A retailer has three key equations available to them, which can be manipulated to increase turnover. The three equations are conversion rate, average transaction value and frequency of purchase rate. Each of the equations can feed into one another, creating a multiplier effect, when you start to improve the performance of one of them.

Each of the equations is explained further below. The factors that influence its performance are covered in subsequent worksheets “Attracting Customers”, “Converting Customers” and “Engaging or Retaining Customers”.

“We visit many businesses who consider their number one challenge to be low footfall, or customers through the door. After inspecting the business, we invariably find they could significantly improve their conversation rate, increasing turnover without the need for more customers”
 

Average Transaction Value: The average transaction value, is the average amount of money a customer spends in a single transaction. It is calculated by dividing the total daily revenue (sales) by the number of purchases or transactions in the same period. For instance: Today we served 10 customers, and made a total of £200. Our average transaction value is therefore £20. Total Sales Value / Transactions = Average Transaction / Value If through better merchandising, displays and sales skills we were able to increase this to £25, my total sales value would increase by 25% to £250.

In simple terms we are trying to get our customers to spend more money than they usually do. A popular way to achieve this is with impulse purchases.

Supermarkets do this with tasty treats at the counter. Alternatively, accessorising encourages purchases of complimentary products, for example “Would you like batteries to go with that toy?”.

Conversion Rate: Conversion Rate is the percentage of customers that actually buy from you in a given period. For instance, if my store had 10 customers come through it today, and 2 of them purchased something, my conversion rate would be 20%.

If through better layout, display and sales skills I was able to increase this to 4 people out of 10. My conversion rate would increase from 20% to 40% and my turnover would double!


Selling more to Customers already buying from you is the easiest way to increase your turnover.