People Counting: Baby steps to customer behavior intelligence
In next few blogs in this series, I would be taking a role of a retailer and stripping it down to bare bone necessities. The focus would be to critically evaluate and validate need and benefit of gaining additional customer behavior information for brick and mortar retail stores. I may not reach a conclusion that you’d agree with – would certainly love to hear from you about your experience and share that with our readers as well if you leave a comment or write a message to us through our contact us page.
If you’re like most retailers that have been in business for long enough, you certainly know your business as well as customer nuances pretty well. Most would argue that knowing your customer is more art than science – I am in that boat as well. That’s why I like to propose a very critical approach to validating benefit of any new technology that claims to provide additional ‘intelligence’. There are countless billions of dollars spent every year in attempt to furnish retail analytics for large retail corporations in attempt to improve your business. How many of these dollars meet intended ROI is a conversation for another thread probably J
In spirit of keeping things simple and achievable for small retail outlets or stores, let’s begin with overarching goals of any retail business.
For generating and increasing revenue/sales, retail store has only below three ways to generate that:
a) Increase number of visitors coming to store
b) Increase average purchase value (ticket size)
c) Increase conversion rate
Traditionally, retail stores have focused on first two options, specifically the first one. Trying to get more traffic through promotions, discount offers, advertisements and other marketing efforts. Equal or higher sales effectiveness could be achieved through focus on maintaining steady conversion rates and slowly improving it. We will continue to focus on this metric in following blogs as well.
Now, getting back to technology piece – with any introduction of technology, I’d like to understand if that directly has an impact/influence over any of above categories on the right hand side. Even within the right hand buckets, if clear impact is expected in first two categories, it’s a better proposition.
Also, it is important to note that as a retail outlet or store owner, one of the key areas of business that you are witness to and have somewhat control over is number of visitors entering the door. Can we really start using this piece of business knowledge and start having meaningful actions using conversion rate?
I will dive in to further detail in my next post wherein we’d start discussing how we could utilize precise visitor count knowledge into concrete actions and business measures.