convert visitors into customers
Take control of the sales in the store. A step-by-step guide for retail Analytics
Improve the store with retail analytics
Take control of the sales in the store. A step-by-step guide for the retail analytics. Here we go trough how you easily can take control of the sales in your store with the help of statistics and straightforward thinking. Check it out now! This can seriously change the way you run a store.
Introduction to retail analytics
No one can sell to everyone that passes by. In the depends on a lot of factors, to simplify it a bit we refer to the 3 P's from marketing literature price, place (location) and promotion. Generally accepted, it is usually said that a store sells to 10-20 % of all customers who enters the store.
What is you sell share today? In fact it really doesn’t matter what your current sales share is. The purpose of working with people counting is to help you understand the current relationship and improve it.
There are periods during a day or a week when the sales share is high and there are periods when it is low. You do not have to sell to the same percentage of customers every hour, every day.
It's about knowing when and under what circumstances your store is performing best, this will help you maximize your efforts to convert more visitors into buying customers.
Three key components in Retail Analytics
When you know your customer base and your sales share. What do you do with it? How do you improve your sales effort? There are three important parts that are required.
Three key components
The customer flow is predictable
Customer flow and sales share are important parts of the formula that helps you understand where sales come from and why.
Customer orientation is one of the fastest and most cost-effective methods to increase sales.
predict YOUR SALES with very high probability
Most store managers are aware of a certain buying pattern in the store. Sales in the first half of the week are usually a good indicator of what the week's results will be. At lunchtime, most store managers know how the rest of the day will end.
But the store manager has no control over whether the volume is reached. If the goal is reached or exceeded, the employees have done a good job, if the goals are not reached: "there have not been enough customers in the store."
Imagine if you could predict with very high probability how much traffic will come into the store every hour, every day, how much they will buy and what the average sales will be? What if you could predict very exactly what your sales every hour of the day, every day of the week throughout the year will be?
The truth is that you can! The traffic to your store every week is significantly more predictable in relation to your sales volume.
The customer flow is predictable
Customer flows and purchases take place in predictable patterns. This means that every week, the same percentage will visit the store during the different days of the week. The traffic may vary slightly from week to week, and seasonal variations will also affect the total, but the days of the week will be relatively similar.
You will find that the same regularity appears when you see per hour as the percentage of daily traffic. That percentage will not always be the same, but stable enough so that you can make very good forecasts.
When you know the traffic you can also predict how many of those who enter the store will actually be converted into buying customers.
YOU WILL QUICKLY IDENTIFY PATTERNS
Your store has several distinctive patterns that you will be able to identify, the more you become familiar with traffic measurements and the percentage of recruiting customers. It can be weeks where nothing special happens, special activity weeks, sale, Mother's Day, Father's Day, etc.
Most stores have at least 6 different specific patterns, or templates. These templates can be used for daily traffic / hour forecasts and the proportion of buying customers through all weeks and at any time of the year.
Knowing this gives the store two important benefits:
It will tell you if you reach your sales figures or not. If you can not reach them and you know it in advance so that you can possibly do something about it.
The information will tell you exactly what you need to do to reach or exceed goals.
THE Formula WILL CHANGE THE WAY YOU RUN A STORE
How do I take the next step and use this information? IMAS productivity formula is a simple formula, which once you have learned it, will change how you run the store.
Number of incoming customers x% hit-rate* x average sales = Sales
If you want to increase your sales, you need to increase one or more of these three factors.
*Hit-rate, or Conversion rate (% of visitors making a purchase).
EXAMPLE Retail Analytics: Store manager
Let's show an example of how a store manager can use the productivity formula to improve sales. Let's assume last week's sales looked like this:
Number of incoming customers x% hit-rate x average sales = sales
4500 x 10% x 10 = 4500
If the sales target is 5000€ this week, then you need to:
Increase the traffic base from 4500 to 5000. Are there any activities, ads, etc. - that will increase the traffic by 500 extra visitors this week?If not, then the store will continue to have about 4,500 visiting customers.
Increase hit-rate from 10% to 11.2%. What are you going to do this week that you did not do last week to make it happen? If you do not do something different, you will probably sell to 10% of your customers. Just like last week.
Increase average sales from 10€ to SEK 11€. To achieve this, you need to get your staff to work hard on more sales. Not always easy, especially if the staff is not trained to do so.
Use the formula to forecast
If you do not make any change, then you will sell for 4500. But if you focus on improving the share of buying customers (hit-rate) by 1% every day through better and more customer-oriented service, then you can achieve your goal of 5000 . Above all, you want to know why you have achieved the result.
The productivity formula can be used both forwards and backwards. Use it backwards to explain more exactly what caused last week's results. What has changed? The traffic surface? Change in hit-rate? Average sales? Which activity contributed most to the change?
Use the formula to forecast what your sales will be next week. If you find that the formula shows that your actual sales will differ from your budget, you must either change the budget or decide what to change for next week.
But how do you change the values if they are so predictable? We have already pointed out that the traffic base is usually a central responsibility and that an increase in average sales is difficult to achieve.
We then only have the hit-rate. Both the store manager and the employees can influence this. If you do nothing, this factor will remain constant. But it can be changed and the result will be greatly changed.
Fig 1. Customer in relation to available staff
A rule of thumb: when the ratio exceeds 30, then there is too little service available in the store. With 30 customers per staff hour, each customer receives help for an average of 2 minutes.
measure the level of service in the store
How do we increase % hit-rate? If your store is service sensitive, the best way is probably to get the hit-rate up by also getting the service level up during the most important sales periods.
But what is better service? Possibly, that you are trying to increase capacity during hectic times such as lunchtime, Thursday evenings and Saturdays, etc. But the question is always pending, "who and how much staff". How can you measure service so you can improve it? With a customer counter, you can measure exactly what your service level is every hour, every day.
The formula we use to measure the level of service is the ratio between the number of customers and available staff. We obtain the ratio by dividing the number of customers by the total number of staff hours for the current period.
The key figure represents the number of customers who receive help in the store.
The example in Fig 1. shows that the ratio for Wednesday is 13 and for Saturday 42. The lower the number, the more available staff in the store. There was obviously more service on Wednesday than on Saturday, although the number of staff hours on Saturday was higher.
Use the productivity formula to evaluate whether these measures have led to a higher % hit-rate. If you have increased the cost by 500€ per week using the productivity formula (extra time, bonus, training, etc.), then you can measure exactly what the increased cost has meant for the store's sales, and return on investment.
How the productivity formula will help you
You can improve your customer service by reallocating the number of hours in the store and increasing them during important periods such as at lunch, after office hours, Saturdays, etc.
Then use the productivity formula to evaluate whether these measures have led to a higher % hit rate. If you have increased the cost by 500 per week using the productivity formula (extra time, bonus, training, etc.), then you can measure exactly what the increased cost has meant for the store's sales, and return on investment.
When you start using the traffic data, hit rate and productivity formula more efficiently, you will find that you have much better control over what happens in your store.
YOU WILL KNOW IF THE TRAFFIC DATA HAS CHANGED
When was the last time you were away for a day, came back and found that sales were much lower than expected? Your staff will probably tell you that there were no customers that day.
But now you know if the sales decrease is due to the store having fewer customers or if the% hit rate has become lower, the latter is probably what has changed.
Because you can forecast traffic,% hit rate and average sales every hour, every day, you will be able to schedule staff and in-store activities during the most important sales periods.
When you change product exposures, activities or ads, or whatever, you will know if you have increased your traffic base or not.
Let the HEAD OFFICE find out how their ACTIVITIES WORK
You will also be able to report to the head office exactly what impact the head office's activities had on the traffic base in your store. When you use the information from the customer counters, you will become a more efficient store manager and influence the store and the employees' future. Now that you are aware of the possibilities with the most important components behind people counting, you should practice to become comfortable with the forecast of the buying pattern in your store.
A SIMPLE AND PRACTICAL APPROACH
Learn to use your productivity formula and forecast your sales for the next 4 weeks. Learn to see what effect the service level has on the hit rate.
When you feel comfortable with this, then enter a short periodic goal (3 months) to see what results you can get in the store (% hit rate and average sales) by increasing your service level during the most important sales periods. Test it for 3 months. And make adjustments for the next 3 months.
When you start using the traffic data, hit-rate and productivity formula more efficiently, you will find that you have much better control over what happens in your store.
LET OUR NEW STAFF PLANNER DO THE JOB
Based on this way of running a store we have developed a tool to help you automatically staff your personal. The system plans the staffing based on the access and conversion rate, in other words visits and desired sales . You can easily fill up the staff required per hour to generate the sales required to reach the daily targets.
"In many ways, this is a revolutionary tool."
Helge Bjørklund, founder, BJØRKLUND, Norway's largest watch and goldsmith chain
Capture rate = (Store Visitors) / (Passing by the Store)
When you know the the number of people entering the store and devides it by the number of people passing by the store you have the capture rate.
The capture rate gives you a percentage number to work and measure against. What entrances works best? How are changes outside and inside the store affecting the capture rate?
Conversion rate/Hit-rate = % OF VISITORS MAKING A PURCHASE
How many of the stores visitors actually made a purchase? This is called conversion rate or the hit-rate (% of visitors making a purchase). and this have proven to be a very effective method for productivity increases. Many projects over the years have yielded significant revenue gains for retail stores.
With over 30 000 installations and many hundred customers spread out across Europe and South East Asia we have established strong relations with our customers and suppliers. Our head office Nordic is located in Sweden, head office Europe in Germany and head office South-South East Asia in Thailand.
„With great flexibility and the use of mixed technologies, IMAS offers suitable solutions that count accurately and reliably, which first made in-depth customer analyses possible for us.“
Director of IT, B.O.C. (Bike and Outdoor Company)