[Lesson 1] Sales Effectiveness

Get a clear picture of your store’s performance and sharpen your competitive edge with the right sales data. Follow along with the worksheet and calculations below. Before you begin, be sure that you have access to your store's POS data.

  • Average daily transactions is a fundamental metric that tells you how many sales you should shoot for each day.
    You can use it to evaluate in-store marketing strategies, customer service, and employee performance.
    When tracked according to specific time periods, it is also a good indicator of how busy your store is expected to be, so you can make staffing decisions.

    How To Calculate Average Daily Transactions (Over 1 Year):

    Divide the total number of transactions you performed in one year by the *working* days in one year
    EXAMPLE: 12,000 / 355 = 33.8 transactions per day
    NOTE: exclude days that you were not in operation. If you are closed on all major public holidays, there are 355 working days. Use this calculator if your store's schedule is unique
  • Sales per square foot is your store’s average revenue for every foot of sales space. This KPI is a good measure of how efficient you are with the use of sales space and assets.
    Review your sales per square foot when you need to compare your store’s performance from last year, when it’s time to re-negotiate your rent or when planning a new store layout

    How To Calculate Sales Per Square Foot

    Simply divide your sales (for 1 year) by your store’s total square feet of sales space.
    EXAMPLE: $400,000 / 1,000 = $400 per square ft.
    NOTE: Only include the square footage of the area in which your customer can access

  • Foot traffic is simply the number of people that walk into your store each year, whether or not they buy something.
    Measuring foot traffic gives you tons of insights about several aspects of your store, and can help you make decisions when it comes to staffing, marketing, store layout, and more.

    How To Calculate Foot Traffic

    The only way to truly know this number is to have a foot traffic counter. There are many options, but we recommend "Dor". If you don't have this number, take your best guess. For example if I "guess" that half of my visitors buy something, my conversion rate is 50%. So, if you made 12,000 transactions last year, your foot traffic would be 24,000. To be clear, 50% is very conservative. Specialty retail like vape shops could see 80% conversion rates.
  • Conversion rate measures the percentage of customers who bought from you.
    This KPI is perhaps the most important for tracking the sales effectiveness of your sales staff and of your product/market match. If you have a lot of foot traffic but a low conversion rate, you may need to re-train your sales staff or improve your merchandise selection. You should track conversion rates regularly.

    How To Calculate Conversion Rate

    Divide Total Transactions By Gross Foot Traffic
    EXAMPLE: 12,000 / 24,000 = 50%

  • This KPI tells you how much revenue you earn per transaction. Tracking AOV helps you predict sales for a given time period and is essential in calculating "Customer Lifetime Value". You'll also be able to tell if your sales staff is doing a good job of up-selling your customers.

    How To Calculate AOV

    Divide Total Revenue By Total Transactions
    EXAMPLE: $400,000 / 12,000 = $33.33