Retail TouchPoints: Retailers Counting on Conversion Analysis to Drive Store Metrics
By Amanda Ferrante, Assistant Editor
Through a special arrangement, what follows
is an excerpt of a current article from the Retail TouchPoints website,
presented here for discussion.
With physical expansion slowing, many retailers
are taking a harder look at the performance metrics of their existing locations.
Forward-looking retailers such as Virgin Megastores, Marks & Spencer, and Crabtree & Evelyn
are adopting sophisticated traffic counting systems and developing conversion
rate analytics to precisely track how many shoppers are actually making purchases.
“Knowing your conversion rate lets retailers see how well they are doing, how much the shopper felt the promise of your brand at the door, delivered on the rack, and how much money you might be leaving on the table,” said Bob Phibbs of The Retail Doctor, a sales training consultancy specializing in the retail sector.
Virgin has credited the analysis with uncovering variations of up to 20 percent in average transaction values between stores, as well as a 15 point difference in conversion rates between its highest and lowest performing stores. Jason Toy, a division manager for Virgin Retail, said the analysis has been beneficial in highlighting store level performance, as well as regional customer profiles.
More and more retailers are also providing the analysis directly to store managers and other personnel. For example, Marks & Spencer has used its visitor count system to build staffing plans to each department within a store. “By making small, simple, sustainable changes in staffing, product availability and service based on our findings, Marks & Spencer has been able to drive measurable improvements in conversion, units per transaction and basket size,” said Bill Donald, a manager with Marks & Spencer.
In addition to highlighting operational opportunities for staffing and merchandise adjustments, traffic counting and conversion rates also help measure the effectiveness of a retailer’s marketing efforts. “You can see if your advertising creates more traffic or more sales from the existing traffic,” said Mark Lilien, consultant with Retail Technology Group.
Laura Davis-Taylor, founder and principal with Retail Media Consulting, suggested that the bigger opportunity for retailers is learning more about the in-store behavior of shoppers.
“Frankly, any retailer that is interested in shopper insights that unveil the desires and causal triggers for the human behaviors of the people in their aisles benefit from conversion rates,” Ms. Davis-Taylor said. “What we are doing is finally bringing the best practices of marketing into the store environment. It’s interesting that it’s taken so long, as those insights lead to the knowledge on what works and does not work to positively affect these valued people.”
Discussion Questions: What do you think are the major benefits of traffic counting and conversion rate analytics? What might be some of the shortcomings, or areas where the technology over-promises? What’s the best way for retailers to take advantage of data gleaned from conversion analysis?