term-life-conversionInitiative:  Conversion Rate Study

By Gunnar Simonsen (circa 2002)

I wrote this on a flight from Tennessee to Oregon. I was a Vice President of Merchandising and Operations at the time for a retail chain of bookstores throughout the Northwest. We experienced roughly 15 million in annual sales.

Objective:  Turning foot traffic into transactions by consistently meeting the needs of the customer.


  1. More of the prospects who visit your store(s) will take the action you want them to take, thereby increasing your conversion rate.
  2. You improve your bottom line without spending additional marketing dollars.
  3. Your marketing campaigns yield a higher ROI.
  4. Your merchandising efforts will become much more effective.
  5. Your customer acquisition costs will be lower.
  6. Your customer retention rates will be higher.
  7. Your customer lifetime values will be higher.
  8. Increasing Conversion Rate will have a positive effect on inventory turns.
  • Loyalty.  Frequency & lifetime.  Average dollar per transaction.

Conversion Rate Is:  Number of customers who make a transaction/Walk-Ins.

Example of Benefits When Increasing the Conversion Rate:

    • Weekly walk in traffic at store: 600 prospects
    • Number of transactions: 150
    • Average sale: $45
  1. Increase Conversion Rate by 4% and see a 12% increase in sales.  (At $45 average sale.)
  2. Maintain that “New” Conversion Rate and increase average sale transaction by $10 and see a 37% increase in sales.

Solutions to Increasing Conversion Rate:

  • Focused staff.  (Hire the RIGHT people!)

1. Traits of the RIGHT people:  Team player, energetic, outgoing, responsible, takes the initiative to get things done.

  • Identify with the Mission
  • Clearly understand expectations
  • Internal Commitment to both
  • Practice (showcase) FISH philosophy
  • Staff wisely.  (Are you too heavy during soft time, or vice versa?)
  • When average sales or walk-in traffic is highest, increase customer per staff ratio.  The customer per staff hour ratio is an indication of the availability of service in a store over a given period.
  • During “softer” times decrease staff

Customer Per Staff Ratio Example:                                                                        

A ratio of 30:1 would mean that each staff member would have to “deal with” 30 people on average each hour.  At best, they would be able to average only 2 minutes with each.  A ratio of 20:1 would enable staff to devote 3 minutes per shopper.

(If this happens to be the case, what are you doing with your 2 to 3 minutes per shopper?)

Another benefit of this is, according to a recent study on “The Statistical Impact of Customer Service on Retail Store Shrinkage” which was commissioned by St. Michael Strategies, found that improving customer per staff hour ratio can reduce shoplifting by as much as 34.5%.

Based on our window of payroll being 10-15% of sales, I believe increasing payroll is not the answer.  Scheduling more strategically to maximize our customer’s patterns is.  When sales increase, payroll can then increase.

Let me give you an example:


Did you realize that according to this spreadsheet:

Foot Traffic


Conversion Rate

Average Sale

Total Sale












  • Increasing your conversion rate roughly 4% or 10 more transaction for the entire day gives you a 15% increase in sales.

Foot Traffic


Conversion Rate

Average Sale

Total Sale












  • Maintaining the 4% increase in conversion rate while increasing your average sale by only $1.68 gives you a 25% increase in sales.

In this example, it is important to note that one salesperson was scheduled from opening to 3pm. This was done in an effort to manage payroll constraints. However, if you schedule according to the customer patterns, you potentially will more than make up for the savings in increased sales. A $200 per day increase adds up to $6,000 for the month. You do the math, that’s only in achieving a 4% increase in conversion rate.

Schedule accordingly, in doing this, you can better meet the needs of your customer. If it’s slow, send your part time help home.

How do we “Consistently meet the needs of the customer?”

  • Focused, accountable and positive work environment for staff can have a direct effect on the customer’s senses upon entering the store. (Unseen/unasked need=atmosphere/vibe)

Questions and Answers:

Q #1: How does an employee know a customer needs help?

A #2: There are several ways to tell:

  • The customer told them so/Employee asked
  • Behavior of customer is consistent with having a need.  (Body language.)
  • Customer can at first refuse help, but often when checked on ends up needing assistance.
  • All customers that walk into the store have needs.  They may not even know it.  It is the employee’s job to find out those wants & needs and help the customer meet those needs through Great Service and product knowledge.

Q #2: When does an employee engage the customer?

A #2: There are several potential “points of engagement” that should occur with each customer.

  1. Greeting each customer within 15 seconds of entering the store.

a)    Hello

b)   Eye Contact

c)    Smile & Nod

d)   Positive “welcoming” acknowledgement that says “I value you.”

  1. Conversation starter/Ice breaker

a)    Weather, their clothes, their kids etc.  This can “disarm” the customer making their experience more personal as well as relational.

b)   Find out who the customer is.  When they leave, could you tell their story?

c)    Being there for them as they share shows that you care.  Getting to know them will often lead to finding out their needs.  Be ready to offer suggestions, and don’t point them in the right direction, walk them there.

  1. Monitoring their needs:

a)    Though you have already helped them or they refused help, check in on them every few minutes.  This is not pushy, this shows we care.

  1. The Goodbye

a)    I once heard of a retailer who had their employees write on every receipt the words “Thank You”.  Let the customer know that we appreciate them.  We cannot “fall asleep” and take these transactions for granted.  No matter how busy we are, we should always thank each customer for coming in.  If they make a purchase or not, makes NO difference.

Q #3: How much power does an associate have to serve the customer?

A #3: It is essential that each employee have a clear understanding of:

  1. Job expectations
  2. Company policies (i.e. returns, quantity discounts, etc.)
  3. Current company promotions

With a clear understanding of each of these, the employee now has a firm foundation in which they can more effectively serve the customer.  It is the company’s responsibility to clearly communicate these points.  The manager must then ensure staff readiness on all of these points.

However, sometimes a situation may arise that falls outside of these guidelines which comes at the request of the customer.  The proper response then is to “turnover” the decision to the manager on duty.

The proper way to “turnover” to the manager is to politely excuse yourself from the customer, explain to them that you will be going to get the MIC so that they could further assist the customer.  Be sure to clearly understand their request when you find the MIC.  Clearly relay the request and lead them to the customer.  Be sure to get the customers name prior to getting the MIC.

When you get to the customer, politely introduce the MIC to the customer by name.  The MIC should then “take over”.

Q #4: How important is the role of manager as teacher?

A #4: Continued education is crucial to the further development of the staff, therefore the role of manager as teacher is crucial.

“Growing” your employees should be a personal goal of every manager in this organization.  This comes first from the commitment to grow oneself in the knowledge and development of their responsibilities.  You should never be too busy learn.  You should never be too busy not to teach.  Successful stores have willing learners.  Growing your employees is an investment in their futures.  Goal #2 should be to see your employees become promotable.

Q #5: Will our assortment have to change to improve conversion rate?

A #5: Adjusting assortments to more effectively meet the needs of the customer must always be a part of the process.  Ways in which this can take place are:

  1. Continued clear communication between manager and buying team.
  2. Keeping a “walk-up” list at each POS.

a)    A “walk-up” list is a daily list that employees log each time a customer requests a product the store does not carry.  (Any request that is duplicated more than 3-5 times per week should be turned in to the Buyers office for further action.)

  1. More effectively monitoring special order quantities by title.

Q #6: Will we need to redesign events to improve conversion rate?

A #6: Continuing to improve our events template should always be a part of the process.  Areas to review with a continued goal of higher ROI are:

  1. Event area layout
  2. Customer line path
  3. Role of employees during event (i.e. working the line)
  4. Product placement
  5. Product assortment
  6. Available “like” products
  7. Pricepoint
  8. Purpose driven displays with focus and “like” product

Q #7: Can we target conversion rate for ticket sales, or is this an add-on sale?

A #7: The “idea” of conversion rate, can and should be applied to other aspects of the business as well.  (i.e. Capturing addresses in the sale of concert/event tickets; a low dollar profit.)  Converting the customer to other sales is essential.

A good understanding of all upcoming events is crucial to ensure on enticing display at all ticket sales counters.  Selling tickets only at the customer service counter may allow greater impact for this, as well as causing the customer to walk through the entire store before purchasing the ticket.  At $2 gross per ticket, we need to convert this customer in order to better justify ticket sales to the bottom line.

Q #8: Is there a value associated with information?

A #8: Information.  If expectations are being followed and interaction with each customer is happening, there will be times when customers will be only seeking information with no intent to buy.

The value of information can be a positive if expectations are being met.  It is just another opportunity to convert out customers into “Raving Fans” of our company.  It is always the case that we build a bridge to that customer next visit.  It is especially crucial that the customer consistently receives this positive experience in all of our stores.

Plain and simple, the manager must reflect and manage expectations.  Look always to coach and grow your people.

Q #9: Answering “We turn away customers because we don’t have…”

A #9: To answer part of this question, see answer #5.  If there is a continued need that is not being met, the manager is responsible to communicate that need.  In doing so, it will decrease the amount of customers being turned away.  This however should me measured in accordance to the “walk-up” list as explained in answer #5.

Realizing that some “rare” requests that we just cannot order are going to happen, is ok.  However, knowing how to special order product or direct customers to our other locations is a great way to “care” for the customers.  Unfortunately, many times it is how the situation is communicated or handled that frustrates the customer.  Employees should be excellent communicators with a comfortable and clear understanding of these procedures.  Otherwise it may not be conducive to having them on the sales floor.

Other ways of handling this situation is by suggestive selling, by seeking to convert this customer to another “like” product.  Sure, sometimes all they want is a specific product and sometimes we don’t have it.  It’s OK.  That will happen.  Remember, 10% of life is what happens, 90% is how we react.

In this case, we must remember that retail is a “dance” and we must be confident in our ability to “dance” with the customer.

Know your customer, know your product, know your boundaries and know your IT.  If you do, you may just find yourself consistently meeting the needs of each customer.

Q #10:        “How would this apply when someone calls us over the phone? “

A #10:

1.   Talk with a smile.

  1. Don’t rush.
  2. Listen Carefully.
  3. Know your “stuff”.
  4. Invite Customer to come in so you can personally help them.


When sales are down, some retailers spend more money on advertising to drive in more foot traffic.  Unfortunately, many times this is done without any knowledge of conversion rate for their stores.  If conversion rate is low, the problem might not be the advertising, but in the areas of the topics we just discussed.

As a company, we must be committed to having high expectations for conversion rate.  We also must be willing to seek out solutions for when they are not being met.

Knowing your business and being alert are crucial if we all want to play a part in growing our business.  In retail it is better to be hungry than comfortable.

Which Are You??

Flash Forward to Now >>

STRATEGISTICS: The Essential Information

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