Small Tip Big Click

Understanding the Customer Behavior

It is surprising how little we know about the behavior of customers.

·         How frequently do customers visit your stores? (Frequency of Visit)

·         What proportion of the people visiting your store makes a purchase? (Conversion Ratio)

The answers to these two questions combined with sales data, would enable us to tackle some important issues of micro-marketing, including the following:

·         How much does the average customer spend with us, and what is the share of her or his spend on the products you sell? (Share of Storage)

·         What proportion of your target customer population is actually coming to your store to shop? (Penetration Rate)

·         Why is this store underperforming?

o   It is because the local selling and merchandise management are underachieving?

o   Or does the store location get less traffic than do others?

By measuring share of storage, penetration ratio and traffic, we can better understand the degree to which the key improves sales and profitability lies on “selling more to existing customers” or in “attracting more customers”.

These alternatives demand radically different priorities:

·         Selling more to existing customers – which should be a priority if your share of storage is low – focus on

o   Increasing the conversion ratio

o   Raising the size of the average sales transaction

§  More items for transaction

§  Higher average selling price

·         Attracting more customers – which should be priority if your penetration rate is low – focus on

o   Advertising to drive traffic and enhance your image.

o   Real estate – to locate your stores in spots most likely to draw high numbers of visitors.

The Panelli & Fassina Micro-Marketing tools help you understand how your customer’s expenses can strongly affect in an effective way your actions to increase sales and profitability.

Until next-“Small Tip Big Click”