Retailers seeking to improve sales usually focus on either getting more people into the store or getting them to buy more (or more expensive) items. There is a third approach that many store owners fail to take full advantage of: increasing retail conversion rate. Monitoring and taking measures to increase the percentage of shoppers who make purchases can make a major difference in a store’s performance and profits.
Retail conversion rates are calculated by dividing the number of sales transactions by the total number of people who come into the store. If a store gets 200 visitors in a day, and makes 50 sales, the conversion rate is 25% (50 ÷ 200). It’s important to accurately track total pedestrian traffic, and a people counting system is a great tool for the job.
Once you’ve determined your retail conversion rate, it’s important to evaluate your store’s performance. In the above example, there were 50 sales — but what about the other 150 people who left the store without making a purchase? Assuming that most people who enter a store are predisposed to buy, you need to be able to figure out why they don’t, and what you can do to convert even a few of those lost opportunities into sales. It doesn’t take a big increase in percentage to make a big difference in profits.
Here are some things to consider to help increase your retail conversion rate:
- Spend some time observing customer behavior. Notice what customers encounter (or don’t encounter) when they enter your store. Do they abandon purchases when they see long lines at the checkout? Can they easily find the items they want or that have been advertised? Are they getting assistance from sales associates or having trouble getting attention? Identifying and fixing problems can make a conversion rate rise.
- Study peak and slow times, and adjust staffing to match. Your people counter will show you the days and hours your store gets the most foot traffic, and you should staff based on number of people in the store, rather than number of sales. Conversion rates tend to dip when traffic rises, so during busy times, you’ll want to have enough associates on hand to assist as many of those potential customers as possible to make the sales.
- Get your staff invested in the goal. Mark Ryski, author of Conversion: The Last Great Retail Metric, suggests making conversion “a team sport.” If your employees understand the importance of the roles they play in raising your retail conversion rate, they’ll be motivated to contribute to the effort to make that percentage go up.
When setting goals for your retail conversion rate, keep in mind that every store is unique (even multiple locations of the same chain). Depending on the type of store or goods being sold, a rate of 25% might be great for one store, but dismally low for another. Track the data for a while to find your average rate, and then focus on ways you can improve it — and your bottom line.