October 20, 2015
by Bob Meyer, Editor of BarterNews
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Be Informed, Take Action, Embrace
Times change, and we too must adjust. The good news is that even with economic
changes, you can do just fine when you're aware, motivated, and take action.
Knowledge is power that can become your ally in achieving greater economic
Begin with a greater focus on reduction of debt and lowering
overhead. Next, pay attention to cementing those special relationships with your
most valued customers — the 20% that bring you 80% of your sales, because
they’re the backbone of your business.
Moreover, with the power of
knowledge, you can be confidently aggressive and pro-active in your strategy.
Thus, this would be an excellent time to pursue those prospective clients you've
always wanted to do business with. Because of lagging sales in the environment,
prospective clients will be more willing to listen to you when you use the
greatest closing there is: "And remember, you don’t have to pay me in all cash!"
When economic changes occur, many business owners will lose their
bearings. But with knowledge and awareness, you will be different. You can stay
focused and be positive about your company's strategy to offset the vicissitudes
in the economy. Remember, some of the world's greatest fortunes have been
created in chaotic times.
The good news is that even with the economic
changes ahead, you can do just fine when you’re aware, motivated, and take
BarterNews.com — World's Largest
Hundreds of valuable articles,
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Categories are found on the horizontal bar at the top - 3rd
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What Retailers Can Learn from
By Mark Ryski
When a retailer is asked if traffic is up or down, there’s a very
good chance that the answer provided actually refers to the store's
"transaction count" or what is sometimes ambiguously referred to as
"customer count." No one seems to probe on this, so by default
transaction count has become an acceptable proxy for store traffic
count. But there's another rub: transaction count is not the same as
Transaction Counts Vs. Traffic Counts — Hits
To say that transaction count
represents a reliable proxy for store traffic is analogous to saying
that hits are a reliable substitute for at-bats in baseball. Yes,
the two stats are related, but they are not interchangeable —
not even close.
If baseball statisticians only tracked hits,
without considering at-bats and batting average, how much less would
we understand about the greatness of players like Ty Cobb or Babe
Ruth? A lot less. The same is true for retailers. Transaction counts
(hits) may be up, but knowing if it was a result of an increase in
store traffic (at-bats), or that the retailer was more effective at
converting the store traffic is an important distinction. This is
not a subtle point. Here’s why.
Why Store Traffic Matters
Store traffic is a measure of all the people who visit the
store, including buyers and non-buyers. Traffic is a leading
indicator that tells us something about a chain's sales opportunity
— more traffic, more opportunity. If traffic is trending up, this is
clearly a positive sign. It suggests that the brand is in favor and
opportunities abound. The converse is also true. If store traffic is
waning, this is disconcerting and it could indicate that the banner
is falling out of favor. The number of sales opportunities is
The problem with relying on transaction counts
as a proxy for traffic is that they could be going up regardless of
whether actual store traffic is going up or down. To understand this
apparent paradox, you need to consider the retailers’ batting
Conversion Rate — Retail Batting Average
mentioned, store traffic count defines the sales opportunity and is
analogous to at-bats. Transaction count represents buyers only and
is analogous to hits. Therefore a retailer’s batting average, or
conversion rate, is calculated by dividing the transaction count by
the store traffic count — just like in calculating batting average.
Store traffic and conversion rates tend to be inversely
related. When store traffic falls, associates are able to deliver a
higher level of service, checkout lines are shorter, and generally
it’s easier to buy. The transaction count often goes up, despite the
fact that there is actually less traffic in the store.
this case store traffic didn't increase, but if the retailer only
has transaction counts to rely upon, then he reports "traffic is
up." But it's not. And yet all parties, the retailers and the
inquisitive analysts, seem to tolerate the ambiguity.
Ask, Don't Tell
One Wall Streeter told me that you cannot
ask a retailer about traffic counts, if they don't track traffic in
their stores. True, but you also can't have two definitions for this
basic metric either. If you want to ask about transaction counts
then ask for transaction counts, and if you want to ask about store
traffic, then ask for store traffic. This shouldn't be open to
There is a simple way to inject clarity into
what has become a convoluted question. Instead of asking retailers
if it was "ticket or traffic" that drove results, analysts should
ask if it was "ticket, traffic or conversion." Most retailers don't
track store traffic and so won't be able to answer. But at least it
will be clear that they don't, and you will know they mean
transaction count — which on its own tells us little about what
As for the retailers who do track store
traffic and measure conversion rates, you will have a much deeper
insight into what actually drove sales results. Maybe retailers, and
Wall Street, need to take a page out of the baseball playbook.
(Mark Ryski is the founder of HeadCount.com and author of
"Conversion: The Last Great Retail Metric" and "When Retail
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