Pursuing the "ultimate" customer experience has become an obsession with retailers. From online surveys and social media monitoring to good old-fashioned customer satisfaction surveys, focus groups, and mystery shopping, retailers, it seems, will go to great lengths to measure the shopping experience in their stores.
While it's undeniable that measuring in-store experience is an important thing to do, retailers often find it hard to turn the insights that come from this data into action that delivers better sales results. To do so, retailers need to understand store traffic and conversion rates.
Traffic and conversion rate clarified
Before we get too far, it's important that we're clear on definitions. By "store traffic," I am referring to all the people who visit the store, including buyers and non-buyers. Too often retailers use sales transaction counts as a proxy for traffic. Sales transaction counts only include buyers and tell us nothing about how many people actually visited the store. Furthermore, without store traffic counts, it's impossible to calculate conversion rate.
Conversion rate is calculated by dividing sales transactions by total store traffic. This basic metric provides important insight into how well the store is serving customers and tells us far more about in-store experience than sales results alone. Here's why:
Why customer experience scores and sales results often don't match
Great customer experience scores should translate into commensurately positive in-store sales results, but the fact is they often don't. Stores with high sales can have poor customer experience scores and stores with low sales can have high customer experience scores. Part of the problem is that you can't directly connect sales results to customer experience scores because there's a moderating variable: store traffic volume.
Think about it. What's it like to shop in a very busy store? The isles are clogged, it's hard to find a sales associate, and there's a line-up at check-out-not a very good in-store experience. You can imagine that the mystery shop or customer survey results in a store like this wouldn't be very good. However, given the high volume of traffic, despite the fact that many people have a poor in-store experience and many probably leave without making a purchase, overall sales still look pretty good.
Now consider the in-store experience of a store that has very little traffic. The isles are free and clear, sales associates are doting on you and there's no line-up at check-out. It's a wonderful in-store experience, but the lack of store traffic results in modest sales even if most everyone buys. Improving customer experience in this store won't deliver more sales; this store needs traffic.
Store traffic data provides critical context that enables management to better understand what's impacting in-store experience scores, and conversion rate can help pinpoint where and when lapses in customer service are occurring.
Conversion rate fills in customer experience gaps
Great in-store experiences are one's where prospects make a purchase. When conversion rates are high, the store is by definition delivering a great in-store experience-that's why it is an excellent proxy for customer experience.
Every hour a store is open for business it's delivering an experience to customers. A 100-store chain, operating 10 hours a day, 362 days of the year would have 362,000 total store operating hours. Even a robust mystery shop program where each store is visited three times per month will cover only 1 percent of the total operating hours by the end of the year. What about the other 99 percent?
Of course some retailers augment mystery shop with other in-store experience measures like customer surveying. One of the common ways for doing this is to invite customers to complete an online survey, the coordinates for which are printed on the sales receipt. The obvious short-coming is that it only includes buyers. What about the people who visited, but didn't buy?
Traditional customer experience measures simply don't go far enough; they don't provide coverage across all the operating hours and the samples are often skewed to buyers. Store traffic and conversion data are captured hourly and provide a continuous stream of insights that help fill customer experience gaps.
Sags in conversion rates are telltale signs that customer service issues are occurring. By knowing where and when these conversion sags occur, management can focus their efforts on where they are most needed.
A fusion of in-store insights
If it sounds like I'm suggesting that retailers should stop investing in customer surveys and mystery shopping, I'm not. In fact, these customer experience measures have never been more important. However, I am saying that store traffic and conversion data make these traditional customer experience measures more meaningful and actionable. The result: better in-store experience scores and higher sales.