How to learn to effectively manage store customer traffic?

Customer traffic in shopping malls and street retail is declining; people are shopping less offline for a number of objective reasons, one of which is the convenience of online shopping with all its advantages. And yet, offline shopping continues to thrive. How can we control store traffic, learn to correctly calculate and influence the number of people visiting stores to ensure profitability?

How can you attract as many people as possible to your retail stores? How do you calculate incoming traffic to your stores and the cost per visitor to each store? SR expert on increasing shoe retail sales, Evgeny Danchev, answers these questions. The author examines the five most common mistakes that negatively impact customer traffic and reduce store profits.

Evgeny Danchev -

business coach, consultant, expert in increasing sales of the fashion market. Author of the book "A Practical Guide to Increasing Sales of Shoes and Accessories". Author of sales scripts "60 responses to customer objections in a retail shoe store" and "Standards for retail shoe sales." Creator of an online school for fashion market leaders.

@evgenydanchev, https://onlineschool.wconsulting.su/

The five main mistakes are the result of problems that exist in the retail footwear business, and we'll begin by examining their causes. Every problem has a root cause, and finding it is crucial.

Let's say you have a sales plan for a specific store—5 million rubles per month—but it's only making 4 million rubles, meaning it's 20% short of its planned revenue. One month it's 20% short, then the second, then the third, and so if we take the entire sales season, the store could be several million rubles short of revenue in six months. Previously, managers solved this problem with discount campaigns: at the end of the season, they'd use deep discounts to eliminate as much excess inventory as possible and somehow reach an acceptable level of inventory, ensuring they had working capital to purchase new merchandise.

But now this strategy doesn't really work because stores don't have the necessary customer traffic, even during the sales season.

It turns out that end-of-season discounts are no longer helping the company, preventing it from recouping working capital and selling the number of styles and units the store owner/manager expected to sell throughout the season. What should business managers do in this situation? We'll discuss this in this article.

Mistake #1:

The business manager does not have a plan for customer traffic in stores.

Let's think logically: if there's a sales plan, it must be met. But how? What are the components that can be influenced to achieve this plan?

Let's take a classic sales funnel. At the top of the funnel is the number of people entering the store, then further down are conversion, average order value, and its complexity. And at the end, we get our sales—a figure that tells us whether we've met (or haven't met) our sales plan.

If we're looking at the bottom of the funnel and it's important to us that sales targets are met, why aren't we looking at the top of the funnel? After all, if retail traffic starts to decline, sales will also decline. Low traffic leads to a shrinking top of the funnel.

Therefore, in business, it is necessary to take control of in-store traffic, and someone has to calculate it: how many customers must come to your retail store to fulfill the sales plan at the bottom of the funnel 100%?

When I talk to business owners and ask them this question, I'm met with a concerned silence. It would seem that in this age of fierce competition, we should be taking control of this metric and influencing the number of people coming into retail stores. Yet, many business owners not only lack a traffic plan, but still don't even have in-store customer counting sensors. So what happens? If business owners don't plan and monitor their traffic plan, they can set any sales target—5 million rubles per store, 6 million rubles—but such a plan won't be consistently met, only sporadically, if it's not tied to customer traffic.

This doesn't mean that customer traffic is to blame for all of a company's woes. But we must closely monitor this metric and influence it through marketing efforts.

Mistake #2:

The head of a shoe business has no understanding of how to calculate customer traffic.

Some people think, "I might want to do this, but since I don't know how, I won't do it." And the brain simply deletes such an unnecessary task from memory because it's unclear, complicated, and there's no way to calculate it.

But in reality, there's nothing complicated about it. It's a simple math problem from school. To calculate customer traffic, we need to know the average check in the store, the sales funnel conversion rate, and, of course, our sales plan.

Example:

Advertising

Advertising of Business Global Expo LLC, Taxpayer Identification Number (INN) 7710961530, erid: 2W5zFJRB7Va

Sales plan: 5,000,000 rubles. Average bill: 5,000 rubles.
Conversion rate: 8%

5,000,000 : 5,000 = 1000 checks  
1000: 8 x 100 = 12,500 people – this is what is required to fulfill the sales plan with a conversion rate of 8%.

Mistake #3:

The company does not have an employee responsible for driving traffic to retail stores (which is not uncommon).

It may seem strange, but this is a fairly common practice - every business has a person responsible for the sales plan (either the owner, or a hired commercial director, or a sales director, or, in extreme cases, a store manager), but there is no person responsible for customer traffic.

For some reason, companies don’t think about this.

You can work with your staff, increase the average order value, and expand its complexity, but if your store doesn't have the number of customers necessary for profitability and profitability (even taking into account the growth of the above indicators), then sales will be lower than expected.

Therefore, someone in the company must be responsible for traffic. And this person can be asked: What did they do to ensure the number of people you need to meet your sales plan visited your retail stores?

But until you have such an employee in your business, you will not be able to fully take control of sales and manage the fulfillment of the sales plan in the current market situation.

Mistake #4:

The marketing department does not work with customer traffic and does not generate it.

Let's say you have a chain of stores and even a marketing department with more than one person. Formally, there are people responsible for traffic. But can we hold a specific marketer accountable for achieving the customer traffic plan? The marketer is interested in meeting the traffic plan, but how is their salary determined, based on what criteria, and does it depend on their performance in this area?

If the marketing department's KPI is partially tied to the sales plan, that might be a good thing. But the goal of marketing isn't to sell, but to generate traffic and create a specific marketing positioning.

What is marketing? The classic definition of marketing is satisfying consumer needs for the company's benefit. To satisfy customer needs, you need to get them into your store first. But if your marketers are getting bonuses for what remains at the bottom of the sales funnel (meeting sales targets), in my opinion, that's not the most effective strategy. Their focus needs to shift to the top of the sales funnel. The marketing department's job is to expand this funnel, bringing as many people as possible into your retail stores. Identify two or three KPIs for your marketing department, and one of them should be meeting your retail traffic targets.

Mistake #5:

The company does not have a marketing budget, or its budget is calculated based on a percentage of the company's revenue (2-3%).

This strategy may have worked in the past, but now you need to focus on more than just a percentage of sales. Today, you need to calculate how much it costs you to attract one customer to your retail stores.

If you have visitor counters and know exactly how many customers entered your stores, then knowing your marketing costs, you can accurately calculate how much the company paid in rubles to attract one visitor to your store.

Knowing your traffic plan, you can calculate how much you need to invest in your marketing budget to attract the exact number of people your business currently requires to meet its sales plan 100%. It would be wrong to allocate, for example, 300,000 rubles, or 2% of turnover, and consider this sufficient for an effective marketing department. If you use the cost of attracting one visitor, you may find that you need not 300,000 rubles, but 400,000 rubles or more. And you must understand the following: the cost of attracting customers to your store will only increase every year.

Many managers might object: "We can't allocate 300,000 rubles or even 200,000 rubles to marketing; that's too much." This means the sales plan needs to be adjusted downwards, selling less but with a higher markup to recoup the company's costs. It might even be necessary to adjust the product offering and change some suppliers.

There are other solutions, but in any case, this is work that won't yield immediate results. For example, you can work with your staff to sell more products per order, which requires increasing conversion and average order value. Then, with the same traffic, you can achieve completely different sales results. But this is also a long-term project. Training managers in sales management and training sales staff in sales techniques are all lengthy processes that stretch out over months, and in some companies, even years.

I have an example of one company whose sales funnel conversion rate was 5,5% at the beginning of our collaboration, but now it averages 12%. It took 10 years to get this figure to this level. But this is a large chain of stores. If you have one or two stores, of course, you can achieve this faster, and you won't need to invest large amounts of money in marketing and customer acquisition. But even in your case, it will still take some time.

What is a marketing budget? These are the resources you invest in your business to achieve the results you want—meeting your sales plan. If you don't provide these resources to your company, it's highly likely you won't achieve the results you need.

The five mistakes we've analyzed in this article illustrate why shoe businesses are experiencing such significant sales problems today. The old business management model is still widely used. Meanwhile, the market is changing rapidly and long requires a new approach to management and marketing.