The Missed Opportunities Retailers Don’t Even Know About
It’s still surprising how many retailers fail to understand the importance of traffic and conversion data. With a singular focus on revenue or other obvious but misleading metrics, these store owners or managers have little interest or concern for the many variables that can dramatically impact their earnings, such as foot traffic and conversion. When asked why this is the case, many retailers ask us “What will traffic and conversion data tell me that I don’t already know?”
Why traffic and conversion data is important
Wayne Gretsky coined the popular phrase ‘you miss 100% of the shots you don’t take’. This simple saying highlights how failing to respond to an opportunity will always end the same way: nothing will change. In order for you to take advantage of an opportunity, you have to respond to it, even if there are risks associated with it. This is the only way to achieve growth and avoid remaining stagnant.
But what if you don’t know that there’s a ‘shot’ you could be taking?
Every day there are customers who walk into a store with the goal of purchasing a specific product, but, for a multitude of reasons, they never do. These potential customers will never show up on your store’s revenue metrics, so they may as well not exist for retailers who fail to track them. Many retailers are spending thousands, if not millions, on getting customers through their doors, and then couldn’t be bothered to investigate what it is that’s causing some of these customers to leave without purchasing a product.
This is why traffic and conversion data is so important in identifying and understanding how many of these individuals are missed opportunities.
Gathering traffic data
Traffic data is the first step to getting a clear picture of how many people walk through your doors. However, getting accurate traffic data can be a challenge on its own. Even retailers who do attempt to track foot traffic often do so using solutions that are highly inaccurate. For example, some retailers still equip their sales and security staff with manual clickers that they use to track people who enter their store. Others use infrared people counters that are placed across an entrance to track whenever someone entering or leaving crosses the beam.
While both of these systems provide some data, their accuracy is questionable. Manual clickers mean that if someone is distracted, or a store is particularly busy, the individual with the clicker may fail to track the correct number of people who enter the store. In addition to this, both of these systems fail to track when a specific individual entered a store, how long they spent there, and when they eventually left. Automated tracking systems like an infrared people counter also fail to differentiate whether the person they are tracking was a customer or staff member. This is why it is so important to choose a smart people counter, such as one that tracks the anonymous signals shared by everyone’s smartphones.
Tracking conversion rates
The next step to understanding how many opportunities you may be missing is calculating your conversion rate. The conversion rate is calculated by taking the total number of unique sales against the total number of unique visitors over a particular time period. This will give you your conversion rate for that period.
For example, let’s say your store has 500 visitors a day, but only 50 of those visitors make a purchase. This gives you a conversion rate of 10%. Immediately you ask the question “Why aren’t the other 450 people buying something?” Simply through gathering accurate traffic data and comparing it to the number of unique sales you have on your system, you immediately become aware of all the missed opportunities that were sitting right under your nose.
This will allow retailers to take steps to improve conversion, such as increasing the number of floor staff and providing sales training and seeing if their actions have a positive impact on conversion.
Retailers must also be aware that conversion values may shift depending on their clientele, what day of the week or what time it is. For example, a mass market clothing retailer is more likely to have higher traffic and conversion rates on weekends or after 5 PM since this is when their customers will be available to make a purchase. A high-end boutique, on the other hand, is likely to have a more consistent traffic and conversion rate since their customers are wealthier and have more control over their schedules.
It’s a mistake to base your retail decisions solely around revenue
If you are a retailer who is interested in growing your retail business as a whole, it’s clear that basing your decisions solely on what you sell is the least effective way to achieve this goal. The first steps to truly efficient growth lie with making the most of foot traffic and conversion data.