The following is an introduction to the meaning and structure of the term "purchasing rate," a KPI that is directly related to the number of purchases that increase or decrease sales.

What is Purchase Rate?

The purchase rate is a measure of the percentage of customers who visit a store and make a purchase. At times it's also referred to as conversion rate.

Factors that make up the purchasing rate

The purchasing rate is comprised of the following two KPIs

(1) The number of customers who visited the store (Traffic)

(2) Number of times customers exchanged money for products (= number of purchases)

The purchase rate is expressed as a ratio because it is an indicator of the percentage of customers who visited the store and made a purchase.

How to evaluate the purchasing rate

We are rarely asked, "What is the appropriate purchase rate? This question varies greatly depending on the type of store and where the KGI (most important indicator) goal is set.

If the KGI is "sales," the goal of most stores would be "achieving the sales budget”.

When creating a plan to achieve the sales budget (KGI), you may first consider "how many customers (number of purchases)" and "how much (price per customer)" a store needs to sell to reach the goal.

Since the purchase rate is a KPI related to how many customers you need to sell to achieve a store budget, it is used when considering how to get the number of purchases needed to achieve a store sales budget.

For example, if the sales budget is 1,000,000 yen and the unit price per customer in the same period last year was 10,000 yen and the same level is expected for this fiscal year, 100 purchases are needed to achieve the sales budget.

If the number of customers visiting the store during the same period last year was 1,000 and the same number of customers are expected to visit the store this year, the sales budget can be achieved if the purchase rate is 10% or higher.

In this way, instead of considering an appropriate purchase rate, you can set a purchase rate target as "a standard necessary to achieve the target", which makes it possible to set and evaluate targets tailored to your store.

Conclusion

The purchase rate is an indicator of the number of purchases that are closely related to sales, and it is a useful indicator that can be used to evaluate how to achieve your goals (sales budget).

We hope this article will provide you with some hints to help you achieve your goals. Thank you for reading!