You know your rent, your monthly payroll and maybe even your electric bill off the top of your head, but if you can’t tell me these three numbers, you’re not making as much money as you could be. Stop missing out! Here’s what you must be tracking if you want to make a significant impact on your financial future.
Units per Transaction
Your units per transaction, or UPT, is the average number of items your customers are purchasing per sale for a given period of time. You can monitor this on a daily basis, over a longer period, by individual locations or even by employee. (That last one is where you’ll see the most success long term.)
To figure out your UPT, pull the number of items you’ve sold and divide it by the number of transactions for a given period. To get a sense of your current situation look at the last 30 days. If you sold 1,800 items between 600 transactions over the last 30 days your store would have a UPT of 3. (1,800 ÷ 600 = 3).
If Jenny sold 200 items last week in 75 transactions, her UPT would be 2.66. If Christina sold 350 items that same week in 100 transactions, her UPT would be 3.5.
If you don’t track transactions by employee, start today. Knowing what a team member’s UPT is will help you establish goals to set them up for success. If Jenny can commit to getting every person to bring three items to the register, increasing her UPT to 3 seems achievable. Since Christina seems more confident selling, you could make her UPT goal higher, like 5.
Analyzing revenue by breaking it down by average sale makes the task of making more money manageable. To figure out your average sale, take the total dollar amount sold divided by the total number of sales transactions for a given period. If you sold $50,000 last month and had 1,800 transactions, your average sale is $27.77.
If your team were trained and motivated to get customers to buy just one more item, you’d see a spike in your average sale. Using the 1,800 transactions a month example, adding $10 to every sale is another $18,000 a month —or an increase of $216,000 a year!
Through working with your team on increasing their UPT and having them add-ons more $10 dog toys, poop bags or bully sticks, you will increase your average sale in your retail store.
Have a grooming salon? Try this: Let’s say you groom 200 dogs a month, and you were able to get each client to add on a $6 teeth brushing. That’s $1,200 a month just by asking one simple question.
Knowing the number of potential customers who come to your store versus the actual number who leave with a purchase provides insights on a variety of key factors, like how well you show and sell or whether you’re selling what they want and need. But before you can analyze that, start by tracking your conversion rate.
To figure this out, count the number of people who walk in or if you’re a service-based business with appointments, track how many people call or inquire. This is called “footfall.” Take the total transactions sold divided by your footfall during a given time, and you’ll have your conversion rate.
You can’t grow what you don’t measure. Start tracking to be fast on your way to higher revenue.
Let’s say last week your business saw 2,000 footfalls, had 200 transactions at the register, which totaled sales of $5,500. That would make last week’s conversion rate 10 percent (200/2,000 = 0.10). However, this week your store saw 2,500 footfalls, and over 220 transactions, which totaled sales of $6,300.
If you’re looking only at sales, then you would think you had a better week. But if you look at your conversion, you only converted 8.8 percent of the browsers to buyers. If you were able to convert 10 percent as you did the week before, you would have seen an extra $700 in sales or more depending on your average sale, so technically you were down.
You can’t grow what you don’t measure. Start tracking your employee’s UPT, improve your average sale and convert more browsers into buyers to be fast on your way to significantly higher revenue this year!
This article originally appeared in the May-June 2017 edition of PETS+.