Introduction to Traffic and Conversion
If you are running a retail store, I am confident the content of this blog will open your eyes to what you can do to drive stronger sales results. I first learned about the impact I had on traffic and conversion as a store manager at The Gap. It wasn’t until I worked for BBW as a District Manager that I truly learned the power behind the conversion metric. Since then, conversion has been part of my retail DNA and a critical part of my strategy in driving store sales results.
Regardless of the type of retail store you run, there is a common challenge that is causing pain for brick and mortar stores – TRAFFIC IS DOWN. This isn’t a new phenomenon. Let me give you three personal examples:
– It was 1992 and I was managing Ann Taylor at City Center Mall. We were struggling with down traffic.
– In 2002 when I was a district manager for BBW, we were struggling with down traffic.
– Then once again in 2008, as the Director of Store Ops for Limited Too, we were struggling with down traffic. I can keep listing examples but perhaps you get the point.
Down traffic is not new, it is the cause behind down traffic that continues to change.
When traffic is down, your opportunity to maximize conversion goes up.
Why is the traffic shift happening?
Customer traffic has shifted from brick and mortar to online shopping. That is a fact. What to hear another fact? 90% of retail shopping is being done in Brick and Mortar stores with the remaining 10% being done online. So if you are listening to the fake news out there and think that brick and mortar is dying, think again. More e-commerce retailers than ever are opening brick and mortar stores. Managers have more control in driving sales results in your store than you might realize.
So why is traffic shifting? Certainly the Amazon effect is real and driving some of it. The convenience of getting a package the next day at your front door, well even I have to admit that I have taken advantage of that!
But there is another factor – many retailers are reducing the amount of product available in store so when customers go to the store to shop, the product just isn’t there. Customers get frustrated and start to second guess if it is worth driving to their shopping center of choice to shop. It becomes a self-fulfilling prophecy…If the product is not in stores, the customers choose to order it online.
Retailers justify this by telling themselves that customers can order it from the store and even offer free shipping but they are missing the point. Retailers are driving customers to shop online instead of in brick and mortar stores and then complain that traffic is down.
This shortage of in-store inventory is perpetuating the shift of traffic and sales to online. Fulfilling online orders from stores or a fulfillment center is expensive. Factor in Store or DC labor and the cost to ship it. And if the item is on sale or any percentage off, there goes your margin. Now you and I cannot solve for this, the corporate teams need to realize the issue and solve for it.
What can I do to drive Conversion?
What is conversion? Simply put it is when a customer walks into your store, makes a purchase and walks out with a bag.
There are a few things that YOU can do as a retail manager to drive conversion in your store regardless of your inventory levels…it comes down to the customer experience and awareness of your traffic and conversion metrics.
It is remarkable how underused the conversion metric is by managers to increase sales on down traffic. And it is easier than you might think. Now, you might be a conversion guru, but I want to encourage you to read on…I am sharing some insights from a powerful book called Conversion, The Last Great Retail Metric by Mark Ryski, Founder and CEO of Headcount. They are a leading business analytics firm working with retailers across North America. I first met Mark when I was the Vice President of Store Operations at Justice and we hired Headcount to install traffic counters and provide traffic and conversion reporting to our stores. We have been friends ever since, a remarkable person and brilliant thinker.
How many sales am I losing because of my conversion results?
Every hour of every day, customers walk into your store and leave without making a purchase – despite the fact that they intended to buy. Over the course of weeks, months and years this adds up to potentially thousands of dollars for your store if not millions of dollars for your company, of lost sales opportunity.
These customers do not take your store surveys to tell you why they left without buying anything and they don’t show up in your POS data (don’t confuse transactions with traffic). So how do you learn about these customers? You don’t. And what is worse, you don’t know how many of them tell other people about their unsuccessful trip to your store.
So what do you do? You train your team what a focus on Traffic and Conversion will do for your store’s results. Start by looking at your traffic count data and the resulting conversion number for yesterday, last week, last month – whatever data you can get your hands on.
Let’s say your conversion averages 15%, some days higher, other days lower. That means for every 100 people who walk into your store, 85 of them leave without buying anything.
That is what 15% conversion really means. Stop and read that again. 85 people walked out and bought nothing. Did you realize that many people were even in your store? We usually don’t!
Traffic and Conversion: Insight to Action
Have you ever caught yourself saying to one of your managers, “we need to increase conversion” and then walked away leaving them to figure it out? Let’s dig into what “increasing conversion” actually means.
It starts by having your radar tuned to customers, not tasks. Now, is your radar tuned to the customer frequency? Good, then you are ready to learn some practical steps that you can take to impact conversion in your store.
What if you could get 2 more people to make a purchase on the same traffic number? Using the example above, it means your conversion would increase from 15% to 17% which would result in an increase in your sales! How do you get two more people to make a purchase? It keeps coming back to the behaviors in the store…urgency to get to every customer and once you do, uncovering their needs and recommending product.
There is a lot of noise around traffic counting and conversion. Managers might suggest that their associates leaving on break is driving conversion down or large groups where only one makes a purchase is negatively impacting your results. Yes, these things will happen…but they happened last year and will happen next year. I want to encourage you to really focus on associate behaviors that drive your conversion results and not let the noise distract you.
What levers can I pull to drive Conversion results?
Let’s go a level deeper.
There are three components that make up your sales.
(1) The number of people who walk in your store (Traffic)
(2) The number of people who buy something (Conversion)
(3) The amount of money the customer spends (ADS)
So the only way to increase your sales is to either increase the number of customers who walk in the door and last I checked, this is Marketing’s job. So that leaves either increasing the number of people who make a purchase (raise conversion) or increasing the amount each customer spends (raise ADS).
The trick is, if you are focused on getting more people to make a purchase, you have to engage every customer and by the way, that should be your goal. But if you want to get customers to spend more, you typically have to spend more time with each of them which means you might miss a few customers. To balance both requires focus and skill. And you can do it! Engage, uncover their needs, break away, circle back, reinforce their decisions and repeat.
Tell me again, what should I do to impact Traffic and Conversion?
– Is every customer who walks through your door being engaged?
– Does your team drop their task (or their cell phone) to have real conversations with customers? Not, “Are you finding what you need”. Instead, make a comment about an item they are looking at or holding. Suggest something that goes with it. Or offer a fitting room. Any of these are more effective than asking if they are finding what they need.
– Do they use the proverbial “let me know if you need anything” or do they genuinely work to get to know their customer’s needs?
Now I am sure your brand has a selling model. My goal here is not to reinvent that model with you. But if your team doesn’t know and use the model, that is your starting point.
Time to review your Conversion results
I have a question for you…how many customers walked in yesterday and how many made a purchase? The ones who didn’t purchase? Those are your sales opportunity. Let’s look at this from another angle. What if you made your sales goal yesterday and conversion was down. Is there still opportunity? The answer is a resounding YES! Maximizing every customer who enters your store is job #1. Whether they buy 3 items or 1 item, each customer counts and you should want every one of these transactions.
I know that managers have a lot vying for their attention. But if you can unlock this opportunity the sky is the limit on your potential sales. This blog only scratches the surface on conversion opportunities so look for another blog and a podcast with Mark Ryski that further explores this topic coming soon.
If you are a district manager reading this, what if you could have a modest lift in conversion in each of your stores? What would that equate to in sales for your district? Beware of applying a flat conversion target across all stores. I believe comparing conversion across stores is ineffective. Each store should work to build it’s own conversion results. 22% conversion in a mall store could be strong, 35% conversion in a strip/lifestyle center could be soft. Each store needs to look at their traffic number and their actual conversion.
Action TimeEach blogs always wraps up with actions that you can take to apply what you read. Here are 5 simple follow up actions for you to take:
– Evaluate your sales goal…are you consistently achieving it? If not, do you know why?
– Take a look at your store’s traffic. Then look at the conversion results. Is there opportunity? Is the trend up? Down? Do you miss it most on high volume days or low volume days? If so, rally your managers. Ensure they understand the traffic and conversion opportunity that exists. Learn if they prefer a customer not buy anything rather than lower their ADS or UPTs.
– Evaluate each managers conversion results when they are the manager on duty. What is the customer experience like? Provide them with specific feedback – what are they doing well and where there is opportunity?
– Does every associate on your team (not just managers) understand the behavior that positively impacts conversion? The best way to evaluate your own team’s behaviors is to do the helicopter exercise. This is where you stand in front of your store and observe customer interactions. What do you see? Is there urgency to get to customers? Do they use your brand’s selling model? Knowing what they do well or not well is not enough. You must take action!
– Don’t allow your Conversion focus to be the flavor of the week or month. Commit to driving Conversion in your store or district every hour of every day and watch what happens!
Send me a note, tell me what you are learning. Ask me questions. I am here for you and rooting for your success!