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Retail Funnel & Path Metrics

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Retail Funnel & Path

Metrics


Metrics that can be used to track and improve the effectiveness of systems tasked with moving customers from an initial inquiry to a repeat purchase.

In the November/December 2021 edition of Furniture World we took a close look at the four “funnels” customers pass through during their purchase experience (see www.furninfo.com/furniture-world-articles/3962). They often start in the first of these funnels, the virtual funnel where they reach out before visiting a physical store. Once they arrive at a brick-and-mortar location, they enter the physical funnel. Provided a sale is made there, they enter the open sales funnel where they can remain for a short or (now during the pandemic) a long time. Following a successful delivery or pick-up, customers proceed to the post-sale funnel. The purpose of the post-sale funnel is to invite customers to enter back into the virtual and physical lead funnels where repeat business can be generated.

In this article, I will discuss metrics that can be used to track and improve effectiveness when customers enter each of the four funnels.

Virtual Lead Funnel Metrics

Lead source. This simple metric tracks the ways customers make pre-sales inquiries. It measures the percentage of telephone, chat, text, email, webform, appointment request, social media and lead gen CTA (call-to-action) quizzes.

Conversion rate. Calculated by measuring the number of sales made virtually divided by the number of leads, conversion rate provides a measure of how well retail teams perform when selling remotely.

Average sale of virtual leads. This is a measurement of the typical value of converting a prospect online. Typically, average e-commerce sales are lower than the in-person average sales..

Improving the experiences of customers who are waiting for products to be delivered is important for most furniture retailers in the current business environment.

Number of appointments made from virtual leads. A critical number to track since appointment sales are proven to yield better close rates and higher average tickets. Appointments present retailers with opportunities to deliver superior customer experiences, in part because preparation is possible.

Conversion rate inclusive of appointments made. This metric considers appointments made and virtual sales, together. It’s an indicator of the success rate when customers move from the first to the second funnel, calculated as the sum of the number of sales made virtually and sales made by appointment, divided by the number of leads.

Physical Lead Funnel Metrics

Physical lead funnel metrics are the most common sales metrics tracked by furniture retailers. I suggest that these metrics be adapted to track leads received from at least three sources: appointments, repeat customers and new customers.

Close rate by appointments from virtual leads. This close rate equals the number of sales from virtual leads closed divided by the number of opportunities times 100. It tracks the average chance of converting an appointment prospect into a sold customer. It is among the highest close rates for most furniture retailers, comparable to close rates for house calls, typically in the 90-100 percent close-rate range.

This new metric will help you to get a handle on how much your teams are actually following up. It is calculated as the number of follow-ups (emails, texts, phone calls) divided by total customers with open sales.

Close rate for repeat customers. Provided information on known customers is already available in your CRM system, measuring this close rate allows you to determine how well your store develops long-term relationships. The better your close rate for repeat customers is the less you may need to spend on advertising.

Close rate for new customers. This metric provides a measure of how adept you are at converting on first impressions.

Overall close rate. You will likely find that if you track and improve the number of opportunities from both appointment customers and repeat customers, your overall close rate will also grow.

Average sale. Track average sales from all three sources: virtual leads, repeat customers and new customers. The calculation is sales dollars divided by the number of successful sales. The highest average sale numbers will normally result from appointments and repeat customers.

Sales per guest. Consider appointment customers, repeat customers, and new customers when calculating sales per guest. This will provide further evidence of the power of making connections with people. If you improve systems to maximize flow of virtual leads into the physical lead funnel you will produce more sales volume with less customer traffic.

Sales efficiency rate. This metric is measured by adding your close rate to your no-sale capture rate for follow-up. Here’s an example. Let’s say your store greets 10 shoppers. If three buy, four give you their contact information for follow-up and the remaining three leave without providing any contact information, your efficiency rate is 70 percent.

 

Open Sales Funnel Metrics

The open sales funnel has ballooned in the past two years due to supply chain disruptions. It is, therefore, very important to manage and track customers who enter this funnel. Improving the experiences of customers who are waiting for products to be delivered is important for most furniture retailers in the current business environment.

Cancellation rate. This is the number of sales that exit the open sales funnel in the wrong direction. Follow this metric by measuring the number of cancellations divided by the number of sales written over a period of time. Presently, retailers are reporting this number to be one percent at the low end to ten percent or more at the high end of the spectrum. I’ve mentioned in many Furniture World articles, and I will say it again: “If it is worth improving, start by tracking.”

Number of follow-ups per open sales. This new metric will help you to get a handle on how much your teams are following up. It is calculated as the number of follow-ups (emails, texts, phone calls) divided by total customers with open sales. Remember that proactive, routine follow-up on open sales, even if there is nothing new to report, delivers a better customer experience. With the large number of customers requiring follow-up right now, and many salespeople to manage, good systems can help to facilitate appropriate follow-up scheduling. These systems should notify salespeople or order management personnel when a customer needs to be contacted by text, email or phone.

Delivery failure rate. This metric tracks how many customers are dissatisfied. Dissatisfied customers often enter a different type of funnel—the open service funnel. These customers may become brand detractors if not handled correctly. Collecting metrics on why failures happen helps retail organizations improve customer experiences.

Net Promoter Score (NPS). NPS is a popular way of surveying customer satisfaction. Measured on a scale of 1-10, it measures whether a customer is likely to be a promoter of your business or a detractor. An example of a common NPS question asked is, “How likely is it that you would recommend us to a friend or family member from 1-10, and why?” Asking these types of questions just after delivery yields useful information and actionable insight into the quality of your sales cycle.

Post-Delivery Funnel Metrics

Past purchase engagement rate. If you schedule past purchase follow-up, via email, for example, you can track the resulting opens and click-through rates of your campaigns.

Next purchase engagement rate. Retailers that collect information on the timing of customers’ likely next projects can send out emails that include a link to a digital appointment calendar. As with past purchase follow-up emails, opens and clicks should be observed.

Known customer website visits. It’s useful to measure known contacts that are visiting your website. These include customers who have shopped with you before and left behind a digital email tracking signature. If a known contact visits your site, you can alert the salesperson they worked with previously to follow up. Regardless of how you use this info, you want to grow total website visitors as well as the proportion of known contacts to all contacts. See the chart on the previous page where blue depicts “all contacts” and the green depicts “known contacts.”

It’s useful to measure known contacts that are visiting your website.
These include customers who have shopped with you before and left behind a digital email tracking signature.”

Repeat customer leads. Whether they are virtual or physical, when a past purchaser or shopper who left without buying reaches out to you again, they leave the post-delivery funnel and re-enter either the virtual or physical lead funnel. The percentage of these shoppers is a good measure of your customer experience and re-marketing performance.

The Future of Furniture Retail

Using customer engagement tools such as funnels combined with automation is the future of furniture retail for those businesses who want to get ahead of their competitors. We live in a time when, for the majority of furniture retailers, there is a problem with a lack of human resources.

The solution to better manage the retail customer experience is technology. In the next issue of Furniture World, we will show how retailers can use automation to connect with all their contacts (prospects, customers, vendors, new hire candidates, and employees) so that more can be accomplished with fewer resources.

 


 

 

About David McMahon 
David McMahon is founder of PerformNOW Inc.  PerformNOW has three main products that help home furnishings businesses improve and innovate: Performance Groups (Owners, Sales managers, Operations), PerformNOW CXM (Customer eXperience Management systems and processes), Furniture business consulting.  Your can reach David at david@performnow.com.