There is a piece of data that many retailers do not collect, and it is part of what is separating the winners and the losers in the brick and mortar economy.
Point-of-sale (POS) systems have come a long way over the last ten years. Certain features that were previously unimaginable are now ubiquitous; capabilities like registering sales by the staff member ringing them up, processing a wide variety of payment methods, and downloading and charting sales numbers over time.
There is, however, one critical piece of data that POS systems cannot provide, and it happens to be the key to unlocking the value of all the numbers that retailers do currently collect: the number of people going in and out of the store.
When stores count people entering and exiting the store, they can use that number in conjunction with their POS data to calculate their conversion rate, a.k.a what percentage of people coming to their store are actually buying things.
The majority of retailers do not currently count folks coming and going because until now, there has not been a non-invasive, cost-effective way to do that.
But, conversion rate is a critical metric for businesses to improve their sales and operations, and as a result retailers of all sizes are starting to collect traffic data (to great effect). Here are a couple of the ways that the conversion rate can be used to tell a more complete story.
1. Employee Performance
Brick and mortar locations typically evaluate employees on the floor based on a couple of factors, including their interpersonal skills and how reliably they show up to their shifts.
But the ability of employees to actually close sales - to boost revenue by subtly influencing browsers to become customers - is measured quite poorly by traditional metrics.
Modern POS systems tell store leadership how many customers a clerk rang up, as well as the value of those purchases, but they do not say how many prospects were left on the table. Is Mary making 5x more sales than Joe because she is a better closer, or because many more people are coming in when she is on duty? If they traded shifts, would Joe make more sales than Mary?
It is impossible to collect hard data on who a business's best salespeople are without understanding how many opportunities are walking in while they are on duty. Once leadership knows who has the highest conversion percentage, they can arrange schedules to give their top performers more hours, and/or have them work during high-traffic times.
The bottom line? More revenue for your business.
2. Evaluating Campaigns
If sales mark a bountiful harvest, then prospects are the carefully planted seeds that may one day grow into customers. And even though not every passerby who browses a store will end up purchasing something, generating heavy foot track is still the most surefire way to guarantee sufficient revenue come yield time.
Brick and mortar retailers use any number of marketing initiatives to drive traffic, including discounts, coupons, and more. Book stores, for instance, often have authors do readings and Q+A's, while clothing stores may have pop-ups or other buy-one get-one promotions.
The problem, though, is that without counting the number of folks entering and exiting their businesses, brick and mortar shopkeepers cannot properly evaluate whether these marketing campaigns are bearing fruit.
Again, raw sales numbers are only half the puzzle; the real meat is in conversion rate. Higher sales numbers after launching a campaign might indicate that the campaign is working, but if the conversion rate drops when the traffic increases, then there are problems with store staff or on-premise signage. Folks are coming in the door, but they are not purchasing at nearly the rate they should be, and something needs to change.
With brick and mortar retail under unparalleled pressure from e-commerce, business owners are understandably trying to get their arms around every piece of information they can. In the at-times arid desert of new data, savvy shopkeepers are realizing that conversion rate reigns supreme.
We built the QTotal people counting system for use in restrooms, but retailers are starting to use it to count their traffic because of how affordable and easy-to-use it is. If you're interested in learning more, let's schedule a 15 minute demo & conversation.