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Friday, June 8, 2012

Conversion Rate

Conversion Rate

Basically speaking, conversion rate is a measure of how well you can turn your people who are “Just looking” into customers. In a convenience store, the conversion rate is close to 100%. Most people who enter a convenience store or discount retailer have at least one purchase in mind when they come through the door. For these stores, conversion isn’t the goal. The idea there is to increase sales through the sale of “Impulse Items”.

There are many ways of turning a “Just Looking” browser into a customer. One of the best and most effective ways is by providing the information they need to make a decision. In many cases those who are just looking are really planning to buy sometime; maybe not today, but sometime in the future. However, if the business can provide that customer with an incentive to purchase now rather than in the future then, oftentimes, the browser will become a customer.

One of the best ways to prepare for a customer is to have ample product knowledge. If you can provide the customer with all the information he needs to make a decision, you have made his job easier. And, as an added bonus, once he makes the purchase he is less likely to experience buyer’s remorse if he has ample product knowledge before he makes the purchase.

When a browser says, “This is too expensive” he may really be saying, “Tell me how to make it more affordable.” He might also be saying “Are you out of your cotton-pickin’ mind?”

In small ticket retail the best way to convert a customer is through proper merchandising. Provide an attractive display that isn’t crowded with a lot of other things that make a distraction. Place complementary items close by and try to take advantage of cross promotion.

McDonalds learned a long time ago that one of the best ways to get people to purchase something in addition to the item they have chosen is to suggest. “Would you like fries with that?” If someone is purchasing a snack, offer them a cold drink. If you are selling a car, you would offer them an extended service plan. If someone is purchasing a coat, suggest a hat. The list is endless.

When working behind the counter at a convenience store, I experimented with suggested sales. I found that by suggesting the purchase of lottery tickets that sales increased. However, I found that suggesting a specific lottery ticket increased the conversion rate substantially. “There are five more big prizes left on Break the Bank. You can buy one for only $2.” Sometimes people would get all the way home and then come back to buy that ticket.

Can you think of a time when a suggestion encouraged you to make a purchase?

The opinions or advice listed in this blog or website should be used as a place to start only. It is not a substitute for the use of a professional.
Please be sure to consult your attorney and/or accountant with any specific questions.
There is no one right answer to any business question that will cover all circumstances.
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