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How to Calculate and Improve Retail Conversion Rate

Updated: Jun 22, 2022

Conversation rate is one of the most important KPI’s for a retail store. In this post I will go through what the term means for a physical store, why it makes such a huge different and finally how you can start saving staff costs and increase sales with the help of it.

What is retail conversation rate and how to calculate it?

First of all, when we refer to the term Conversation rate in the retail business, we want to know how many percentages of our visitors that actually made a purchase in the store.

Let’s imagine you are store manager at a Home & Gardening store. When summarizing the day, you see that you had 150 transactions and 1000 visitors. Divide the number of sales with the number of visitors and multiply it with 100 to get the percentage.

150 / 1000 x 100 = 15%

This means that 15% of the visitors made a purchase and your conversation rate therefore was 15% during that specific day.

Use this formula to calculate the conversation rate = Number of Transaction / Total Number of Visitors x 100

Why it is important to measure retail conversation rate?

With this information we dramatically increase the knowledge of how our customers behave in the store when it comes to the buying process. Do the changes we do in the store improve or lower the number of sales?

How much can you improve the retail conversation rate?

It will of course differ depending on what type of product/price range we are talking about but from our 30 years of retail experiences and working with this KPI we usually see an average increase in the conversion rate of around 3% when the store focuses on this.

What is the average conversation rate for retailers?

It depends on many factors but price and type of product being the most important ones. A jewelry store could have a conversation of 10% while a pharmacy could have 80% conversation rate. The decision-making process is longer when buying a neckless compared to buying a toothbrush. The most important is to know how your store is performing and on a regular basis work to improve that number.

How much is 1% unit increased conversation rate for your store per year?

Let’s use the same example again. Your store has a conversion rate of 15% and you are aiming to increase it by 1 percent unit to 16%. Let’s also imagine that your average customer buys for €40 (we assume in this calculation that this week is equal to an average week in the year).

An increased conversion rate by 1 percent unit (from 1000 visits) is 10 more sales per week, this gives use 10 x 40 = 400 x 52 weeks = €20 800 increase per store, on a yearly base.

How to measure retail conversation rate?

To be able to efficiently and accurate calculate the number of visitors in the store you need to have a people counter mounted at your entrance and there are several different techniques to choose from. You also need collect the sales statistics and see the number of transactions being made.

To do so you need some type of analytic tool to connect the information from the people counter with the cash register to make comparisons and analyzes. The IMAS Xperio analytic tool is made for this and you can also choose to easily export the information thanks to an open API.

How to improve the retail conversation rate?

There are numerous ways to improve a stores conversation rate. Optimize stocking and inventory, placing the products right, make it easier to checkout and pay, campaigns, training and staffing are some good examples.

Since staff costs are one of the highest expenses for a retailer it is of great importance to keep them as low as possible without effecting the services to the customer. Staffing with the right amount of people at the right time is crucial if you really want to improve the conversation rate without spending the earnings you made when increasing the KPI.

The key to success is to keep your staff occupied during their work shift but not overloaded by work and not being able to offer the customer support needed to finish the buying process.

Where can I find a retail scheduling software that uses conversation rate?

With IMAS tailor-made staff planner tool, you can automatically plan and schedule your staff based on the conversation rate and your planned sales. It’s a simple, yet very sophisticated tool made by retailers for retailers. The staff planner automatically collects data from people counters and cash registers and puts together a proposed schedule to meet the desired sales goals.

Screenshot of IMAS Staff Planner, a tool for retail scheduling
IMAS Xperio automatically collects data from people counters and cash registers and puts together a proposed schedule based on conversation rate and your desired sales. In the bottom the staff members are displayed and when they are scheduled to work. Staff Planner is currently available in German, English, Swedish and Norwegian.

Read more about how people counting systems and retail staff scheduling systems like IMAS can provide you with information so that you can make better decisions and generate more revenues.

Good luck with your store and improving the conversation rate!


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