The following is an introduction to the meaning and structure of the term "sales", which many companies regard as the most important indicator (KGI) in running a store.

What is Sales?

The term "Sales" refers to the amount of money obtained from the sale of goods, products, or services that serve the purpose of a company. It is the amount of money received from the purchase of goods. It is also referred to simply as "Revenue".

In other words, sales can be described as "the result of the exchange of customers' money for the store's products.

Factors that makeup Sales

When sales are broken down and analyzed, which are the result of the exchange of customers' money for the store's products, sales can be divided into two main categories:

(1) How many customers exchanged their money for products (= number of purchases)

(2) How much the customer paid for the product to be exchanged (= unit price per customer)

In other words, by breaking down the sales figures, we can find out "how many customers paid how much to exchange money for products, and how much the total amount is".

Please refer to this article if you want to know more about the KPIs that make up sales.

Indicators for Evaluating Sales

In general, two indicators are often used to evaluate sales. One of them is "Sales Budget".

In the store business, achieving the sales budget is an important indicator to achieve the company's profit target.

The budget is usually set based on the past performance of the store and the size of the expected return.

In many cases, a "budget ratio" is calculated from actual sales, and the budget is then used for evaluation.

The second is "period comparison," which targets a specific period of time such as the previous year.

This method evaluates how much sales have increased or decreased compared to a certain period.

It is common to calculate the "period (year-on-year) ratio" from the actual sales and the actual results of the period (previous year) and use it for evaluation.

Although these two evaluation methods are frequently used, there are actually major differences between them.

Please refer to this article if you want to know more about the indicators used to evaluate sales.

Conclusion

On this page, we have introduced the meaning of sales, KPIs that makeup sales, and evaluation indicators.

We hope that it is useful and thank you for reading!