What KPI is measured by the percentage of potential customers who actually make a purchase?

The key performance indicator that measures the percentage of potential customers who actually make a purchase is known as the sales conversion rate. This metric reflects how effectively a business can turn interested leads into actual buyers. It is calculated by taking the number of conversions (purchases) and dividing it by the total number of potential customers, then expressing that as a percentage.

For businesses, understanding the sales conversion rate is crucial as it provides insights into the effectiveness of marketing strategies, sales techniques, and overall customer engagement. A higher conversion rate indicates a successful approach in converting interest into sales, which can inform decisions about where to optimize efforts in the sales funnel.

Customer retention rate focuses on the percentage of existing customers that a company retains over a certain period, while sales growth rate measures the increase in sales over time. Customer acquisition cost assesses the expenses related to acquiring new customers, which is different as it does not directly measure the outcomes of those efforts in terms of actual sales conversions. Therefore, the sales conversion rate is the most appropriate KPI for measuring the percentage of potential customers who complete a purchase.