Driving Success Through Conversion Rates: A Guide for Cannabis RetailersAug 21, 2023
Are you a cannabis retailer wondering about the importance of tracking your conversion rate? Look no further – this blog will delve into the depths of this seemingly simple metric to unveil insights, shape strategies, and elevate your business's success. Whether you're a retailer or a brand, you'll leave with actionable tactics to optimize your conversion rates and bolster your profits.
Do You Have to Track Your Conversion KPI as a Retailer?
Approach any thriving traditional retailer and inquire about their tracking of conversion rates – you'll receive a resounding yes. However, did you know that historically, retail cannabis stores haven't been keen on monitoring their conversion?
You might wonder why. Although tracking a retail store's conversion rate might seem like a basic Key Performance Indicator (KPI), the legalization of cannabis led retailers to assume that every customer would leave with a purchase. Making retailers feel exempt from intense conversion rate scrutiny, this assumption is now under the magnifying glass.
The reality is that the cannabis retail landscape has matured, characterized by increased store density and shifts in product differentiation strategies. This has brought missed opportunities into sharper focus more than ever.
Your conversion rate, in this context, serves as a revealing tool to identify untapped potential and strategize for turning it into sales.
So yes, you really do need to track your conversion as a cannabis retail store.
Missed Opportunities Revealed Using Conversion Rate
Conversion rates don’t just reflect the efficiency of a sales team in connecting customers with the right products; they also reveal the shadowy realm of missed opportunities arising from assortment and sales strategies.
By analyzing conversion rates, cannabis retail managers can gain insights into the success of their store layout, merchandising, and marketing efforts, as well as inventory assortment and customer preferences. This wealth of information spawns action and transformation.
Your store's conversion rate is a multifaceted metric that influences various aspects of your business. It's not only a valuable tool for your merchandising and inventory teams but also an indicator that guides your purchasing team.
How to Calculate Conversion Rate
Before we plunge into the intricacies, as a retailer, you will need a reliable way to measure accurate customer traffic. Employing foot traffic counters will make sure you are using accurate data.
The calculation process is straightforward – simply divide the number of successful transactions by the total count of customers who entered your store during a specific timeframe.
Simple Conversion Rate Formula
Conversion Rate = (Number of Transactions ÷ Total Traffic) x 100
For instance, if a thousand people entered your store and forty made purchases, the conversion rate would be (40 ÷ 1000) x 100 = 4%.
While conversion rates can be measured over varying intervals, daily tracking is very effective and aligns with our recommended practice for clients.
It is important to note that conversion rates can differ based on factors such as foot traffic intensity, overhead costs, and inventory size. Smaller stores might naturally exhibit lower conversion rates compared to their larger counterparts.
Keeping in mind the nature of a location will also help you better understand what your data. For example, a shopping mall may witness a different conversion rate than a street store due to the difference in casual walk-by traffic.
What is a ‘Good’ Conversion Rate?
At Vetrina Group, we love data to benchmark conversion rates against industry standards. It allows our clients to make informed choices.
We recommend a conversion rate ranging between 20% and 40% for our clients. Multi-store operators often attain higher conversions.
If your conversion rate dips below 15%, it serves as an early signal that strategic interventions are required to elevate your conversion performance. Source: Headset data
How to Increase Conversion Rate: Tips for Retailers and Brands
In the quest to boost conversion rates, both retailers and brands hold the keys to transforming their cannabis retail landscapes. Here are some tactics we work on with our clients:
- Empower Staff through Training: Well-trained teams have the power to drive sales. Robust retail sales and customer experience training equip employees to leave a lasting impression. Training should include:
- The Art of Greeting: A warm and sincere welcome sets a positive tone for customers' in-store experiences, fostering a sense of value and connection.
- Speedy Engagement: Quick responses to customer queries and attentive assistance demonstrate commitment to customer satisfaction.
- Implement Cross-Selling and Upselling Techniques: Cross-selling involves suggesting related products that complement what the customer is already purchasing or looking for.
- Conversion Awareness through Coach-In Meetings: The conversion rate is a straightforward ratio for your team to grasp and tackle, especially if it's tracked and shared daily. It also can lead to great insights as your team is likely to provide feedback in real-time. We encourage our clients to use Coach-In meetings to:
- Role-play scenarios that enable staff to refine their skills
- Identify products responsible for missed opportunities
- Share insights with the merchandising team
- Elevate In-Store Appearance: Merchandising and store layout play a significant role in conversion rates. The visual appeal of a store will influence your customer experiences. A well-designed and inviting space encourages customers to stay longer and make purchases. Strategically positioned products, menus, and displays contribute to sell-through, education, and conversion.
- Matching Inventory with Demand: Ensure optimal stock levels and prevent shortages. By mastering your inventory you are going to boost customer satisfaction, contributing to higher conversion rates. A great start is using an Inventory Funnel, which is a decision-making tool that helps retailers and brands determine the right assortment and investment in their inventory.
- Tackling Shortages Strategically: Prepare for product shortages by offering suitable alternatives to ensure that missed opportunities don't translate into lost sales. This will be an important part of helping your team cross-sell and will help your customers walk out happy.
- Leverage Data-Driven Insights: Utilize data analytics to identify trends and patterns in customer behaviour. This can help you understand which products are popular, which areas of your store receive the most foot traffic, and how customers navigate through your store. By leveraging this information, you can optimize your store layout and product placement to increase the likelihood of conversions.
- Support Merchandising: Offer retailers eye-catching visual merchandising displays to go alongside new product releases, promotions, and seasonal SKUs to enhance in-store appearance.
- Strategizing for Shortages: Support your retailers by keeping them informed of possible changes in product availability and offering insights or exciting product updates to keep their team engaged and suggesting your brand.
- Provide Ordering Insights: Create tailored ordering recommendations based on store size and location. These insights guide retailers in evading over-ordering pitfalls.
By harnessing these strategies, cannabis retailers and brands can propel their conversion rates and chart a course toward an enriched retail experience and increased profits.
Remember, conversion rates are a helpful tool, but they're just one part of a successful retail strategy. Crafting personalized experiences, amassing product knowledge, managing inventory, and nurturing customer relationships are equally pivotal.
If this blog has ignited an urge to track and lift your conversion rates, be sure to subscribe to our newsletter. We help cannabis retailers and brands alike achieve and sustain profitability.
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