Driving more prospects into your stores is a good idea. Traffic, is the lifeblood of retailing. But prospects just don’t decide to show up; driving additional prospect traffic to your stores requires some kind of stimulus.
The most common traffic stimulus is advertising and/or promotion. While there’s a vast array of advertising and promotional vehicles retailers can and do employ to drive traffic, they all generally have one common attribute – they cost money. Retailers collectively spend billions on advertising annually in an attempt to drive more buyers into their stores and ultimately increase sales.
It’s important to remember that advertising drives prospects to the store, not buyers. Buyers are part of the prospect traffic group; some of these prospects will become buyers, and the others won’t. This unconverted prospect traffic represents a significant lost sales opportunity.
A campaign may be very effective at driving traffic levels up in the stores, but if at the end of the day, customer conversion rates and/or average ticket values decrease, overall sales may not necessarily increase – or increase enough to justify the investment.
Investing precious budget dollars to drive more prospect traffic to your stores when you may not be adequately serving the prospects you already have doesn’t make sense. Unfortunately, this is exactly what many retailers do, week in and week out, throwing money at advertising and promotions without the faintest clue as to what impact they’re actually having on sales or what the ROI actually is.
How conversion may be driven in response to traffic.
To drive conversion, remember that traffic and customer conversion rate tend to be inversely related. As traffic levels go up, customer conversion often goes down. It’s not hard to understand why this happens. As the store gets busier, it’s harder to find an Associate to help, the check-out lines get longer, and service levels generally decline. Or perhaps the store misplaced (or simply didn’t receive) its shipment of items that were featured in the promotion. Prospects might have come looking for the item — but left when they learned the store didn’t have the item or ran out. Whatever the cause, the net effect is that more people came to the store but left without buying.
As the example above shows, if the advertising successfully drove 10% more prospect traffic to the store (even if the store maintains its $30 average ticket), and if the customer conversion rate decreases from 30% to 28% (not atypical), the overall sales lift would be only 4% instead of the 10% it should be, given the traffic increase.
The moral of the story is this: traffic is good, but your stores need to be prepared for increased prospect volume if you’re going to get the return you’re looking for. If conversion sags, you won’t get everything you should from your advertising investment.