3 Ways to Use Data to Increase Basket Size

Retail legend has it that in the early ’90s, a savvy store manager discovered that placing beer displays near the diaper section was a surefire way to increase sales. Why? Because dads whose wives sent them on diaper runs liked to pick up a few cold ones before heading home.
The real story behind that tale turned out to be somewhat different, but it underlined an important point: The psychology behind customer purchases is a great predictor of future behavior. It’s also essential in order to increase engagement and sales.

Working With the Numbers

Retailers use units per transaction (UPT) — the average number of items purchased on a single visit to the store — as a key performance indicator. Companies use UPT to measure their sales volumes, evaluate the sales staff’s performance, and determine whether a promotional event was successful.
Most companies rely on two proven methods for improving their UPT. The first is training sales associates to establish trust with customers and advise them on purchases. This increases opportunities for upselling or introducing new products.
The second is offering bundled sales — packaging complementary products together for one price, such as phones and phone cases. This works especially well for goods that are difficult to market as standalone items.
But could there be an even better way?

The Time for Tech

Behavioral and location tracking technologies offer an alternative. The method provides precise data on customer behavior that can be analyzed to increase UPT. Global system for mobile (GSM) tracking, in particular, helps businesses identify their most popular sections and use that information to enhance their overall operations.

Here are three ways retailers can use data tracking to boost their UPT:  

1.      Strategize future offers. Until recently, stores could only access customer behavior from point-of-sale information, which is collected after shoppers make their purchases. (This type of data drove the beer and diapers study.) Now, retailers can analyze traffic in real time and see what draws consumer interest. That data can inform product placement and make for more effective promotions.
2.      Cross-sell in complementary departments. Tracking technology enables retailers to monitor traffic and conversion rates for departments and entire stores. They can then ensure neighboring zones complement one another, thereby maximizing cross-sale opportunities.
3.      Keep customers in the store. If the layout changes often enough that customers can’t whip through the aisles on autopilot, they end up spending more time in the store — which usually results in a higher final item count. Simulators and analytics show retailers optimal floor plans. They can even give you a clue as to which departments can be moved to improve the customer experience.
Companies can use big data to make products more accessible and ensure customers are consistently purchasing in higher numbers. UPT is a key indicator of retail health, and technology-driven strategies can help retailers go the distance and be more competitive.

Roberto Ugo is co-founder and CTO of Movvo, an innovative platform that measures the flow of people in physical spaces and helps retailers enhance customers’ shopping experiences. Ugo specialized in business data networks and e-commerce at Boston University and the University of the West of Scotland and has an international background in engineering and computer sciences. Movvo won the first MIT Portugal Venture Competition and has offices in Portugal, Boston, and Silicon Valley.