Technology
Turning retail shoppers into buyers via conversion rate optimization
HeadCount CEO and Founder Mark Ryski explains why conversion rate optimization is a valuable approach in the quest to turn shoppers into buyers. A free live webinar on the topic will take place Sept. 19 at 2 p.m.
August 31, 2022 by Judy Mottl — Editor, RetailCustomerExperience.com & DigitalSignageToday.com
Shoppers are flowing back into retail stores after two years of COVID-19 and the quest is on to convert shoppers into buyers as well as engaged and loyal customers.
One proven approach is developing an effective conversion rate optimization (CRO) program and taking a deep dive into store traffic to determine where conversion is lacking, which indicates customers are likely not have a good shopping experience, as well as identifying "super converters" within the brand footprint. These are stores that benchmark "what's possible" and likely hold the secret to unlocking chainwide conversion rate improvement, according to Mark Ryski, founder and CEO of HeadCount.
Ryski is a retail analytics expert, two-time author and retail industry commentator who founded HeadCount 20 years ago to help retailers turn traffic and conversion insights into sales.
With the biggest shopping season fast approaching, and with retailers struggling with staffing needed to engage and convert shoppers, Retail Customer Experience reached out to Ryski ahead of a live webinar during which he'll explain the reasons retailers and brands need a CRO and best practices for implementation.
The free one-hour event, taking place on Sept. 20 at 2 p.m. EST is hosted by Networld Media Group and moderated by Retail Customer Experience Editor Judy Mottl. During the webinar Ryski will outline the "must haves" for the CRO strategy, such as benchmarking conversion performance, identifying and leveraging super converters, the need for A/B experimentation in physical stores and CRO methodology and measuring results. The event will also feature a live Q&A session for attendees.
Below is an edited transcript of the email interview with Ryski.
Q. What do you think will be the biggest challenges retailers face this holiday season and how is it different from previous years?
A.Focusing on helping stores maximize sales by focusing on what they can control versus what they can't (e.g. stock outs). Shoppers are back in stores. Are store teams ready? The last two years have had store teams focus on things they never have had to before (like occupancy and temperature checks). Plus, there's been tremendous turnover. How focused are teams on the fundamentals, e.g., conversion?
There is a lot of noise now with so many other data to focus on like BOPIS, omnichannel tracking, etc. — but it's the fundamentals that will really drive your sales and also (let's not forget) actually deliver great service to the customers who have actually crossed the threshold and come into your store. Conversion isn't old news. It is the truest test of great retail customer experience. Conversion has always been important, but this year, many teams will be finding they are short on labor or working with brand new teams, so they're going to need to be absolutely focused on it.
Q.Mark, you say that in-store shopper conversion directly connects to the in-store customer experience. Can you explain how?
A. We need to first agree that there is no single perfect measure of in-store customer experience. But there are lots of ways to measure it…and most have merit. However, I believe that conversion rate is the best proxy for in-store experience available. If you believe that shoppers vote with their dollars, then conversion as a proxy for store experience makes perfect sense — unhappy shoppers rarely make a purchase. So if you improve the percentage of shoppers who convert, by definition you're delivering a good store experience.
We calculate conversion rates down to the hour of the day so that store managers can pinpoint exactly where they need to focus their attention — I can't think of any customer experience metric that can provide that level of precision. And let's not forget that delivering a great store experience is substantially a result of the actions/behaviors of the frontline team, which means that conversion rates directly connect frontline store labor efforts to business outcomes since it's frontline store staff who ultimately drive (or don't drive conversion).
Q.I imagine that today most retailers have store traffic data and know what their in-store conversion rates are, so what should they be doing differently?
A.Surprisingly there are still retailers not counting traffic in all their stores. If you are not yet counting store traffic, you really are flying blind and should install traffic counters as soon as practical.
Store traffic is the most reliable measure of store activity — and you won't find the answer in sales transaction counts or sales, because these merely reflect the shoppers who did buy…what about the shoppers that visited the store, and left without buying?
But to the initial point, you are correct that most major retailers today have store traffic data. But just having traffic data and calculating in-store conversion rates doesn't deliver much value if it's not applied and that's the problem…and the opportunity. The bigger issue is that many retailers who are counting traffic are not truly using the data they have…part of the challenge is how they access the data… for many retailers this requires them to access a data portal and try to find an actionable insight. Store managers aren't data analysts, and they don't have time to log-on to data portals and try to find an actionable insight…what they need is a very concise, simple to interpret daily "conversion opportunity" report that says — here's where you're missing conversion opportunities, focus on this.
We make it very easy for our clients because we build them custom reports and deliver them to their inboxes directly every morning. Everyone on team is focused on the same KPIs and only have to worry about actually applying the insights.
Q.Mark, you advise that retailers should think about in-store conversion the same way e-commerce teams think about online conversion and focus on conversion rate optimization. What is it and how does it translate to physical stores?
A.Consider what happens in the online world. Conversion rate optimization is a well established practice that seeks to continually improve online conversion results…but this same thinking needs to be applied to in-store conversion rates, and that's what I'm talking about…CRO for physical stores. The vast majority of retailers that I have encountered do not have (or even considered) a formal CRO program for their stores, and consequently they are missing sales opportunities every hour of every day…at a time when they can least afford to!
We've developed an approach to doing CRO in physical stores that includes: benchmarking conversion performance, identifying super converters, conversion opportunity spotting at store level and A/B experimentation.
Q.So the term 'super converter' sounds interesting. What are they and why are they important?
A.Heuristically, these are the top 20% of converting stores in a given chain. But you can't simply calculate conversion rates and rank them top to bottom and you're done. You need to look at conversion performance in the context of the traffic volume the store receives and the amount of labor the store gets. Not only do these stores tell us what's possible in conversion performance (since they're actually doing it), they also provide the very best, best practices that can be replicated and applied across all stores. Retailers ask me about "industry benchmarks" and "best practices" all the time, but the absolute best, most meaningful and replicable benchmarks and best practices come from their own super converter stores. But before we declare a store to be a super converter, we need to first assess how labor is being allocated to these super converters versus all other stores… since frontline store labor drives conversion, if a super converter is converting at a high level because they're getting significantly more labor than other stores, then they may not actually be a super converter… and the way we do that is by using a significantly under-used metric called staff-to-traffic ratio.
Q.Ok, so what is the staff-to-traffic ratio and how does this help retailers?
A.For most retailers, labor is allocated to stores based on sales budgets. Stores that have higher sales get more labor, and this makes perfect sense. But the problem is, how do you know if you're allocating too much or too little labor to any given store when the allocation of labor can vary dramatically across stores? The answer: staff-to-traffic ratios.
Simply put, staff-to-traffic ratio is a measure of the relative labor allocation a store gets versus the store traffic it receives.
We calculate it by simply dividing store traffic by labor hours, so if a store has 500 traffic counts and 50 labor hours, its staff-to-traffic ratio is 500/50 = 10… which means that for every one labor hour, this store has to serve 10 shoppers. It's remarkable to see how staff-to-traffic ratios compare across an entire chain! You can immediately spot labor mis-allocations. But this simple metric can also reveal how effectively the store is using the labor it gets when we combine staff-to-traffic with conversion rates.
Q.Since we're moving into the all important holiday season, what can retailers do right now to impact holiday results?
A.Start focusing on in-store conversion rate optimization right now. It starts with benchmarking current conversion performance and identifying super converters — this can be done in a couple of weeks.
Then they need to provide their store managers with a very simple "conversion opportunity" report to show them to the hour of the day where they're missing conversion opportunities. And finally, field leaders and the head office need to be monitoring conversion performance daily and adjust resources and focus based on the results.
The way for retailers to have a successful holiday season is by focusing on the shopper who is already in their stores, and that's what CRO for physical stores is all about.
About Judy Mottl
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