Retail Analytics… 5 Steps (and 4 Tools) to Reverse-Engineering the Sale.

Gone are the days where we have to guess how customers interact or react to our merchandising and product displays. While the tools are abundant, there seems to be little out there about drawing the lines between the various systems and tools that provide these insights. I’ll attempt to connect those dots here.

Before I go any further, this is intended to help small businesses and their store owners get more data about their in-store customer experience (CX). If you own a store or are responsible for improving CX (and growing sales), hopefully, you’ll find this helpful.

Here’s a quick rundown of the major components: The Point of Sale (POS), Traffic Counter, Product Displays, and Digital Signage.

As retailers, we should be able to confidently answer the following:

Which messaging—
Which displays/products—
Which associate—
Lead to the sale?

One way to measure a store’s success is to measure conversion rate: [door swings / sales]. This basic view of conversions doesn’t give us a direction on our creative, product placement, or staffing strategy. A sale is great; but if we don’t know how we got it, what chance do we have to replicate (and improve) it?

Let’s look at putting the tools together to help us get a better view of this customer journey as we attempt to reverse engineer the sale.

1. The Point of Sale (POS)

This is your hub—the heart of tracking customer behavior in retail stores. The POS is how transaction-level data gets fed back into your other systems and reports.

There are a wide variety of POS systems out there that can do just about whatever you need them to—time keeping, services management (ex. Phone Repair Tracking), and, of course, payment transactions. You won’t need the top of the line POS to be able to get the insights we’re looking for. But, if you’re interested in realtime conversion data, you will need to connect the POS to your Traffic Counter solution. And because I personally like the flexibility of connecting e-commerce inventory and ROPIS (reserve online and pick-up in-store) features, I like RQ by IQ Metrix.

POS data is the starting point for reverse engineering the sale. Knowing what products were purchased together and when the sale took place is how you’ll later work backwards to determine the success of your CX optimization efforts.

2. Traffic (and Conversion) Counter

Door swings are a good start. What’s better is comparing pass-by and capture rates as well as directionality. In other words, did your exterior signage and displays stop people in their tracks? And when they came in, which part of the store was most attractive?

By connecting your POS and your Traffic Counter, you’ll get conversion rate data that can help determine trends like busy times, average transaction value (ATV), and even whether the sale was from a returning or new customer.

There are a lot of bells and whistles available for traffic counting solutions—dwell zones, visit duration, directionality, and much more. Of the solutions that I’m familiar with, I prefer the Retail Next solution becuase most of the critical functionality is covered in a single piece of hardware. Plus their hardware can be re-installed in another store (with additional setup) if you choose to move or close a location. Other solutions are custom-configured per location (which means they can’t be installed anywhere else) and there’s a cost for returning the hardware.

3. Product (+ Secure) Displays

If you have physical products—electronics, for example—you’ll want to lock them down. You could just bolt them to the table and call it a day. But I’d urge you to take it a step further. Solutions like InVue’s OnePOD system give data about lift times for a particular product.

Consider overlaying this data with associate information (ex. Did Associate Jane open a display case for the customer?) via their their OneKEY solution, you can start to put together a very detailed view of the customer’s experience in your store. Using associate data/events, you can determine whether an associate helped a particular customer. You could even determine which associates are the most effective at closing sales.

Special bonus, you can even add digital content to your secure product displays—driving impulse buys via promotional messaging or simply displaying critical information about the product. Layer this with your storewide Digital Signage solution, and now you can see what imagery and messaging is helping to drive sales.

4. Digital Signage

There are a ton of digital signage companies out there. Frankly, the distinguishing features are minimal. The most differentiating feature (and arguably one of the most important) is the content editor. Personally, I like the flexibility of being able to convert any screen (a TV, for example) into a digital sign. You’ll also want to manage content across all locations. The one that I prefer is called ScreenScape.

The data you get from your Digital Signage is often overlooked. Probably for two reasons: 1) the creative and messaging can be subjective and hard to measure in the same way as transaction data and 2) the signage probably doesn’t change very often unless you have the means and resources to update regularly.

But consider this, what if you could capture the messaging and creative version at the time of the sale. What if you notice a correlation between a particular message being displayed and sales volume or transaction amount. Suddenly, that digital signage data becomes very useful.

5. The Connection

Each one of the areas mentioned—POS, Traffic Counter, Displays/Security, and Digital Signage could all get their own dedicated post about how to implement and interpret the data (perhaps I’ll write on those another time). But for now, I hope you’ll take away one thing:

Link these systems—POS + Traffic + Secure Displays + Digital Signage—to paint a vivid picture about your customers’ experience. Work your way back from the sale—amount, customer, time, product(s) sold, etc.—to build commonalities and trends. Analyze enough of your transactions using this data and you’ll be able to put together your formula. I’ll write more about crafting the formula but the basic version looks like this:

Marketing Channel x Merchandising x Sales Associate = CX Score

Marketing Channel: Creative +Frequency
Which version of the ad/message was most effective and what was the number of times an ad was shown before action was taken.

Merchandising: Traffic + Product Interaction
Measure pass-by rate as well as capture rate, product pickups, and touches of display units.

Sales Associate: Customers + Engagement
Measure how many customers and repeat customer interactions as well as the number of products shown by an associate.

CX Score
Your Customer Experience (CX) score is a combination of a weighted value placed on customer behavior as well as sales data. Use this CX score to compare locations or simply benchmark a single location.

If you found this useful, please let me know in the comments. I personally haven’t found a list of tools/solutions like this—which is why I wrote this. But if you know if another list or similar resource, please feel free to share.

Good luck to all my fellow retailers out there.