How to Use Retail Analytics to Boost Your Sales
It looks like there is hope for retail companies, as it turns out that many of them are taking advantage of new technology to see what shoppers want. A survey by Alteryx and RetailWire found that 81% of respondents say they gather shopper insights, which can help boost their performance.
The bad news is that many merchants are collecting data, but most of them don’t know how to use it. The study found that only 16% of merchants consider themselves experts when it comes to harnessing the power of their customer’s information, and 60% said they were “getting there.”
Of course, it is much easier to say that you want data-driven decision-making than actually doing so. That’s why we’ve compiled some tips on how to gather and harness the information in your retail business.
Keep reading for some ways to improve your sales operation.
Begin with data-centric tools.
You might be having trouble with your data-centric efforts because you don’t have the right tools for collecting and harnessing information. Or maybe you know how to use them, but not their full potential.
Consider the following:
Point of Sale System
If you’re only using your point of sale system to ring up sales, then there’s a good chance that some essential features are missing. Most modern POS solutions come with reporting tools that can help give insight into the metrics such as profit margins and customer counts.
Looking at sales reports revealed the products and suppliers generating revenue can aid in coming up with a plan for the stock orders accordingly.
Podarok, a hand-made gift retailer in England and Russia, makes sure to analyze their sales data on the POS system to make more informed decisions.
“My favorite feature has to be the sales reports. By day, by month, by period, by the hour, but most importantly, by the supplier,”
“We can predict what will happen next year and therefore plan our staff rosters and product ordering. This saves us a lot of time, and therefore money. We only order what we need and know that will sell. We are also able to order only as much as we need because we can see how much was sold before.”
But there are plenty of great benefits to having the correct data. For example, Dish The Fish is a seafood stall in Beo Crescent Market, and they found that customer feedback surveys helped them provide better service.
UOB conducted a study on the stall’s cash register data and found that they could see what their customers liked, which helped them better serve those people.
“I can see what these customers like, and I can recommend other fish to them. You know what their tastes are like after a while. Sometimes they like it, so that’s good. If they don’t, they will tell me, and I will suggest something else,”
He told UOB.
“This is really where data makes the difference. You know more about your customers and their spending and eating habits, and you can go one step further to build a relationship with them.”
Lastly, your POS records can help you determine the best staffing and operations strategies.
As Rieva Lesonsky, CEO at GrowBiz Media, writes in her article on Small Business Trends:
“You can use information from your POS system and sales receipts to staff your store appropriately or make adjustments to your store hours. For example, if you find that customers rarely come in after 6.30 p.m., consider closing earlier or reducing the number of sales associates on the floor at that time. You can also use this data to plan for seasonal fluctuations in sales, helping you manage cash flow better.”
Many retailers don’t realize that their point-of-sale data is invaluable for understanding the business and customers. So if you haven’t looked at your POS reporting yet, explore it because there are many metrics to analyze.
Email marketing software
Using email to communicate with your customers, you must track open rates and click-throughs. Your marketing software should provide this information, so always examine the data before sending out a message.
While it’s essential to have an open rate, when people are reading your messages, it could help you time your campaigns more effectively. It also enables you to see which subject lines work best to continue using them in the future.
Foot traffic analytics
Many tools are out there to help you track your customers. For example, people counters and beacons can provide customer counts and dwell times.
By using this data, you can find out more about your store’s traffic and the parts of it that are receiving the most attention.
Look at your past data with retail analytics.
Looking back at your past data can better understand what is going on in the present and future. Like many other aspects of life, it’s good to look at previous sales numbers or inventory before making any decisions.
What were your top sellers last season? Who are the customers that spent the most? According to our records from this past year’s sales reports, which suppliers or designers did you carry, and which ones do they like best of all?
Vend is one example of a company that helps retailers do better. Vend has helped businesses like Cream Cornwall, a homeware store in the UK, to use historical data and make smarter decisions.
“We’ve had Vend for over a year, and I love the comparisons in the reporting. It’s beneficial for us to go back and look at high-season and see what we sold, and then plan our orders based on that. It’s invaluable information for a retailer,”
Says co-owner Rebecca Hearne.
See how different metrics are related.
When it comes to an understanding your business’s performance, you can’t just focus on one metric.
The data you collect can provide many insights, but it’s essential to see how different metrics are related. Instead of looking at each report individually, mix and match various pieces deeper.
This is especially true when looking at metrics like transaction counts and foot traffic. While those things are helpful on their own, it’s best to look at them together.
The conversion rate is the number of people who purchase after visiting your store. This metric tells you how many visitors made purchases to those that didn’t, which will give you an idea of what can be improved.
You can get a macro view of how much customers spend in your store by calculating the average order value. This is calculated as total revenue divided by transaction count.
When you have your data, it’s easy to develop new metrics. Just look for other reports or points of information that can help give a complete picture.
Figure out the essential metrics for your business.
It’s hard to know what metrics are relevant for your business because they’re not always the same. Every company is different, so it can be not easy knowing which numbers matter.
It’s not enough to know how much your employees are making; you also need to figure out the critical metrics for success.
If you’re like me, then you’ll want to look at your current priorities and goals. You should also figure out the metrics that will be important for measuring performance.
If you want to increase sales and staff engagement, one thing that may be worth monitoring is the number of sales per associate.
Vend’s powerful analytics features help you visualize and analyze all of your data in various ways. You can set up any report the way that works best for you, from filtering by POS or retail management system to changing timeframes.
Get Insights on what your customers will buy next.
Timing is critical when it comes to data. If you’re doing some analysis and then realize that the data was incorrect or outdated, there’s no point in looking at anything else.
The time of day can provide insights into what a customer might buy next. A study conducted by the University of Texas at Austin showed that customers are most likely to purchase products on their way out or after they’ve completed another transaction.
Let’s say you’re a baby clothes retailer and just sold some stuff to someone with an infant. You can use that data to predict what they’ll need in the future, so when their son is six months old or one year old, for example, you know exactly which products are best suited for them.
Enfagrow does this well. When moms sign up for their mailing list, they collect information about a child’s due date or age and then send them samples in advance.
For example, if a child is five years old and has no prior interactions with the company, they will receive information about different age-appropriate toys. However, if that same person interacted with an email campaign at seven or eight, emails would be more tailored to their tastes.
If you’re not sure what to do with your child, check out this email sent by a mom whose son is around 21 months old.
Enfagrow has a ton of helpful advice for parents in their emails. It’s not just about the product recommendations; they also have tips on dealing with toddlers.
Encourage your customers to give feedback and share their opinions.
You have to be careful when gathering data on shoppers and sales. You don’t want people thinking you are just a creepy company that doesn’t care about them.
To get the most out of your data collection efforts, you need to have customers participate in it. Have them share their opinions and research methods with you.
Having this type of conversation builds a stronger relationship with your sales team and helps to increase trust.
It’s hard to know what people want if you’re not asking them. When customers feel like they are part of the process, they’ll be more inclined to give feedback and share their opinions with other shoppers.
The best way to collect shopper data is dependent on your store and customers. Some stores can get by with a chat-based survey, while others need something complex.
Other retailers are trying new things to find out more about their customers. Sephora, for example, is using iPads and other technology at its South Coast Plaza Mall location.
Sephora uses tablets to provide quizzes for shoppers that will help them find the best product.
Analyze online and offline data to get a complete picture of your customers.
If you want to get the complete picture of your customers, then analyze online and offline data together. Modern consumers use multiple channels on their path to purchase, so if you’re storing and analyzing information in silos, there’s a chance that specific insights will be missed.
Barneys is a great example of how brick-and-mortar and online retailing can work together. Matthew Woolsey, Barneys’ executive vice president for digital, told the Washington Post that by looking at offline and online customer behaviors, they could see which customers had previously browsed their website for jewelry before coming into one of their stores.
Barneys just started using data from their website, but that didn’t work because they did not completely understand where people shopped and what kind of products they purchased.
Combine your business data with human insight.
Computers and algorithms are not the only things that matter when making decisions about your business. It would help if you always considered human insights.
You can get all the numbers you need from your analytics and reporting programs, but make sure to ask for feedback on what they’re seeing in person.
Stitch Fix is a company that employs both algorithms and human stylists to make recommendations about your style.
Stitch Fix is a service that collects feedback from its members to make recommendations on the type of clothing they might like. However, human stylists ultimately decide what clothes people will wear.
As a data-driven business, we need to balance our analytics with the human factor to grow.
It could be that you need to refresh your product assortment or get your associates on board with the company’s sales strategy. Whatever it is, talk about what changes are required and seek input from them.
If you want to make it in the retail industry, don’t be afraid of investing time and effort into data collection. It may take some work at first, but once you’ve got your systems set up and know how to use them, all that hard work will pay off.