For shoppers in the store, there are several key steps on the “path to purchase” that a shopper must achieve before an actual purchase takes place.  One is entering the store, a second is traveling physically to the part of the store where that particular product is located, and a third is stopping and engaging with the product.  One part of our functionality is to look at all three of these critical moments, and compare them to actual sales at the register, to help retailers optimize their businesses.

The actual shoppers who enter your place of business in a given time period are called visitors.  Comparing this number to the number of actual transactions at the register (which is not necessarily the same as the number of items purchased because transactions can be for multiple items at a single time) gives you one key metric, which is conversion.  For example, if ten shoppers entered your store in a one-hour period and the cash register rang five times, you’d have a 50% conversion rate for that hour.  Actual conversion rates can vary widely from segment to segment.  Many grocery stores are seeing conversion rates above 90%, while many luxury goods stores see conversion rates below 10%.  Neither is wrong, and both models can be highly successful.

Among store visitors, some percentage of them will pass within physical proximity of the section or product in question.  Those visitors are referred to as traffic.  Traffic is measured by defining a section of the store’s square footage that we and the retailer mutually believe to be close enough that these shoppers have the opportunity to stop and engage with products.  Visitors are called dwells if they stay within the defined zone for a minimum period of time.  The actual dwell time must be defined on a zone-by-zone basis.  For example, if you define an entire aisle of a grocery store as a single zone, then you’ll need a longer dwell threshold because of the time it takes to walk down that aisle.  But if your dwell zone is very tightly defined (like the floor space in front of a single product category), then the definition of dwell time might be only a few seconds.

We can define the zones precisely where the retailer wants, can create as many as the retailer wants, and can set the dwell threshold wherever the retailer chooses.  We also can adjust all these things over time if the retailer changes the store or decides to think about things in a different way.

Now the retailer gets several key metrics in the path to purchase for each section or product.  We can measure engagement, which is the ratio of traffic to dwells, and we can measure traffic conversion (percentage of traffic who purchases this product or from this section) and dwell conversion (percentage of dwells who do the same).

Now there are other metrics the retailer can look at based on these metrics.  For example, most retailers pay attention to profit per square foot, but with these new metrics they can augment that metric with profit per shopper, which is perhaps a better metric of how well each location meets its full potential.