Units per Transaction (UPT), aka Items per Customer (IPC), is a retail KPI used to measure how many items customers add to the shopping basket on average.
Units Per Transaction Formula
Units per Transaction (UPT) can be calculated by dividing the total number of units sold by the total number of transactions for the same period of time (day, month, year..etc)
Units per Transaction (UPT) = No. of Units Sold ÷ No. of Transactions
For example, in the month of February the store sold a total of 3564 pieces of merchandise and had a total of 1045 transactions for the same month.
UPT = 3564 ÷ 1045 = 3.4
So UPT is 3.4.
This means that, on average, each customer bought 3.4 units from the store in that month.
You can also calculate Units per Transaction in excel by generating your sales data and entering them in an excel sheet and then using a simple divide function that divides the total units value by the number of transactions as shown here.
Why Is Units Per Transaction Important?
Measuring Markdown Effectiveness
Besides being a sales KPI used in retail to evaluate the effectiveness of the sales process and the sales team, UPT comes more under the microscope during markdown events.
The main objective of a sale or markdown event is to clear merchandise faster.
Read Also: Why Do Retail Stores Have Sales?
In order to evaluate whether the store is clearing merchandise at a fast pace, UPT acts as an important daily measure to see how many items customers are picking during the sale.
If it is found that UPT is the same as before the markdown event, this could mean that the discount is not effective or the sales & visual teams are not highlighting the discount to the customers on the floor.
This also means that the store is losing margins on the products, without achieving the main objective, which is to clear the products fast.
KPI For The Store Team
UPT is among many different KPIs given to the store manager, to measure his performance, as well as his team’s.
A high UPT usually indicates that the sales team at this store does a good job in serving customers and helping them buy more items from the store.
In fact, many retail brands often hold an “IPC/UPT Competition” to encourage store teams to do just that, as a way to improve sales at the stores.
It can also indicate good visual practices at this store, by highlighting products in a way that encourages customers to buy different items together.
For example, creative visual teams know how to create an appealing outfit on a mannequin, that will make the customer want to buy all the items together to get the same look. This could include a top, a bottom, a footwear and an accessory.
One of the many different ways to capitalize on existing traffic and increase sales without spending more on marketing is simply working on improving UPT.
Which takes us to the next point…
How to Increase UPT?
Units per Transaction (UPT) can be increased through:
- Bundle Offers (e.g Buy 2 Get 1 Free)
- Cross Selling
- Highlighting Outfits on Mannequins
- Hiring Skilled Sales People
- Conducting UPT Competition Among Stores
Units per Transaction is a retail KPI used to measure the performance of the sales function at the store. It is generated and calculated on a daily basis, as part of the sales reports, but becomes more important to track during markdown events.
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Retailer & Founder of Retail Dogma, Inc.
Rasha has 12 years of retail & ecommerce experience. She has started an ecommerce business in 2008, and later worked at H&M, Bath & Body Works, Victoria’s Secret and Landmark Group. She has lived in 4 different countries, speaks 3 different languages and holds a master’s degree in Strategic Management & Marketing.