'Retailers today are able to generate the critical customer information on traffic and conversion rates that turn from their traditional anecdotal reflections . . . in Conversion Mark Ryski tells us all that we need to know to make that shift a reality. A true find for any retailer looking for dramatic improvements in business outcomes!''
- Len Schlesinger President, Babson College
former Vice Chairman and COO, Limited Brands
''A retail brand is built from the cumulative effects of its shoppers' experiences over time, making learning from these experiences a strategic priority for retailers in order to drive business value. Converting customers into buyers is the first step in creating a sustained partnership that results in value for all. The strategies introduced in this book will help retailers of all sizes and categories convert their customers' experiences into future buyers.''
- Pat Conroy Vice Chairman, Deloitte LLP
& Consumer Products Practice Leader
''Half the battle is finding the right things to measure for your business and industry. Ryski is right that conversion is a critical metric for retailers who care about revenue, profits, and growth.''
- Thomas H. Davenport President's Distinguished Professor,
Babson College & Author of Competing on Analytics and
Analytics at Work
CONVERSION
The Last Great Retail MetricBy Mark Ryski AuthorHouse
Copyright © 2011 Mark Ryski
All right reserved.ISBN: 978-1-4634-1422-1Contents
INTRODUCTION: The Last Great Retail Metric...........................................1CHAPTER 1.1 What this tells you that you don't already know..........................15CHAPTER 1.2 Conversion champions.....................................................27CHAPTER 1.3 Living & dying by "Comp" sales...........................................69CHAPTER 1.4 Conversion takes the mystery out of mystery shopping.....................95CHAPTER 1.5 Why traffic counters can be a pain.......................................119CHAPTER 2.1 Calculating Conversion...................................................141CHAPTER 2.2 Finding the missed sales opportunities...................................165CHAPTER 2.3 Why good advertising can look bad........................................183CHAPTER 2.4 Staffing for conversion..................................................213CHAPTER 3.1 Driving sales performance with conversion................................241CHAPTER 3.2 Consumption is key: creating a conversion culture........................275CHAPTER 3.3 Implications round the executive table...................................303CHAPTER 3.4 Why some retailers get it – and others don't.......................325CONCLUSION: Chief Conversion Officer.................................................359ACKNOWLEDGEMENTS.....................................................................365END NOTES/APPENDIX/INDEX.............................................................371
Chapter One
What this tells you that you don't already know What will this tell me I don't already know? This is what many retailers ask me. They simply don't believe that counting traffic and measuring customer conversion will tell them anything they don't already know. Or, I guess, anything else worth knowing.
The answer lies in the basic dynamics of retail. Consider: Every day customers visit your stores intending to make a purchase. Your advertising was successful – it got prospects to your store despite the myriad of choices they have. Congratulations. These prospects wandered the store, looked at products, engaged one of your sales associates, and they may have even made it all the way to your check-out, but then, for some reason, decided not to buy. The sale is lost. And worse, you will never even know.
To repeat: Every hour of every day, prospects visit your stores but leave without making a purchase – despite the fact that they intended or were predisposed to buy. Over the course of weeks, months and years, these lost prospects add up. Customer "leakage" can represent hundreds of thousands, even millions of lost sales opportunities. These "unconverted" prospects are not captured in your POS data they rarely ll out your customer service surveys – they just leave. And you will never know.
And worse: 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.
Traffic and conversion analytics fundamentally answer two very simple but critical questions: How many people visit your stores? And what percent of these visitors actually makes a purchase?
For some of you, this might seem a little underwhelming – how can knowing the answers to these two simple, innocuous questions possibly make any difference in your business? If you have never tracked traffic and conversion in your stores, you have no idea just how profoundly these basic but truly great metrics will transform you and your company. Not only will they make a difference, they will change the way you measure performance, make decisions and generally, run your business.
As one retailer put it, "I couldn't image running my retail operation without traffic and conversion data." What does he know that most retailers don't?
It seems to me that in the over-analyzed world of business today, the simple has been overlooked. Traffic counts and conversion rates are simple measures, and that's in part what makes them so useful and essential "Sophisticated" and "important" have somehow come to mean that the data must be incomprehensible and voluminous. This insane thinking has caused retailers to lose focus on what's truly important and what they intuitively know – driving prospects into the store and then serving them in a way that translates into a sale is what retailing is all about.
Why, how and where this basic message got lost, I cannot tell. But it has, and retailers of every size, shape and description are starting to rediscover traffic and customer conversion, the "corn akes" of retail analytics.
Decision making – the glut and the gut
Retailers are awash in data. As information systems have evolved, retailers have embraced technology and the multitude of systems that provide better, faster information. With a cornucopia of information at your ngertips, the theory goes, you will be able to make better decisions, run your businesses better and deliver better performance.
While the technological advances in information systems used by retailers and the resultant ability to produce mountains of data are irrefutable (and no doubt have had a positive impact on retailers' ability understand their businesses), the downside has been a torrent of data and information owing into the executive suite. So prolific and continuous is the amount of data available to retail executives today that the problem has evolved from how to get the data to what to do with all the data. To which I would add – is this even the right data?
Despite the unprecedented penetration of technology and the flood of data available to retailers, decision making still largely depends on an executive's gut rather than the information glut. While gut will always naturally play a role in executive decision making, retailers need the right data to help guide and validate decisions.
Retail metrics – the critical few vs. irrelevant many
What are the critical metrics that retail executives rely upon to make decisions? With data dashboards brimming with a dizzying array of indices and stats, all presented in massive PowerPoint decks, with screen transitions that create a kaleidoscope of curious, colorful and important looking graphs and charts, what is the executive (and the cascade of functional and front-line managers, for that matter) to rely upon?
One way to solve the `meaningfulness' problem of having too much data has been, perversely, to summarize it and package it in an interesting and engaging way, in the hope of making it somehow more relevant. In many cases, to the detriment of all stakeholders, style prevails over substance. While it would be entirely heretical to advocate the elimination of the mass of "quant-metrics" that retail executives have become addicted to, it is completely rational and reasonable to propose a distillation of the multitude of metrics to a critical few.
Traffic and Customer Conversion, two of the most fundamental and insightful metrics in retailing – great metrics, in fact – should be given their rightful place on the dashboards and in the collective consciousness of retail executives.
Improving your average
In his seminal work, Why We Buy—The Science of Shopping, Paco Underhill perfectly relates conversion rate to batting average. I have not found...
