Page 94 - Spring Into Markets
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3: Average transaction value
What is it?
An average transaction value is the 'average' amount of money customers spend at your stall per transaction/visit.
Good retail businesses know their average transaction value and use this information to actively drive their sales by working hard to increase their average transaction value.
The good news is that there is no additional information to gather, your average transaction value is simply a function of (1) sales and (2) number of transactions which you have already recorded.
Example:
Daily Sales £500 Number of Transactions 50 Average Transaction Value £500 ÷ 50 = £10
This figure is your ATV (average transaction value). Record this figure alongside your daily sales figures or calculate it on a weekly basis if you prefer (the principle is the same — just use total weekly sales and total weekly transactions). Make one of your business goals to increase the average transaction value at every opportunity.
Why is ATV such an important business tool?
It enables you to monitor over short time scales the effectiveness of the way the business is operated. By monitoring the ATV it is possible to calculate the effect of any changes to your stall/business.
For example:
• A new promotion
• New product(s)
• Effectiveness of any staff training • New layout/displays
The ATV is an average; some customers spend more than others. The idea is to increase the number of customers who spend at least the ATV.
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