“Metrics?” you say. “Are we talking about numbers here? Don’t you know that everybody hates crunching numbers? What do you think we are, anyway, a bunch of bean counters?”
Hate to disappoint you, loyal readers, but we happen to love numbers. Especially when they add up to increased sales and profits! If you want to drive store results over the top, this is an area of your business you’ve just got to master.
We are constantly looking at the key metrics that drive revenue in your stores. While we continually analyze all kinds of stats related to performance, our main focus is on two of them in particular – conversion rates and average sale. Most retailers track these numbers. Remember, if you don’t have a traffic counter, you can’t calculate a true conversion rate!
Actual conversion rates, defined as the percentage of shoppers who make a purchase when they enter a store (as opposed to the ‘browsers’), are all over the map. They typically range from an frustratingly low 10% – 12% for mall-based fashion retailers, through 25% – 40% at the big box outlets, all the way up to 80% – 90% for pure ‘destination shops’ (e.g. drug and liquor stores).
The real game in most retail environments is about getting a higher percentage of customers to actually buy something while they’re in your store. There are many things involved in the process of driving conversion rates. But let’s take a moment to focus specifically on your staff for now.
Yes, your sales people certainly can get more shoppers to buy. We’ve proven it time and again. Imagine the impact of moving your conversion rate up two percentage points if you’re currently in the 10% – 12% club! But this doesn’t happen by accident. What’s your plan?
And what about ‘average sale’? This is the dollar amount each customer spends during a typical transaction in your stores and it drives revenue. What’s your strategy for getting staff to sell more to each customer? Is it more or better sales training? Improved product knowledge? Accountability for achieving results?
Think about it. Do the calculation. What would the impact be on your top line if every shopper spent an extra $1 this year? How hard would it really be to get them to do that? Not really that difficult when you think about it, right?
So we ask you again … what’s your plan? If you want even a piece of dramatic revenue improvement like this, you’ve got to do something about it. There’s no doubt it will be worth the effort!