How to get your store’s ‘guests’ to become ‘customers’

One of the most common problems a store owner can have is the failure to spend enough time evaluating and observing customer behavior on the sales floor. Assuming suggestions I’ve made in past issues have sparked some ideas for driving traffic, you should be seeing more customers. But how do you actually get the sales needle, not just customer flow, moving in a positive direction?

There are three ways to move the sales needle. You can drive sales in your stores by encouraging more guests to visit, boosting your average ticket and increasing your conversion rate, that is, to sell to more of the guests already visiting the store. For the purposes of this column, we’ll call these visitors “guests” since they don’t actually make a purchase. When they purchase something, they become “customers.”

To a great extent, retail sales has been a two-trick pony—drive more traffic and increase the average ticket. Getting more guests into your store usually requires an advertising or promotional investment, such as the catalogs, postcards and email marketing that the Munce Group provides for independent stores. Most retailers focus on increasing the average ticket, but what about selling to guests who are already at your store? Driving the conversion rate is another source of sales often overlooked.

Before considering how to drive conversion, know that it is first important to actually track traffic and then calculate the rate of conversion in your stores. Many retailers confuse tracking guest traffic with doing transaction counts, but those two functions are not the same. Transaction counts represent the number of people who made a purchase; while traffic counts represent the total number of people who came to the store, buyers and non-buyers.

Then, conversion rate is calculated by dividing sales transactions by gross traffic counts. For example, if you logged 500 traffic counts in your store and there were 200 sales transactions for the day, your conversion rate would be 40 percent (200 divided by 500).

If you don’t track traffic, you can’t calculate conversion rate. If you can’t calculate conversion rate, you can’t improve it.

Here are five ways you can improve conversion rates:

1. Understand why people don’t buy. One of the most important things a retailer can do to improve conversion rates is to understand why people don’t buy, which may include long lines, lack of available sales help, out-of-stocks and poor merchandising. Every store owner or manager should spend some time observing the guests at his store. Resist the temptation to help; just observe the behaviors. Watch guests as they move through your store, and identify some actions you can take to turn more guests into buyers.
2. Align your staff to traffic, not transactions. Staff scheduling is tricky at the best of times, but aligning staff resources to when guests are in your store will help you maximize your chances of converting more guests into buyers. Pay particular attention to lunch time, when store traffic can be way up, but staff lunch breaks can seriously drag down conversion rates. Associates need to eat, but guests need to be served. Matching staff schedules to traffic volume and timing in your store will help improve your chances of converting more.
3. Look for conversion leaks and plug the holes. Traffic volume and conversion rates tend to be inversely related. That is, when traffic is high, conversion tends to go down or sag. When traffic levels are low, conversion rates tend to go up. When the store is busy, lines at the register are longer, and it’s harder to get help from an associate. The opposite is true when the store isn’t as busy. If you want to improve conversion rates, look at the traffic and conversion patterns in your store by day of week and by hour to look for when conversion rates are sagging and sales are being lost.
4. Set conversion targets by store. If you don’t have a conversion target for your store, set one. If you own or operate more than one store, it’s important to remember that each store is unique, and conversion targets should be set by store. One store might be doing well with a 15 percent conversion rate, while another may be underperforming even though it has 30 percent conversion. Move up your conversion rate relative to your store’s performance.
5. Make conversion a team sport. Turning guests into buyers takes the collective effort of all store staff, from sales associates to merchandisers. Ensure that your staff understands what conversion is and that each of them helps influence it. Ask your staff about why they think people don’t buy and what the store can do to improve. Discuss targets, get them to buy in and share results.

Every day, guests visit your store with the intent to buy, but leave without making a purchase. Capturing even a few more of these lost sales can have a significant impact on sales. If you don’t track traffic or measure conversion rate in your stores today, you are missing out on an entirely new way to drive sales. Retailers who are focused on driving conversion rate have a significant advantage over those who do not.

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