At KSI VISION, we've collaborated with a wide variety of businesses in the retail sector, from small specialty shops to large chains with an international presence. Because of our experience, we can help you increase efficiency and sales. We understand different types of businesses, locations, and audiences, allowing us to identify key patterns and trends. One simple way to generate significant impact is by focusing on sales conversion.
Why Measuring and Managing Sales Conversion is Crucial
Sales conversion, which measures the percentage of visitors who make a purchase, is a fundamental indicator of your store's success. In the retail sector, you might notice a margin of up to ±20% in sales conversion that depends directly on the quality of customer service, according to studies comparing stores with different customer service models and staff training levels. This margin is especially pronounced in assisted sales models.
You might be surprised to learn that, when comparing the performance of the store with the lowest conversion to the one with the highest, the difference can reach up to 40%. This significant variation is usually due to factors such as:
Experience and training of the staff.
Effectiveness of customer service processes.
Implementation of personalized sales strategies.
Stores with highly trained teams focused on the customer tend to make the most of every interaction, while others may miss key opportunities due to less preparation or lack of focus on customer service. Therefore, it's crucial that you measure sales conversion and set clear goals and appropriate incentives to keep your stores within the upper margin of this range.
The Common Mistake: Uniform Goals for All Stores
A mistake many retailers make is setting a fixed goal for all stores under the assumption that all are the same. However, the reality is that each store is unique. Sales conversion can vary drastically depending on factors such as:
Location: street, shopping mall, residential area, etc.
Audience profile: family, young, executive, etc.
Competition in the area.
Season and market trends.
Therefore, goals should be personalized to reflect the particularities of each store.
How to Set Personalized Conversion Goals
To effectively define conversion goals, you should base them on each store's historical data. Although there are more advanced methods, we'll explain a simple method you can apply manually: the weighted average. This approach combines:
The conversion from the previous month.
The conversion from the same month of the previous year.
The importance of each of these factors will depend on the month in question. For example:
In December, the conversion from the same month last year should carry much more weight due to seasonality.
In March, the trend from the previous month may be more relevant.
This reflects how recent conversion patterns can offer a more accurate view of current expectations. On the other hand, using the reference from the same month last year helps capture seasonality and historical behaviors characteristic of that time. This combination ensures a more balanced, well-founded strategy aligned with the specific realities of each store and business.
Formula for the Weighted Average
The formula to calculate the conversion goal using the weighted average is:
Conversion Goal = (Conversion from Previous Month × Weight of Previous Month) + (Conversion from Same Month Last Year × Weight of Same Month Last Year)
Where:
Weight of Previous Month + Weight of Same Month Last Year=1 (or 100%)
Example of Calculation: Weighted Average
Suppose we want to set the conversion goal for March. The conversion in February was 15%, and the conversion in March last year was 18%. Using a more pronounced weight table:
Month | Weight |
February (Previous Month) | 70% |
March (Same Month Last Year) | 30% |
The weighted average calculation would be:
Conversion Goal = (15% × 0.70) + (18% × 0.30) = 10.5% + 5.4% = 15.9%
Thus, the conversion goal for March would be 15.9%. Each business can and should adjust the weights according to its reality and specific needs.
Table of Typical Weights by Month
Below is a table with more pronounced weights for all months of the year. These values are suggested and should be adjusted according to the seasonality and particularities of each business:
Month | Weight Previous Month | Weight Same Month Last Year |
January | 40% | 60% |
February | 60% | 40% |
March | 70% | 30% |
April | 65% | 35% |
May | 65% | 35% |
June | 70% | 30% |
July | 70% | 30% |
August | 70% | 30% |
September | 65% | 35% |
October | 50% | 50% |
November | 30% | 70% |
December | 20% | 80% |
As you can see, in months like December, the weight leans heavily towards the same month of the previous year due to high seasonality and specific purchasing patterns of the season.
Implementation and Daily Communication
To maximize impact, it's crucial to communicate this information daily to all stores. In our experience, this simple step generates an immediate increase of 5% in sales conversion. By setting clear goals and monitoring them in real-time, managers can quickly identify deviations and take corrective actions.
Automation with KSI VISION
If you want to take this process to the next level, at KSI VISION we can help you automate the entire flow: from measuring conversion, setting personalized goals, to communicating across your entire chain.
Contact us, and we'll accompany you every step of the way to ensure your stores reach their maximum conversion potential.
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