And that’s no great surprise – it’s the fairy tale of overlooked potential that probably every aspiring actress, musician, soccer dad and career-minded employee clings to. Among the recent articles on the New York Knicks’ phenom, was one from Bloomberg about how several small-time basketball statistic geeks say they saw “Linsanity” coming. Using obscure metrics such as the “RSB40,” a combined score of rebounds, steals, and blocks per 40 minutes, analysts at blogs such as Hoops Analyst claim they predicted back in 2010 that Lin had the potential to be a star.
Interestingly, the Bloomberg story notes that it wasn’t just a problem of general managers going with their guts (and in being an American-Asian kid from Harvard, Lin was obviously fighting a *lot* of professional bias), but more that the GMs were looking at the wrong data.
“They’re looking at how well [players] can bench press, and I’m not really sure that’s relevant,” sports economist David Berri of Southern Utah University was quoted as saying. Store traffic analyst Mark Ryski makes a similar claim about retail managers in his new book, Conversion: The Last Great Retail Metric. POS and other sales tracking systems mean store managers now have a huge pool of data to base their decisions on, but few of them look at conversion, in part because it’s historically been hard to track.
That, according to Ryski, has left most store managers operating in the dark. Without traffic and conversion analytics, he says, you can’t really know how effective an advertising campaign has been, whether staff is optimally deployed, whether your merchandising is right or even if your sales associates are performing well.
In place of the context offered by conversion and traffic analysis, most managers rely on sales transaction data. But the till will tell you only about successful sales. It won’t tell you what sales were lost. For example, if sales are down 5 percent compared to the previous year but conversion is up 15 percent, you’re sales people are actually performing like rock stars. But it also means you may sorely need to drive traffic into the store, most probably with a big investment in advertising.
“Traffic defines the sales opportunity size. Good or bad performance has to be looked at in the light of traffic opportunity. Generally (staff) don’t control traffic, but they do control what they do with it,” Ryski says
Conversely, some stores have ample traffic but need to improve conversion rates. This could mean more staff hours, better training to sharpen the staff’s upselling or cross selling, or perhaps an inventory re-set. Some stores have multiple issues and need to address a combination of these things.
In short, conversion is the best measure of retail performance as it is gauges performance (conversion) against opportunity (traffic), Ryski argues.
But like Lin’s end-to-end coverage, it’s an important metric too many managers are ignoring, confident that their instincts are giving them the true story of what’s happening on the sales floor.
Traffic counters aren’t particularly expensive, starting at about $200 for a basic beam model, says Ryski, although cleaning up the data does take some time. He sternly advises against trying to do a manual count.