Today, physical retailers must accept that store traffic is experiencing a downward trend, which has become the most frequent reason why stores perform poorly. Given that store traffic has experienced a permanent and intractable decline, what can physical retailers to do? — conversion rate optimization is the answer.
Leading retailers have realized that simply focusing on generating more customer traffic is not enough; instead, they need to focus on improving their sales processes in order to increase their conversion rates — that is, get more visitors that finally make a purchase. The key will be for them to increase their conversion rate as much as possible with the current traffic.
Today many physical retailers track store traffic and measure conversion, but the question is, what do they actually do to optimize their in-store conversion rates? The answer for many is, not much.
Given the current challenging conditions due to low traffic, many retailers realize that maximizing their conversion rate has to become more of a focus, if not an obsession.
Tracking conversion it is no enough, optimizing conversion is required
Most retailers today track traffic and conversion rates in their stores, so the basic data needed to set up actions focused on increasing the conversion rate already exists.
For retailers that misguidedly use sales transaction counts as a proxy for traffic — they are completely off the mark, they don’t even possess the basic data needed to calculate conversion rates, much less the ability to achieve optimization. However, just because a retailer has the data, it doesn’t mean they’re doing much with it or as much as they could be doing.
In physical stores, a large number of variables can impact conversion rates, including store layout, inventory levels, merchandising mix and promotional activities, but clearly the most important factors are the front line associates and managers who run the store and serve customers.
Start with the biggest conversion driver, sales floor employees
While there are many variables that influence in-store conversion rates, staff scheduling and deployment are at the top of the list since front-line associates and managers play a critical role in converting store traffic into customers.
No other action can increase the likelihood that a customer decides to make a purchase than being attended on by an associate that provides him or her with the information, trust and attention necessary to convince them to purchase an item. As we reported in our previous article Maximizing the store workforce productivity to win the battle to online retailers when we asked customers what would improve their in-store shopping experience, the most popular answer (40%) was to be attended on by a sales associate with a deep knowledge of the product (PWC – Total Rºetail Survey 2016).
And herein lies the big challenge of maximizing conversion rates for physical retailers. The volatility of store traffic makes it difficult to decide how many and which associates to schedule at any given time
Furthermore, given that labor is one of the largest factors in terms of variable costs in the physical retail industry, it is important not to schedule too many associates during off-hours, when there are few customers, while at the same time ensuring that the best performers, who are the most likely to generate sales, are scheduled during the peak hours.
Effective conversion rate optimization must begin with ensuring staff schedules and their skills are aligned to store traffic patterns. To achieve this alignment, it is important to carry out the following actions:
- First, precisely predict store traffic. Using historical footfall data and machine learning, it is possible to accurately forecast when customers are going to visit the store.
- Second, optimally decide the number of staff and their skills that must be on the store floor at all times. Using historical performance data, the forecasted footfall and machine learning it is possible to identify the best store staff configuration that maximizes the conversion rate at all times, avoiding scheduling too many associates during off-hours and maximizing opportunities for conversion during peak hours.
- Third, retailers need to manage how staff are deployed —servicing customers versus taking care of other store tasks. Aligning staff schedules to traffic will not improve conversion rates if staff are focused on tasks, such as stocking shelves, instead of serving customers. It is crucial to define the work plan for each employee, such that serving customers is prioritized. Using a previously calculated, optimal staff-sizing plan and prescriptive analytics, it is possible to generate detailed daily work plans for each employee, which maximize store performance and productivity.
- Fourth, retailers need to measure associate and manager productivity by analyzing the hourly conversion rates for each employee. This will enable retailers to identify top performers, create benchmarks and identify employees who may require additional coaching or training.
Reaching these four objectives and putting them into action is not easy. Traffic variability in stores makes applying conversion rate improvement through in-store staff scheduling optimization a big challenge, one which has not been accurately solved by most of the workforce management solution suppliers in the market. Why? – Because their algorithms have not been designed for the retail industry with a focus on maximizing the conversion rate taking into account the footfall.
But the good news is that new players are providing solutions especially oriented towards the retail industry, which integrate the most advanced analytics and artificial intelligence techniques applied over footfall and conversion rate historical data. This allows for the identification of store potential and mitigation of traffic volatility by mining the knowledge hidden in the data.
Conversion rate optimization can mitigate traffic declines
In today’s rapidly changing and demanding environment, physical retailers can mitigate traffic declines by focusing on continuously improving the conversion rate through better in-store staff scheduling. Conversion rate optimization can go a long way in helping physical retailers deliver better business results. Retailers need to realize that it’s not just about the amount of traffic in their stores, but what they do with the traffic that matters most.
In order to optimize their conversion rates, more than ever retailers must optimize and automate staff scheduling using software that is focused on store traffic and conversion rate improvement. Nowadays this can be achieved by any retailer without much investment thanks to state of the art advanced analytics and artificial intelligence and the emergence of new players that are supplying cutting edge workforce management solutions especially designed for the retail industry.
If you would like to read more articles about conversion rate optimization and in-store staff scheduling issues and how advanced analytics can help, join our LinkedIn group “Performance Based Approach” or visit the blog section in our website (www.orquest.es)