One percent. It doesn’t sound like much does it?
Written by Tony Loxton
In chapter 1.1 of his book Conversion: The Last Great Retail Metric, Mark Ryski highlights the following issue:
"Every day customers visit your stores intending to make a purchase. Your advertising was successful – it got prospects to your store despite the myriad of choices they have. Congratulations. These prospects wandered the store, looked at products, engaged one of your sales associates, and they may have made it all the way to your check-out, but then, for some reason, decided not to buy. The sale is lost. And worse, you will never even know."
This observation by Ryski highlights a major problem that affects many retailers: they are so focused on their sales metrics and using these stats as a proxy for actual conversion data, that they don’t even realise how traffic and conversion insights could help them improve their business.
In this blog, we’ll be taking a look at how retailers can deepen their understanding of this issue, and how they can overcome this using traffic and conversion data to improve their profits.
Many retailers aren’t aware these “close calls” or “lost opportunities” even exist because they are focused on one thing and one thing only: sales metrics.
The primary sales metric that most retailers focus on is Year-on-Year sales, while others also have a high level of interest in the ATV (Average Transaction Value) metric. However, there can be problems with these metrics. For example, a store may look at their COMP sales metrics and ATV and assume the store is doing well since there is growth from the previous year. If the mall management notifies the store of rental increases around this time, the store might look at this metric and see no problem with agreeing to the increase.
However, the store doesn't realise that even though their COMP sales and ATV metrics are up, overall traffic for their store is actually in decline, negatively impacting their sales even if the store as a whole is experiencing growth. On the other hand, what if traffic to the mall and store has increased dramatically, and this is driving the COMP increase? Or if there are specific items that are increasing the ATV even though fewer customers are walking through the doors? The store manager will never understand the context in either of these scenarios because they aren’t tracking the right metrics.
This leads us to an important question: how do you identify and avoid these problems? The answer lies with traffic and conversion metrics.
You can easily measure foot traffic in or near your retail store using analytics tools that track anonymous smartphone data. These foot traffic tools track customer movement, helping you identify how customers are engaging with your window displays, or how long customers are spending in your store.
You can then connect these traffic metrics to your sales data to identify how well your conversion metrics are performing. For example, sales data is gathered using detailed POS systems, which can be used to identify connections with buying patterns and total spend. Web analytics is also critical to understanding what your customers are interested in, ensuring you have stock of in-demand items based on customer searches from your website. Web analytics can be used in combination with your foot traffic tools to identify how retail and online growth compare, and if there are ways for either to support the other.
In the following case study, we demonstrate how you can identify missed opportunities using Blix's retail Dashboard.
Using these tools, you can identify the issues that are negatively affecting the sales performance of your store. Here are a few examples of how these tools can help:
Let’s say your newly installed foot traffic counter has helped you identify that while there's a lot of traffic passing your store, you are unable to grab the attention of passers by. This might be caused by an old or uninteresting window display. You can refresh your window display, use the foot traffic counter to identify whether people are stopping to take a look, and then see how many of those people decide to walk inside.
In another situation, your foot traffic tool has helped you identify that visitors are entering your store, but they aren't making any purchases. You've also noticed low engagement with the sales staff. Seeing a connection between these issues, you decide to remedy this problem by placing the sales staff in a refresher training course, or bringing in a new manager to reinvigorate staff morale.
Another issue you could have identified thanks to your traffic and conversion tools, is incorrect staff rostering. While you may have assumed that your peak hours were occurring in the typical busy retail periods mid-morning and mid-afternoon, thanks to your new foot traffic counter and detailed POS system, you realise that whilst the majority of your sales are happening mid-morning and mid-afternoon, in fact, the highest missed sales opportunities are actually in the late afternoon period and this is where additional staff are required to increase conversion and sales. This data allows you to realign your staff roster to ensure there are more staff available during this period to help drive sales.
These are just a few of the ways traffic and conversion data can help retailers better understand their business and increase profits. By knowing how many customers enter their store, how many choose to buy, how many don’t, and why they make these decisions, retailers can take steps to improve their service and meet customer needs.
If you are interested in an easy-to-implement foot traffic and analytics tool, Blix offers a solution to meet all your needs. To find out more about Blix Traffic and how it can improve your customer experience and enhance sales, or to get in touch with our staff, visit our website today.
One percent. It doesn’t sound like much does it?