By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Mark Ryski is the founder and president of HeadCount., a retail analytics company, and author of “When Retail Customers Count.”Even in good times, consumer electronics retailers live on the edge - razor-thin margins, unrelenting competitors, fickle consumers. When times are as difficult as they have been in 2009, weak retailers simply close their doors, and the good ones cut expenses and hold their breath waiting for the storm to pass.
As difficult as times are, you would assume that retailers would do everything they could to sell to the prospects who do visit their stores, but the majority of retailers don’t. They can’t because they don’t measure traffic and customer conversion - and they’re making these tough times even tougher on themselves.
Every day prospects visit your stores looking to buy. While some number of these folks will buy and be successfully “converted” into actual customers, others will leave without buying. How many sales did you lose? When did you lose them? What can you do to lose fewer of them?
You won’t find the answers to these questions in your till or in the mountains of POS data you collect. As much as they try, retailers who say that sales transactions provide a good proxy for store traffic are simply wrong. Transactions are a measure of the buyers only - it tells us nothing of the people who came and left without making a purchase, the “unconverted.” Aren’t you even a little curious about these folks? You should be. Every retailer loses sales every day, and so do you, but you will never know it or be able to do anything about it unless you measure traffic and customer conversion.
Customer conversion - calculated by dividing sales transactions by walk-in traffic counts - clearly shows where the sales opportunities were, what you got and what you missed. It’s almost too simple. Then why do so many retailers either not measure this or struggle with making sense of this stuff? For some it’s the expense of buying traffic counters; for others it’s the lack of internal resources to analyze the data; and for many it’s just a lack of appreciation for what these simple but powerful metrics can reveal. The excuse I find most curious is, “We’re too busy worrying about sales to think about customer conversion.” Sort of ironic, isn’t it?
Successful retailers “get it,” and traffic and customer conversion metrics are on their daily dashboards right alongside “average ticket” and “comp sales.” They couldn’t run their businesses without it.
If you don’t track traffic and customer conversion in your stores today, you are at a significant disadvantage. It’s like flying without radar. If you do track traffic and conversion, but aren’t really effectively using it on a daily basis, get help. It’s a gold mine of insights. And, if you are tracking traffic, measuring conversion and using the insights effectively, I apologize for giving away your competitive advantage.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.