Conversion, the last great retail metric

Background and Context

Conversion is perhaps the last great retail metric. My friend Mark Ryski of Edmonton, Canada and I sat down to record a podcast about his passion and mine, Traffic and Conversion. Mark has written a book called Conversion, the Last Great Retail Metric and I am excited to share his expert point of view with you. While I will be posting the podcast link as soon as it is available, I wanted you to be able to be a fly on the wall today. 3 weeks ago I published a blog on Traffic and Conversion and it went viral. With holiday around the corner, I believe this additional context is vital to winning this holiday.

Content Introduction

“In a world where Brick and Mortar stores struggle with down traffic, the experience that our managers create inside their store is the linchpin. Great experiences can drive strong conversion results. Thing is, this requires a constant focus on the customer. Every minute of every hour of every day that your doors are open, your frequency has to be tuned to the customer first, especially when traffic is up. When traffic once again dips, then the focus can be on tasks. I understand the imperative to complete tasks, it is all part of running a store, but they have to get done in between genuine customer interactions if you want to achieve sales results”.

I know you will enjoy the conversation with Mark and hopefully get some tips on how to improve your store’s conversion!

Introduction to Mark Ryski, CEO / Founder of Headcount

RW:  Mark, I have been anticipating our time together today, thank you so much for carving time out of your busy schedule so we could talk about the topic we are both so passionate about, Traffic and Conversion.  I would love our audience to get to know you, why don’t you share a bit about yourself? 

MR: I live in Edmonton Canada…known for the Edmonton Oilers and shopping. Until 2004, the West Edmonton Mall was largest in the world. I have two kids, both in college, one in Engineering and the other in Business and Retail, just like her father. I am the Founder and CEO of Headcount, Inc. a company dedicated to the study of traffic and conversion in brick and mortar retail stores. We are live in 25 countries from Iceland to Ecuador and helping clients use and apply insights from store traffic and conversion data. I have written two books on the topic and am currently working on a third.

Traffic counting and measuring Conversion

RW: How did you get into traffic counting and measuring conversion?

MR: I was working in retail as a manager of advertising for a computer retailer. I was trying to answer, ‘Did my advertising work?’. As the manager of advertising for a computer company in the 1980’s, I had a $250K advertising budget. I would do big ad campaigns. As a result, the store was busy, every associate was waiting on customers but our sales results weren’t that great. So I got curious about our traffic. I knew I needed to understand the number of people who were walking in the door so I could understand the conversion rate of customers. The owner of the company didn’t want to pay for a traffic counter. At that time it was $2500 to install one counter in our store. So I asked the college kids who worked in this store to build a scrappy simple traffic counter. For $300 and parts from Radio Shack I was in the traffic counting business.  I never thought I would build a career based on answering two very simple but critical questions: (1) How many visited your store today? (2) What % of visitors made a purchase?

Two Books on Traffic

RW: What was the motivation to write two books on traffic and conversion?

MR: I had started Headcount and was knocking on retailers doors thinking they would be as excited as I was about what traffic and conversion could do for their business. I couldn’t get retailers to talk to me about installing traffic counters; they just were not connecting the dots. I did not want to lose my company, so from fear and desperation came the idea of writing a book. No one had told the traffic and conversion ‘story’. On one of my sleepless nights, it occurred to me I could write a book and tell the traffic and conversion story. There were 100’s of books authored about online traffic and conversion improvement and there were no books about brick-and-mortar store conversion. I was writing nights and weekends and a year later a box of books showed up in my office. I started sending books to CEO’s of retail chains and the books led to meetings and the meetings led to contracts being signed and Headcount started to grow.

RW: You are right, when you first sent me your book, Conversion, the Last Great Retail Metric, I was sharing it with the executives at our company and it opened up conversations. Do you remember, i kept asking you if I could have more copies of the book? I think at one point you sent me a dozen, and I gave every last book away. My copy is highlighted, dog-eared, and a bit tattered it has been referenced so frequently! Coming from Limited Brands I was teaching managers the power of traffic and conversion so I was passionate about it when I got to Limited Too. The book just backed my story up!

Why doesn’t everybody focus on Conversion?

RW: If traffic and conversion are so important, why doesn’t every retailer measure it / focus on it?

MR: That is the question I have dedicated my career to. It is difficult to get retailers to connect these dots. I thought every retailer would get this when I started Headcount. Truth is while traffic and conversion should be as pervasive as the other metrics retailers are chasing, there are a handful of reasons that they are not.

5 Reasons for lack of focus

(1) Some retailers believe that transaction counts equal traffic counts…and that the real insights come from actual sales. But traffic counts and transaction counts arent the same. In fact, not even close. Transactions tell you how many people made a purchase, they do not tell you how many walked in. The traffic number tells you how well you performed relative to the opportunity.

(2) Some believe that sales are all that matter.

(3) Retailers have tight budgets and they don’t want to spend money installing traffic counters.

(4) There are even retailers who are so focused on driving online sales, they are driving customers online and then complain their traffic is down.

(5) Lastly, some retailers have become obsessed with trying to beat Amazon. I believe every retailer does need to be where the customer is…online, in stores, on mobile devices. But there needs to be balance and retailers need to keep their eye on the ball running their own brick and mortar stores.

Struggling moving from Insight to Action

RW: You say that many retailers struggle with fully using traffic/conversion insights, why is that?

MR: I meet two kinds of retailers, the ones who don’t see the point and the ones who cannot live without it. Many retailers have bought counters and put them in their stores but haven’t done much with the data so they think it hasn’t done anything for them. Collecting data, that is easy. The hard part is extracting insights and taking action. That is where the real value is.

An easy analogy, it is like buying a piano (traffic counter) but not any lessons (how to use and apply the traffic insights). Or another analogy, it’s like installing a new POS System and hoping sales will improve. Acquiring data is easy…finding insights and taking action is hard!

Store staff has the greatest influence on conversion

RW: In your book, Conversion, the Last Great Retail Metric, you say Store Managers and sales staff have the greatest influence on conversion, why do you think that is?

MR: Store managers and sales associates are closest to the customer, they are the ones driving conversion. They need easy to understand data…like your example in your conversation with a store manager. You asked what their conversion results were on an average day and then asked how much traffic walked in on that day. She responded with the data, and your simply took the number who walked out buying nothing and posed a question for her to consider the result. When you asked what a 1% conversion lift would be worth, it got her thinking. The lightbulb went off for her, and that is literally how easy it is to have conversations with the team on conversion results. Of course, then you have to identify the behaviors that are driving the result.

Struggles with Traffic and Conversion insight

RW: Some store managers really struggle with using and applying traffic and conversion data, why is this?

MR:  I have identified 7 different issues that could cause managers to struggle with using and applying the traffic and conversion data.

7 Reasons Managers struggle with the data

(1) Bad/inaccurate traffic count data…if the data is inaccurate, you won’t believe it and you’ll never action it.

(2) They don’t believe their traffic data? “There’s NO WAY I had 300 people visit the store yesterday!?”

(3) Data presented in a complex way or isn’t easily digestible or can’t spot trends won’t get used, store managers are busy!! (Home Office doesn’t always appreciate that)

(4) Too much data and some store managers are overwhelmed by the amount of data/reports they get.

(5) Store Managers are often not provided with adequate training and ongoing support. It can be “here’s your report…good luck”. Store Managers need to understand how to interpret and apply the insight.

(6) Some store managers are not analytical by nature (every manager needs to be able to interpret data in this day and age).

(7) No incentive/motivation to focus on it. Connecting conversion to compensation as part of a balance performance plan is best.

Conversion Noise

RW: I have visited stores where the store manager doesn’t want her team to leave for lunch or break because she is worried what it will do to her conversion. I was visiting a store and one of the associates was leaving for her break, she was doing the limbo to get out of the store. When I asked what this was about, she said her traffic counter was set to measure 5ft and above so the managers wanted the team to limbo in and out so that their conversion results wouldn’t be negatively impacted. what is your response to these behaviors?

MR: This is noise and not worth the effort. Better to focus on the behaviors that are impacting conversion every hour of every day. That is where you will move the needle.

Inaccurate Traffic Data

RW: What should a store manager do if she believes her traffic count data isn’t accurate?

MR: If managers don’t believe the data, they’ll never action it…SAY SOMETHING! Escalate the issue to your DM/RM and have the data audited to confirm accuracy. Tell-tale signs your data is bad (two most common reasons): (1) missing data and (2) suspicious or large changes in traffic and/or conversion rate trends. Too many retailers don’t spend time making sure the data is clean.

Advice for Store Managers

RW: What advice/tips do you have for store managers to improve conversion rates in their stores?

MR: The most important thing you can do is align staff to traffic. When traffic is high and spiking, be careful how you schedule breaks and be mindful of when you are tasking vs. serving customers. Customers have to be #1 priority. Tasks need to get done when you have a lull in traffic. Be situational based on traffic. Watch for peaks and valleys – when the store is busy, touch everyone who comes into store. Serve as many as possible. When less busy, divide your time tasking and waiting on customers, with customers remaining the top priority.

You need to understand why people aren’t buying in your store. When she crosses threshold, she has made a commitment/obligation to buy something. Focus on who is in your store and if she leaves without buying, talk to them when they leave, ask what they didn’t find. Observing behaviors on the floor will tell you a lot about your conversion results.

Actions Store Managers should take

1) Treat store traffic  like a precious, non-renewable resource and don’t take traffic for granted…there are too many choices for shoppers today. It’s a big commitment to visit your store.

2) Go beyond “Can I Help you?” Make a comment about something the customer is looking at or holding. It will go much further to converting the customer.

3) Focus on what you can control and discuss controllable vs. non-controllable factors with your team.

4) Schedule staff to traffic…be careful with breaks/tasking/watch peak hours

5) Be situational based on traffic; know what to do when the store is busy/not busy and ensure your managers do too.

6) Understand why don’t people buy?

7) Don’t worry about conversion rate dips or noise caused by buying group size…focus on improving conversion every hour of every day; it’s about the trends.

Conversion is a team sport for the whole team to work towards. The responsibility doesn’t just belong to the Store Manager. There is a company we work with on their Traffic and Conversion results. We noticed the third Tuesday every month conversion dropped in every store in the chain. We dug into this and realized that was when there was an all company store manager conference call and the store manager was off the selling floor. SM is off the floor and conversion sagged. Once aware, the SM met with their associates and challenged the team to keep conversion up. It created accountability with the store team. Evaluate your conversion results. Are there managers on the team who need additional coaching on their conversion results?

Advice for District Managers

RW: How about District Managers?  What advice would you give them on how they should be thinking about conversion across different stores?

MR: Different ball game with DMs, we ask them to think about each store as unique to understand opportunities. When a DM engages in a store visit, always make traffic and conversion part of the discussion; not just about how sales are. If conversion is important to the DM, it will be important to the store manager.

(1) Ask your store managers about traffic and conversion every visit; if it’s important to you, it will be important to them.

(2) Help store managers spot conversion opportunities, share ideas from other stores and acknowledge success.

(3) Don’t beat your team with the ‘Conversion Stick’. Don’t let it be punitive. It is a really important metric.

(4) Remember: Just because traffic is down, doesn’t mean sales need to follow. Focus on what you can control.

Holiday Readiness for Store Managers

RW:  Mark, you have shared some great actions that both store managers and district managers can take. With holiday around the corner, what 1-2 things should a store manager focus on to win at conversion in their store?  How about for our district managers who are listening, what 1-2 actions should they focus on?

MR: Store Leaders should focus on 1 thing…fast transaction throughput. You need to take customers money quickly. Stores will be busy, you will do your best with merchandising, but you have to keep customers moving through the line quickly. Be mindful of people lined up. Conversion is impacted when people won’t stand in line. This will be exacerbated on Black Friday. Acknowledging customers helps a lot, they are more patient when they think you are doing your best.

Holiday Readiness for District Managers

RW: What about a tip for District Mangers for Holiday?

MR: The curious thing about holiday and Black Friday is it doesn’t happen the same way in every store. Study holiday trends from the prior year in each store to understand what to expect. When traffic shows up will vary by store as well so study store schedules and ensure they are scheduled where the traffic opportunities are.

The Tipping Point

RW:  Mark, Do you remember the book, The Tipping Point?  Malcolm Gladwell talked about the tipping point as the magic moment when an idea, trend or behavior crosses a threshold and tips and spreads like wildfire…I pulled this book back out and read it this week. I believe Store Managers and District Managers who focus on conversion behaviors as part of the day-in/day-out running of their store or district could be the tipping point they need to really move the needle on their results.   

MR: I am a big fan of Malcolm Gladwell and thought my company would be the tipping point for traffic and conversion for retailers! I agree with your comment. Focusing on traffic walking in the door of your store will help you understand the opportunity to deliver sales results.

Wrap Up

RW:  Well Mark, i thoroughly enjoyed our time together today.  You are an expert in your field and I am delighted with the powerful content that you shared.  I know first hand that if our listeners take these actions they will see movement in their results. 

MR: Thank you for inviting me! One final thought, some of the most powerful ideas are the most simple ideas and that is what traffic and conversion really is. What else could explain that store managers in El Salvador can understand these concepts like managers in North America? These behaviors can make a difference!

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