It is surprising how many retailers actually use transaction counts as a proxy (approximation) for traffic. Or they use transactions counts as a proxy in some cases like in workforce management systems or goal setting. But this is a really bad idea.
One question we get asked a lot is how many stores should have traffic counters so that traffic insights can be extrapolated to all stores in the chain.
We totally get it. Budgets are tight. Anything you can do to reduce cost is worth exploring, especially if you operate a large chain, So...do you really need to track traffic in all your stores or can you just simply install traffic counters in a sample of stores and then extrapolate the results?
In-store customer experience has never been more important — you wish you could monitor it every hour of every day, but that just isn't affordable or practical. Sales results aren't a reliable proxy because they are often overly influenced by store traffic. So how then can you understand your CX in any meaningful way?
You already have the best proxy for customer experience for every one of your stores and each hour they are open — and you may not even know it.
While the benefits of conducting Mystery Shops and measuring customer satisfaction are well understood by retailers, the strong connection between traffic, conversion and customer experience are not. Without traffic and conversion data, you will draw the wrong conclusions about your research and waste money on Mystery Shop visits that are not well targeted.
Have you ever listened to quarterly earnings with retailers and heard them explain sales slumps by a fall in foot traffic? The problem is...some of those retailers don't even track traffic and are using transactions as a proxy. So their answer translates to: "Sales are down because sales are down".
So...how about you?
How would you describe a sales slump? Would you refer to traffic or the store 'busy-ness'. Do you track traffic in all your stores?
The value of transaction data that comes from your point-of-sale (POS) system is undeniable — it helps you understand sales results, manage inventory, optimize distribution, and even deploy staff.
So what then is the glaring flaw?
If you are primarily relying on your sales data to fuel your business intelligence systems and team discussions, you have absolutely no perspective on the sales you lost.
There seems to be a tremendous amount of confusion between retail Shoppers or Customers...or, stated differently Traffic versus Transactions. Not understanding the simple concept of 'traffic' cripples your ability to drive retail sales or even understand them.
Most retailers already have powerful data to help understand and improve customer experience (CX) — but they forget to use it. Don't waste money on random Mystery Shop and CSATs until you know precisely when and where to targeted your customer research.
Why do so many retailers still use sales to assess store performance? When all you have is transaction data with out traffic, you are going to suffer a 'transaction misdirection'.
Sales transactions are outcomes. A sale is what happens if you successfully convert a shopper into a buyer. While traffic and transactions are obviously related, relying on transaction counts as a proxy for store traffic is a big mistake.
"What will traffic and conversion data tell me I don’t already know?"
That's a question our team at HeadCount has been hearing for 20 years. Surprisingly, some retailers often don’t believe that counting traffic and measuring customer conversion will tell them anything they don’t already know.
Nothing could be further from the truth. Without traffic and conversion data, you don't even have the basics to run your stores.
No single metric defines the retail category as much as same-store sales do. Retailers live and die by this one simple measure. But, evaluating same-store sales in the context of retail shoppers (people who actually enter your store) and retail conversion (people who actually buy) will dramatically alter how your interpret your results.