Definition
Many companies treat "Sales" as their most important indicator (KGI) for running a store. Here's what the term means and what it's made up of.
Sales is the amount of money a company receives from selling goods, products, or services — the money that comes in when a customer buys something. Also referred to simply as Revenue.
In other words, Sales is the result of exchanging a store's products for customers' money.
Breaking Sales down, it splits into 2 factors:
How many customers exchanged money for products (= Transactions)
How much each customer paid for what they bought (= Average Purchase)
Breaking Sales down this way tells you how many customers paid how much, and how that adds up to your total.
Formula
Formula: Sales = Transactions × Average Purchase
Why it matters
Sales is typically evaluated using 2 indicators: Sales Budget and Period Comparison. See the article below for how to use each one.
Indicators to Evaluate Sales
The "Budget Ratio" and "Period Ratio" used to evaluate sales.
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