are not captured in your POS data; they
rarely fill out your customer service surveys
– they just leave. Not only do these lost
prospects represent an immediate lost sale,
but even more insidiously, you’ll never know
how many other people they tell about their
unsuccessful trip to your store.
Retailers are awash in data. As information
systems have evolved, retailers have em
braced technology. But, it seems to me that
in the overanalysed world of business today
the simple has been overlooked. Traffic
counts and conversion rates are simple mea
sures. Yet driving prospects into your store
and then serving them in a way that trans
lates into a sale is what retailing is all about.
Traffic and conversion should be given their
rightful place on the dashboards and in the
collective consciousness of retail executives.
THE FRAME WORK
At the most basic level sales are simply a
function of three variables: ( 1) the number
of prospects that visit your store, ( 2) the
percentage of these visitors who make a
purchase and ( 3) how much each one buys.
The whole process starts with some
form of traffic stimulus, like advertising. If
your advertising is effective, it will deliver
prospects to the store – a measurable traffic
response. Once at the store, these pros
pects will have an experience of some kind
and if it’s a positive one the result will be a
sale. The point is, there’s a lot of stuff that
happens between the moment a prospect
first crosses your store’s threshold and the
consummation of a sale and it behoves you
to understand it.
While I have no argument with the “busi
ness intelligence” industry, the problem
seems to be that for many retailers the
sophisticated tools and systems available
are fundamentally beyond what most can
put to practical use.
Transaction data from a pointofsale
system is the primary fuel for these busi
ness intelligence engines. These powerful
tools enable you to slice and dice transac
tional data in a multitude of ways to help
manage inventory, optimize distribution
and even deploy your staff – the value is
undeniable. However, there’s one glaring
flaw: a reliance on sales data as the primary
input. What can our business intelligence
systems tell us of the sales we lost, when
the only data it has at its disposal is the
sales we made?
The pressure to be smarter, faster
and better has never been more intense.
Investing in business intelligence seems ...
intelligent. But the mere fact that you in
vest a huge sum in information systems and
business intelligence doesn’t mean you’re
seeing the value. In fact, more often that
not, you don’t.
For retailers who take great pride in
their sophisticated information systems,
analytical prowess and ability to regurgitate
vast quantities of data, I have two simple
questions: How many prospects visited your
store yesterday and what percentage of the
visitors actually made a purchase? Even the
most brilliant analyst can’t script a query
to extract answers to these fundamental
questions if the system doesn’t contain
traffic and conversion data.
MEAT & POTATOES ANALY TICS
It all starts with traffic. If prospects don’t
visit your store, you have no chance at
making a sale, so understanding prospect
visitation is vital to understanding the
opportunity. If you rely on advertising as
your primary traffic catalyst, then your ad
vertising impact can and should be largely
measured by its ability to drive prospect
traffic into your store.
Once these prospects have arrived, then
what happens? If they have a successful
customer experience, then the end result
should be a sale. But, if for whatever rea
son, the prospect doesn’t buy, you’ll never
know why. What makes customer conver
sion truly great is that it’s the only measure
that can quantify your sales potential. It
measures what your POS can’t see – your
missed opportunities, about which most
retailers have almost no information.
Two of the most fundamental metrics in
online retailing are website traffic and con
version rates. Traffic and conversion play
such key roles in understanding the perfor
mance of ecommerce websites, so why do
they get so little attention as measures for
Measuring store traffic is essentially
the same as measuring website traffic: we’re
measuring the number of people who “hit”
the front door instead of the main page on
the website. And just as there can be miss
hits to the website when people make a
wrong keystroke, there are misshits to
your storefront as well. These misshits are
traffic counts that don’t represent true
prospects, e.g., children visiting the store
with their parents.
ASKED & ANSWERED
The following list, far from exhaustive, rep
resents some of the more important ques
tions that confront and confound retailers
which traffic and customer conversion
analysis can answer.
I realise some of you may be sceptical. That’s
okay. I understand. You’ve been around
retailing a long time and you’ve seen and
heard it all. Perhaps you’ve even dabbled
in traffic and conversion in the past. All I
ask is that you keep an open mind and give
me an opportunity to make the case for
why traffic counting is vital and customer
conversion is the last great retail metric.
Adapted from Conversion, The Last Great
Retail Metric. ©2011 Mark Ryski
Mark Ryski is a 17-year veteran of the retail industry, the founder and CEO of HeadCount Corporation
and the author of two books dedicated to traffic and
conversion analytics. He’s a frequent lecturer at the
University of Alberta’s School of Retailing where he
sits on the advisory board. He’s also the former vice-president of sales and marketing for Intuit Canada.