I couldn't agree more that it's important to understand and measure key customer behaviors and store performance. There is no point in spending money on fancy ads and displays if the right behaviors aren't being encouraged. With that said, that's where it's key to look at KPI benchmarking organization like APQC and to check out industry data marts like IBM's Retail Industry Data Model. The IBM Industry Data Model comes with over 80+ metrics to see how well your business is doing.
Why are In-Store Shopping Metrics so Important? | Novitaz, Inc.Well don’t take it from me – take it from Paco Underhill who is a noted author and has done some exhaustive studies on things most retailers don’t know.
Here are some interesting factoids that really emphasize why you need to start collecting In-Store Shopping Metrics:
1. When Paco Underhill asked a senior executive of a multi-billion dollar retail chain - “How many of the people who walk into your stores buy something?” The execs answer was: “Pretty certain that the number was near 100%!” After all, the executive reasoned, “our stores are shopping destinations, and people don’t go there unless they have at least a few specifics things to buy.” However the correct answer: 48%! And this was based on hundreds of hours of study, including, among other things, counting the number of shoppers who walked out vs the number who purchased. As a saving grace, Paco, told the executive that his chain was doing very well. For non-grocery retailers … the apparel, accessory, electronics, white goods, those numbers are typically less than 48%.
2. His 2nd question to the senior executive was - “What is the average time, a non-buyer spends in a particular department/store vs a buyer?” Answer: Cosmetics Dept (Non-Buyer: 2 min; Buyer: 2 min 30 seconds); Toy Store (Non: 10 min; Buyer 17 min); Electronics (Non: 5 min; Buyer 9:30 min). So time-spent is critical to money spent. And one of the key things which increases time-spent is interception rate which was his next question.
3. His 3rd question: “Do you know the interception rate … and the impact it has on spend?” Interception rate is the percentage of customers who interacted with a sales associate. They did a study for clothing retailer and found the interception rate to be 25% .. so 3 out of 4 customers did not interact with a sales associate … according to Paco this is dangerously low.
4. His final question: “What is the average wait time for checkout … and lost sales due to long checkout times?” Anecdotal evidence” A housewares retailer VP was startled when he saw a video of a lady who had spent 22 minutes shopping, had a cart full, and abandoned the cart and exited the store when it dawned on her that she was in cashier hell.