Retailers: Stop obsessing about conversion rates and start obsessing about measuring experience

Retail has changed. It's time to change how we measure success.

Fellow retailers, I have a question for you – Do you know what your current conversion rate percentage is? Cue loud cacophony of “Yes, of course!” Indeed, every retailer I’ve ever met takes great pride in knowing their KPIs and ‘management’ typically see conversion rate as a vital aspect of measuring and driving store performance. As retailers, we've used the "Traffic X Conversion X ATV" formula to calculate retail sales for eons. Who in their right mind wouldn’t know their conversion rate?

Would it surprise you to know that I don’t? What I do know however is exactly how many people visited our stores, how many of them we interacted with, how many products we sold and what shoppers thought of their experience. I also know that, yesterday in our Oxford Street store, Zita went above and beyond to provide an amazing service to a shopper who came in wanting to return the AirWrap she’d bought online and subsequently walked away having bought a new V11 while keeping said AirWrap. Why did the shopper do this? Because Zita took the time to train the shopper how to get the best out of the AirWrap on her hair type and the shopper was so impressed by this that she then started explore all the other products in the store. More importantly, why did Zita take the time to do this? Because she’s measured on providing a great store experience, not on conversion rate.

Back in 2009 when I was working at adidas, our German team asked us to help drive the performance of the Berlin store. Benefitting from an extensive roster of adidas sponsored athletes, we ran an event hosting two of Germany’s most famous, World Cup winning footballers. All went according to plan and we saw significant increases in store traffic and sales. Afterwards, I met the store manager to get a quick debrief on how it had gone from his perspective.

The store manager was surprisingly negative about the event. What I saw was a successful event that had driven loads of new traffic, boosted the morale of the store team, generated hundreds of social media posts and increased sales. What he saw was a decrease in his conversion rate and a forthcoming difficult conversation with his area manager.

That moment has stuck in my mind ever since. I was staggered that a high performing store manager saw a declining conversion rate as such a negative, especially when overall sales had increased. Something struck me as being very wrong.

Fast forward to today and when store managers start talking to me about conversion rates, they quickly catch themselves and change the subject. They know I’d much rather hear their opinion on how we can further improve the shopper’s experience or how we can demonstrate our machines better.  

Why does this matter, I hear you ask. It matters because today’s shopper is a different beast. They no longer make all their purchases in the store and they often use the store as part of their research, opting to buy in a different channel later on. When this is the way that today’s shopper works, focusing on the in-store conversion rate doesn’t give us the full picture and doesn’t provide us with actionable insight. From a staff point of view, setting a hard target conversion rate percentage potentially drives the wrong behaviours. Shoppers who are clearly not displaying buying signals may be perceived as time wasters and not receive the quality of service they deserve. Staff may end up driving the hard sale or attempting to sell shoppers something they don’t want or need. Managers will not work as hard as possible to bring more traffic to the store. Collectively, they will actively work against the way that today’s retail works. Shoppers will be turned off by their experience and will not come back.

As a quick aside, don’t get me wrong – if we’re talking about online retail, conversion rate is as important as it’s ever been and I completely agree that we should obsess about improving it. A quick Google search will turn up thousands of results explaining different tactics and solutions to optimise your conversion rate, with good reason. For the majority of physical stores however, the shopper and therefore the game has changed.

So what should we do? As new generation retailers, we need to know what shoppers think about their experience in our stores and whether or not it has influenced them to make a purchase. Ideally, we need to know if they went on to make a purchase in another channel and which channel it was. We need to know if their experience excited them enough to leave a review or to recommend the store to their friends and family. Or if they intend to return to store or continue to purchase our products online. We need to know the store’s role in the shopper journey. And, how our stores directly or indirectly contribute to the profitability of the business. Not all of these things are easy to measure, but we must continue to find ways. On the other hand, an individual store’s conversion rate tells us nothing about any of these things. Neither will it help us to change any of them.

In summary, shoppers have changed and we retailers must change with them. We must remember that the measurements we ask our store staff and managers to focus on will directly influence their day-to-day behaviours and therefore what the shopper experiences. If we get the measures right, the shopper has a much better chance of having a great store experience. To conclude, stop obsessing about driving a conversion rate number and start obsessing about delivering a great shopper experience.