The conversion rate is a basic metric for any business, which of course also includes the retail business. It is an essential KPI for our business, so increasing the conversion rate is an objective we establish from year to year.
But what exactly do we mean when we talk about the conversion rate?
What is the conversion rate?
It is a metric which confirms the percentage of people who visit our sales outlet who actually buy something and so instead of visitors they become customers.
How is it calculated?
It is very easy to calculate: by dividing the total number of conversions by the total number of visitors.
How to improve the retail conversion rate
Now that we know what the conversion rate is, the objective is to improve it, because the higher it is, the greater the benefits we could achieve.
The importance of measuring traffic
What should we do to improve our conversion rate? The first step is simple, but it needs to be done properly. It involves counting the number of people, because if we don’t know how many people have visited our shop we won’t be able to calculate this metric.
To count the number of people who actually visit our sales outlet we will need a traffic tracking solution or “people counter” to provide us with this information. We will also need to control how many customers we have.
If we have a large number of visitors but very few customers we will need to make an in-depth analysis of the situation, which may be because our sales outlet is badly optimised, or because of an advertising campaign targeting the wrong people, etc.
What you don’t measure can’t be optimised, so it is essential for these data to be as precise as possible.
Technological solutions which help to measure traffic include people counters, wifi tracking and retail analytics.
The key lies in the analysis
The data obtained in our sales outlet, not only from traffic counters but also other information provided by business intelligence tools, will help us identify where there is room for improvement in our sales outlet: has an interruption in stock caused a loss of customers? are there products which do not generate sales? is there a shortage of sales personnel?
The information provided by these tools, together with customer surveys, will help us find the key to improving the conversion rate in our business.
Some Retail Analytics solutions not only analyse traffic, they also inform us about conversion into sales, as well as the products which sell the most. They also help us make conclusions based on data and not on guesswork which helps us to optimise the sales outlet’s resources.
Combining different solutions
To find out which solution is best suited to our objectives it is best to have access to personalised advice. Here in HMY we act as consultants for our customer to help them design the solutions which are best suited to their needs.
We create and test a prototype before the final roll out to make sure the solution meets expectations and a return on the investment is guaranteed.
And start all over again
We need to understand that the optimisation of a sales outlet is an ongoing, never-ending process. Each time we finish measuring, analysing, testing, we have the data we need to take decisions which will help us to improve.
Once these steps have been taken, we need to be brave and apply new strategies for our sales outlet to grow and our conversion rate to improve.
HMY, a leader in innovation for retail outlets, helps its customers to implement the best solution for each case. We have over 60 years experience helping brands and retailers to create effective and efficient sales outlets, and we operate in over 160 countries worldwide.