The primary goal of any retail store is to boost sales conversion rates; however, considering how important this KPI is, few in-store retail organizations are measuring their conversion rate trends accurately enough to fully benefit from them. With skewed or inaccurate results about how well or poorly their stores are performing, they have no insight into how to optimize their sales conversions.
A retail store’s conversion rate measures the proportion of visitors that purchase in any given store. It is calculated by dividing the number of transactions by the number of visitors, times 100. Despite the inherent simplicity of the conversion ratio, older or out-of-date people counting technology leads to significant inaccuracies, paving the way for more advanced footfall count sensors and analytics software platforms transforming the retail analytics industry today.
How is the conversion rate measured in physical retail stores?
While e-commerce technology automatically captures online sales and companies spend millions each year on digital analytics to improve conversion rates, brick-and-mortar stores need to implement a sophisticated system. It is crucial to collect and measure in-store traffic counts and the number of POS transactions to accurately represent a store’s conversion ratio and gain insight into how to improve it.
Footfall counter sensors use advanced 3D video technology and offer up to 98% accuracy. They can be placed above the entrance of a retail store and in other strategic places to accurately track the number of customers in the store at any time. This information can be integrated with your POS transactional data on an analytics platform to calculate the conversion rate.
Newer footfall counting systems can be programmed to count real “shoppers” (it filters objects such as carts, for example) and distinguish between adults and children, different ages, and even gender. In addition to providing more accurate shopper data to measure marketing effectiveness, systems today are capable of:
▶︎ Avoiding multiple counts of the same customer.
▶︎ Sending real-time alerts for queue management.
▶︎ Identifying dwell zones and monitoring customer dwell time.
▶︎ Identifying customer browsing patterns.
▶︎ Predicting busy periods for more efficient staff scheduling.
▶︎ Measuring distance between people to comply with COVID-19 regulations.
▶︎ Integrating with advanced analytics platforms for reports and actionable insights on collected data.
Why is conversion rate so important for physical retail stores?
Conversion rate is crucial to retail store success as it is a direct reflection of how well your marketing and operational strategies are working to drive sales. If you have a high footfall count and a low conversion rate, you know something is wrong. Suppose you’re running a particular marketing campaign for a new product that is drawing in the crowds but not converting them into sales. In that case, you can take steps to enhance customer engagement about the product, display the product in a more visible area in the store, or lower the price to attract more sales. The point is that you would not have known there was a problem in the first place without accurate conversion rate data.
Physical retail stores have higher conversion rates than online retail stores
Most retailers sell more products at their physical stores than they do on their websites. Some retail studies show that the average conversion rate for online retailers is about 3%, where the average conversion rate for physical retail stores is as high as 40%. This is a significant difference that prompts retail store owners to invest more in footfall counting technology and analytics software to benefit even more from this overwhelming advantage.
An in-store customer is more likely to purchase than a website visitor
When a customer enters a retail store, they are doing so intending to purchase something. Because the sales pipeline is a lot shorter, retail staff must make the most of every single sale opportunity to increase the store’s conversion rate. A single interaction is all it takes to make the sale, and with more insight into customer behavior, the more conversions you can make.
Choosing the right solution to measure conversion ratios
Vemcount is a configurable and user-friendly software solution that collects, combines, and analyzes data, helping you make informed decisions that positively impact sales. You can integrate Vemcount with your POS and other systems for in-depth and actionable insights on improving marketing campaigns and operational strategies to boost conversion rates.
Contact us to learn more about Vemcount retail analytics.