s sales opportunities and performing very well. No amount of customer experience improvement will improve the performance of this store.
The low revenue of Store B is a result of low traffic, requiring investigation by the marketing team. The combined sales conversion, traffic and customer experience data suggests that the performance of this store will most likely improve significantly if the traffic is increased, assuming the high customer experience is maintained.
As demonstrated, sales conversion acts as an accurate proxy for customer experience. While I would not recommend eliminating your current customer experience measurements, I would absolutely advise that you use sales conversion and traffic data to lead your customer experience program.
For example, mystery shopping can give you a targeted, in-depth understanding of a store with low sales conversion. Customer surveys can bring to light trends in stores with low conversion rates versus those with high conversion rates. Introducing in-store sales conversion and traffic data will mean your customer experience program will be more targeted, more efficient and more cost effective.