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How Footfall Counting Can Benefit A Retail Business

Consumer businesses are increasingly investing in technology to create a competitive advantage – and the usage of footfall counting software has become progressively more mainstream in recent years. But why is it important to count? How accurate is it? And how can the data be used?

What is the purpose of footfall counting?

The key purpose of footfall counting (also known as traffic counting or people counting software is to identify your potential opportunity. Sales shows you what you achieved and footfall counting shows you what was left off the table. It puts the sales performance in context. By counting people, it simplifies and brings facts to discussions around location performance.

Once you have a view of this core metric in this context, you can understand your potential to improve – as the saying goes, “what gets measured gets done.”

Once traffic counting is combined with transaction data, the key KPI that can be created is Conversion Rate (CR). This KPI for retail stores is the defining metric, telling you how many customers you converted to sales and by tracking this over time you begin to see where you can improve.

Accuracy

Accountants get quite hung up, quite rightly so, if the balance sheet isn’t accurate  (even if it’s a fraction off). If the numbers don’t add up precisely for them, it becomes a question of how many errors exist in the numbers, which areas are good and not so good and how to decide which areas to address. For retailers it should be the same when discussing sales; traffic counting and conversion rate.

The threshold where this becomes stable is 95%, as per the example illustrations. However, 95% is a much banded around number in the industry. 95% accuracy needs to apply to the system and not just the camera or any other counting device selected. As a retailer, you work with the system output and not just that of a specific device. It is also key that the accuracy is maintained in your environment and not only at the point of installation or in a lab environment. Ensuring a continual monitoring system of any counting device is critical to ensure your system points you at the key areas for improvement and learning.

Shopper Groups & Individuals

Another factor to consider is how many people who enter your store are an actual buying opportunity? For example, in a dollar store perhaps you can consider everyone as a buying opportunity, but in a cell phone store it is more likely that a family will come in together and only purchase one device at a time. Imagine the impact on CR between these two approaches. In the cell phone store scenario, if we were counting individuals then achieving 100% CR would be almost impossible. Understanding our chosen approach at the outset and having the ability to cater for this is key.

Reporting software

People counting systems collect data and ultimately should provide this back for operational uses. There are many ways this happens; in some cases it’s simply static excel spreadsheets, others have complex internal Data Warehouses or internal BI tools. The truth is, the systems should present the data back to retailers in a format which is simple and actionable. Store Managers are not Data Analysts; they are operational folk who, by their nature, live in the moment to attend to customers’ needs in-store. Choosing a system which supports this need keeps their focus, perhaps even having an app that puts the data in their hands on the shop floor in a simple format is key. Ultimately, if it’s easy for them to use and doesn’t come with a debate about its legitimacy on accuracy then it’s more likely to be a sound investment and lead your business to new levels of performance.

If you found this post useful, we have more information on footfall counting that further explores its benefits and uses.