Maximizing Sales
There is a tried and tested formula for planning store sales. Here’s Martec’s extended version to include online.
Sales = Traffic x conversion rate x average transaction size – returns
You could have two versions of this, one for stores and one for online, so that some inputs don’t get muddled.Traffic is the number of shoppers that enter the store or the number of visitors to the web site.
Conversion rate is the % of shoppers or site visitors that buy something. The online percentage might be a lot lower than the store percentage, one reason for splitting the calculations.
The average transaction size (money) may be bigger online, especially if delivery is free over a certain value.
Returns is a money value and will definitely be different online to store. In fact, it is helpful to track the BOPIS returns to store separately from online returns to warehouse, and separately from returns of store sales to BOPIS sales.There are 4 ways you can grow sales:
- Increase traffic
- Increase conversion rate
- Increase average transaction size
- Reduce returns
With this framework you can now examine all the components in detail and implement strategies to improve each component part. Using this model makes the whole task of growing sales easier and more manageable to tackle.
You can read a longer version of this minute with more detailed insight at Retail and Consumer Goods Industry WIKI and EPSS, if you or your company have a licence.
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Posted by Brian Hume
5th April 2024
