The best data and analytics mean nothing unless action is taken on the information. One of our projects in the retail sector provides a vivid illustration of how the right information at the right time, used to drive the right actions, can be highly profitable.
Our client was a retailer with 20 locations, all large stores each stocking about a quarter million SKUs. Management wanted to understand how they could increase their customer conversion rate – turn more “browsers” into “buyers” – and thereby increase revenue and profit. With flat or declining sales, hiring more staff was not an attractive option.
Could better and more timely information help? The performance metrics for each store location were calculated and reported only monthly after the month was over. The information was interesting, but not delivered in time to impact results.
Analysis Team’s solution brought together sales and traffic data from each store on a continuous basis to aggregate the number of shoppers and transactions, and calculate conversion rates. A computer monitor was installed on the wall in every store manager’s office, presenting that store’s information in near-real-time both graphically and numerically. Throughout the day, store managers could now keep tabs on the number of shoppers currently in the store, number of transactions, and how many shoppers became customers.
The rest of the story is about how actions delivered results. Store managers, seeing traffic increase on the graph, encouraged their staff to get out on the floor and engage customers, to understand what they were looking for and help them find what they wanted. As a result, more shoppers bought something and the conversion rate increased. At the same time, those who would have bought something anyway bought more, as seen in the increase in average transaction value.
Without hiring additional staff, adding to inventory or opening new stores, our client increased revenue by $1.7 million and gross profit by $500,000 in just 4 months. In fact, it was a period of declining shopper traffic, making the gains even more impressive. At that pace, our client was on track to earn $5 million additional revenue and $1.5 million additional gross profit over one year. That’s just from improved customer engagement, driven by analytics and timely reporting!
“We paid back our investment in 15 weeks,” the retailer’s CIO said. “It was probably the best ROI I’d ever had in my life. It was amazing.”
How can better analytics help you improve customer engagement, and drive your profits higher?