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.
Let's look at series of four charts to illustrate the problem:
In the example above, if this specialty retailer could have held on to the conversion rate it had averaged for the week before and after the Promo Week, the increased traffic (opportunity) from the promotion would have generated 9,000 additional transactions — 11% - 12.5% more than the other two weeks.But...you cannot solve, what you cannot see.
But if you didn't have traffic data and had to evaluate the Promo Week based on transaction counts alone, it would have been very easy to incorrectly assume that there had been a slight drop-off in traffic.
With traffic and conversion data, the picture is clear; we drove more traffic into the store, but we failed to capitalize on it. And we can now ask: What really went wrong?
We know from actually working with this retailer that it turned out to be a stock-out situation on a number of high-demand SKUs. Looking at this in context of traffic and conversion, they could quantify what the stock-outs cost them.
As you can easily imagine, the reverse can also happen. There could be fewer shoppers coming into the store, but because conversion rates go up (perhaps because the staff does a better job of converting the shoppers into buyers), transaction counts will increase.
To improve your sales, you need to understand what lever to pull. Traffic and customer conversion help you do that.