What is “People Counting” and Why Do Highly-Performing Retailers Measure It?
Occasionally, prospective clients ask why people counting is required to augment point-of-sale transactions as a store performance measurement tool. Aren’t point-of-sale transactions the each store’s “traffic”?
The answer is "no", and here’s why: POS transactions measure “hits” (paying customers) but do not measure “at-bats” (shoppers who may or may not become paying customers). People counting is required to measure “batting average,” or the shopper conversion rate. When ShopperTrak’s Managed Service is installed at new clients, the measured foot traffic is frequently higher than clients expected and conversion rate is usually lower than expected. In addition, clients often learn that their Shopper-to-Associate-Ratios (STAR) vary widely by store, an indication that there is room for more efficient staffing to convert more shoppers into paying customers. A recent ShopperTrak pilot in 21 stores objectively measured that the retailer’s store-by-store conversion rate ranged from 19% to 47%. In the lowest performing store, over 80% of shoppers left without making a purchase! In addition, the STAR ranged from 5 to 15. Not surprisingly, the stores with a lower STAR had significantly higher conversion rates.
Moreover, brick and mortar retailers should consider the experience of online retailers who constantly measure their web traffic and shopper conversion rate. Why? First, online tools make measurement a snap. Second, if traffic is flat or declining, online retailers recognize that they have a marketing issue. If conversion rate is flat or declining, then attention is focused on website design, inventory, and the check-out process. Online retail is rapidly growing but is still only 10% of total U.S. retail spending. The highest performing retailers measure their visits or store traffic in both their online and brick and mortar stores. It’s not surprising, given that most retailers still earn over 90% of their revenue from traditional brick and mortar stores. The bottom line: automated people counting brings the science of web analytics to the brick and mortar retail world. The power is in combining people counting data with transactions, marketing spend, and staffing.
Click here to visit ShopperTrak's website to learn more about "people counting."