What is Units Per Transaction – UPT?
Units per transaction (UPT) is a sales metric often used in the retail sales sector to measure the average number of items that customers are purchasing in any given transaction. The higher the UPT, the more items customers are purchasing for every visit.
Retailers want people who enter and browse their stores and websites to buy as many items as possible. Happy shoppers are more likely to fill up their baskets with goods, purchasing stuff they set out to buy, as well as add-ons and other extra items sold to them when in-store or surfing online.
Many experts agree that increasing units per transaction (UTF) is often what determines success versus failure for the small- to a mid-size retailer. Getting customers to buy more suggests the company is engaged and has a decent understanding of its customers. It also means extra revenue and potentially more leverage to push up prices and profit margins. It should come as little surprise then that retailers often make units per transaction (UPT) a key performance indicator (KPI).
A basic unit per transaction (UPT) is calculated by simply dividing the number of items purchased by the number of transactions for the period. However, there is a range of additional factors to consider that might influence how the figure is computed.
Units per transaction (UPT) can achieve a number of objectives. They might be measured across individual stores to identify market areas where customers tend to purchase different numbers of items when they shop. Retailers can also track items per sale by an employee in order to measure sales performance, or keep tabs on units per transaction (UPT) company-wide for a wider picture of overall sales patterns.
Another important consideration to make is whether to calculate units per transaction (UPT) on a day-by-day basis, seasonal basis or over a longer period of time. It is generally advisable to collect data on items sold and transactions daily. From there, the data can be tweaked to focus on longer time periods with greater accuracy.
As an example, if company A wants to compare the sales performance of two employees. The first employee made 30 sales with a total of 105 items, while a second employee sold 105 items in 35 transactions. Thus, UPT for the first employee is 3.5, and units per transaction (UPT) for the second employee is 3.0.
Real Life Example of Units Per Transaction
In the first quarter of 2019, Macy’s Inc. (M) reported a 5.7% increase in transactions, compared to the first quarter of 2018. A closer look at all the figures reveals that this impressive headline number might be slightly misleading. Why? Because average units per transaction (UPT) fell 2.2%.
What this tells us is that a chunk of the department store’s transaction growth was boosted by loyal customers spreading out purchases more than usual, as opposed to Macy’s attracting an influx of new shoppers. Perhaps the company’s relatively new loyalty program, which offers top spenders free shipping regardless of how little they order, had something to do with its customers not feeling inclined to buy items all in one go.
- Units per transaction (UPT) is a sales metric used to measure the average number of items that customers purchase in any given transaction.
- The higher the units per transaction (UPT), the more items customers are purchasing for every visit.
- Getting people to buy more suggests a company has a decent understanding of its customers. It also means extra revenue and potentially more leverage to push up prices and profit margins.
- Retailers often make units per transaction (UPT) a key performance indicator (KPI).