If you’re a business owner, a firm understanding of your foot traffic and conversion rates is critical to your success and growth. Using a people counting system to monitor how many shoppers enter your establishment and comparing that information to your daily sales can give you the data you need to make informed decisions for your store.
Conversions made and foot traffic gained are related, but they aren’t the same. Read on to learn more about the relationship between these two factors.
Understanding the Difference Between Foot Traffic and Conversion Rates
Foot traffic and conversion rates are two separate sets of data, both useful in their own way.
Foot Traffic Meaning
The foot traffic meaning refers to the amount of people who enter your store during a given period. Foot traffic is not an accurate indicator of sales. There are many reasons one might enter an establishment — including to browse sale items, search for a specific product you may not carry, gather information about price comparisons or clothing sizes, use the restroom or even to meet a friend. Measuring foot traffic is a matter of counting how many people enter and exit your business and using that information to make better business decisions.
Why Is Foot Traffic Important?
Though foot traffic measurement alone cannot tell you how much profit you made during the day or what sort of products are moving, it can tell you a lot of other useful information:
How to staff: By tracking foot traffic patterns and how they correspond to different times of day or days of the week, you can create a smarter staff schedule. You can avoid overstaffing during slower hours while leaving plenty of employees on the floor during busier times. Foot traffic data can also help you choose which employees to staff and where to assign them, depending on the more active periods.
Marketing success: Gauge your marketing campaign’s success by tracking who is shopping, when they visit the store, how they heard about your product and how well those numbers convert to sales later on. Gaps in this information could mean you need to adjust your target audience or advertising methods.
Profit and expenses: Foot traffic lets you establish a baseline for how much you couldbe making, so you can compare that to conversion rates and actual profit. Use this information to adjust spending and inventory and reallocate costs as needed. You can also use this retail conversion rate benchmark to create goals and measure progress.
Business needs: If your store consistently pushes maximum capacity, recording those numbers may be useful when seeking a loan to expand or creating new layouts for shelving and merchandise.
Plan sale events: When you look back on previous years’ foot traffic measurements, you have a better idea of what to expect for upcoming sales events. For example, if your store has received 50% more foot traffic in winter months than in the spring, you can use that data to hire additional employees at that time or explore what products and services might be influencing those shoppers to visit.
What Are Conversion Rates?
Your conversion rate is the relationship between the number of visitors and the number of purchases in your store. Your conversion rate is how you can track your profits or losses and make more accurate business plans moving forward.
How Are Foot Traffic and Conversion Rates Related?
If a significant amount of people enter your store regularly but few complete the checkout process, you know you need to make a change. For some businesses, it might mean a nearby competitor offers the same product for less. Maybe your customer service has room for improvement. Whatever the cause, measuring conversion rates is the most effective way to map out where your business stands.
How Is Foot Traffic Measured?
When measuring foot traffic, it’s important to choose a method that is effective and sustainable. Popular options include electronic people counting systems, manual counters and surveillance footage.
People Counting Systems
While a people counting system cannot provide information about your brick and mortar store’s conversion rate, it can help you calculate it yourself and gain a more accurate understanding of your store’s performance. People counting systems are the most effective method of tracking foot traffic because they prioritize shopper privacy while still keeping a record of foot traffic data. They also work without the need for employee direction or input, freeing staff to focus their efforts elsewhere.
People counting systems use sensor-based technology to record how many people cross the established entry or exit point threshold. One of the most effective people counting systems uses an overhead beam counter that you mount to the ceiling in the doorway or other area you’re measuring. Overhead people counters use a reliable wired connection to gather and transmit data.
When selecting a people counting system, consider the location you want to install it, including the dimensions and distance from the floor, and the interval at which you want your system to capture information. You can pair some people counting systems with occupancy counting software to help you make better sense of the information you collect.
You can use the foot traffic data your people counting system has generated to calculate conversion rates for the number of shoppers, seasonal traffic patterns, impact of events and the differences between regions of groups. This information helps you gain a better understanding of how your store is performing and what changes you need to make to increase sales.
Manual Counting Methods
Manual counting methods are more time consuming than electronic people counting systems, but they may work as a temporary solution until your new system is installed:
Surveillance footage: If you have cameras installed near your front door, you can review footage at the end of each day to manually track how many people came in and out. This method is very labor intensive, especially if you’re tracking an entire day’s worth of patrons. It also requires a high-quality camera with clear resolution so you can tell customers apart. This method may feel like a breach of privacy for some shoppers.
Door greeters: Door greeters are another manual counting method for small stores. It involves staffing an employee by the front door and keeping track of each person who enters, either through flip cards, a manual counting machine or old fashioned pen and paper. This method, though often reliable, is not always the best way to utilize trained employees. The manual counter may also have difficulty processing individuals during rushes or when large crowds come in at once.
Circumstances That Affect Foot Traffic
Foot traffic depends on a combination of factors, including those you can and cannot control. Understanding how these elements work together can give you a clearer picture of how your foot traffic and conversion rates are related and how to best harness these factors to work in your favor.
External Factors
External factors are those that affect your business but you have no control over. Although you can’t choose if or when these circumstances affect foot traffic, you can capitalize on them in most cases:
Weather conditions: Most people are more likely to travel to and shop in stores when they feel comfortable. Studies demonstrate that the temperature and weather may even impact shoppers’ attitude and mood while in a store, sometimes prompting more or fewer sales. Snow and ice create hazardous road conditions, which may decrease the amount of people traveling and shopping in person. Weather conditions might also influence the items people purchase once inside.
Seasonal changes: With the changing seasons come new holidays and special events, like back-to-school shopping, summer grilling season and Black Friday sales. Retail stores see natural fluctuations before, during and after seasonal events. Plan inventory and marketing accordingly.
Economy and employment: Your local community’s changing economy and employment rate will help determine how much money people feel comfortable spending on shopping. As this number fluctuates, so may your sales.
Local conditions: Traffic jams, power outages, accidents and construction work can keep your storefront from being accessible or slow the traffic flow to and from your store, which may result in less foot traffic that day.
Internal Factors
Internal factors are those parts of your business that directly impact foot traffic in your store. For the most part, you can control these circumstances and use them to increase conversion rates:
Marketing efforts: If you have an ineffective marketing strategy — or no marketing strategy at all — this will directly affect how many people are drawn to your store. Use foot traffic rates and customer surveys to understand how people heard about your shop, sale or product.
Merchandising and display: Organization, signage, lights, colors and height variances influence how your consumers perceive your product and store. Encourage foot traffic by utilizing window displays and outdoor signs, and carry those themes indoors to provide a cohesive experience. Bundle items together to help the customer visualize those pieces in their lives. For example, a boutique might use a lit window display to pair an outfit with shoes and accessories while accentuating the scene with home decor pieces in complementary colors. This way, they’re advertising several products at once while drawing shoppers indoors.
Customer service: Companies that strive to create a positive, personalized customer service experience bring in nearly six times more revenue than competitors who do not. Engaging customer service is critical for increasing and maintaining foot traffic and even more important for turning that traffic into profitable conversions. This includes employing and training welcoming, hardworking individuals and implementing cross-selling and upselling techniques.
Quality of the product: A well-made product or memorable service attracts foot traffic through word of mouth, positive reviews and raving testimonials. To access these rewards, you need to offer uncompromising quality. This means continuously evaluating your existing inventory and identifying areas that could use improvement. Incorporate customer feedback to learn more about the user experience. A superior product is what sets you apart from competitors in your market and keeps shoppers coming back for more.
Online options: Lack of foot traffic doesn’t always translate to lack of sales. With e-commerce on the rise, your online store could attract its own variation of foot traffic. Consider online sales and abandoned carts when analyzing conversion rates.
How Are Conversion Rates Measured?
To measure and utilize your store’s conversion rates, follow these steps:
Establish your goals: Start by creating a list of goals for your conversion rates. Specific goals depend on your business model and your current baseline. Create smaller goals within larger objectives to track progress on a more detailed level. For example, if 40% of your current foot traffic leads to product sales and you want to boost that to 60% by the end of the year, you could set smaller percentage goals for each month to make the change manageable. Goals don’t always have to be sales-oriented — you might also set a goal to convert a one-time customer into a loyal brand follower or boost the number of people who browse a specific department.
Track foot traffic: Measure foot traffic with an electronic people counting system installed over the entry point or near specific departments for an even closer look at the data.
Measure conversion rates: To find your conversion rate, divide the number of successful transactions on your point-of-sale system by the number of people who entered your store in the same period of time.
Analyze data and adjust: Analyze the data you’ve collected to see when shoppers frequent your store the most, what products are most and least popular and how those figures compare to recent marketing campaigns.
Tips for Achieving Higher Conversion Rates
Once you know your current conversion rates, here are some tips to help you increase them:
1. Focus on Customer Service
With 90% of Americans citing customer service quality as a significant factor when choosing to do business with a company, you already know how important positive, attentive and speedy service is. When training employees, you should also focus on cross-selling and upselling techniques to boost sales.
Cross-selling is when employees recommend additional services or products for customers based on the items they’re currently purchasing or already own, like a scarf to go with a sweater or a set of batteries for a new flashlight. Upselling is when employees encourage shoppers to upgrade their purchase to the next level, like inviting shoppers to buy a smartphone with larger storage capacity instead of one with less storage or opting for a dozen donuts instead of a half-dozen.
2. Manage Your Inventory
Business owners walk a fine line between stocking enough inventory to satisfy shopper demand without overspending on items that won’t move from the shelves. When calculating conversion rates, always compare them to your inventory data and track patterns. Poorly managed inventory can eat away at your profits, rendering high conversion rates useless.
For better inventory management, consider the following:
Audit your inventory regularly, whether that’s annually, monthly, weekly, daily or as shifts change.
Know when it’s time to switch to a new supplier based on customer feedback and sales performance.
Choose consistency when scheduling stock deliveries, so customers and employees are aware.
Track how sales and products correlate and highlight specific items during marketing campaigns.
Use inventory management software to keep track of product information and data.
3. Make It Easy to Shop
Once your shoppers make it through the door, it’s essential that they can navigate easily and learn about products without difficulty. This includes:
Adequately spaced shopping aisles.
Stocked and organized shelves.
Clean floors, restrooms and checkout lanes.
Employees readily available to offer assistance.
Product information clearly displayed.
Lighting, music and temperature control for a comfortable browsing experience.
A quick checkout process that accepts multiple forms of payment.
4. Use Targeted Marketing
Target marketing towards your ideal customer to better utilize advertising funds and attract people who will be genuinely interested in the product you’re selling. For example, a second-hand furniture store might have better success marketing towards college students who live in off-campus housing rather than an affluent neighborhood in an established part of town. Toy stores will likely see more traction after running an ad campaign that targets families rather than college students.
Once you attract the right people with targeted marketing, those people are more likely to become converted sales once they make it inside.
Using Foot Traffic to Increase Conversion Rates
Conversion rates are only one method of measuring success. Shoppers may enter and leave a store without purchasing but have had positive and memorable customer service experiences that will prompt them to return. You never know — perhaps the item they are interested in will have to wait until their next paycheck. You don’t want your customers to make a hasty impulse purchase that they are going to regret.
Use foot traffic data to gauge how satisfied customers are with your current offerings, item selection or prices. Improving what shoppers are dissatisfied with may inspire more conversions. A people counting system can help you track busy periods and periods with less traffic throughout the week, so you know when to target your conversion efforts. You can also check recorded data to see how recent changes — like new marketing, sales events, new products or lower prices — have influenced shopping habits.
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