In a nutshell, Purchase Action Ratio (PAR) indicates how good your company is at converting people who are aware of your brand into paying customers.
Calculation
Purchase Action Ratio = Purchase action / Spontaneous awareness*
*Spontaneous awareness, in this case, means the percentage of people in the market who spontaneously recall the brand when asked about a particular category.
Purchase Action Ratio can also be calculated as a percentage between the brand market share and brand awareness:
Purchase Action Ratio = Brand market share / Brand awareness
Reasons to track Purchase Action Ratio (PAR)
First introduced by Kotler in his book “Marketing 4.0: Moving from Traditional to Digital”, this metric becomes increasingly popular amongst digital marketers. The main reason: this metric gives a much more precise and clear understanding of your brand performance in the market.
Measuring PAR can help you better estimate the effectiveness of your marketing efforts. Tracking this KPI will allow you to evaluate how appealing, relevant, and convincing your brand is to your audience.
The metric is often measured together with Brand Advocacy Ratio (BAR). Tracking these KPIs will allow you to see the full picture, define flaws within the strategy, and eventually increase the number of loyal customers.
How can tracking the PAR help you to become more data-driven?
Let’s look at the Consumer Path to understand the key idea behind this KPI better. In general, a customer’s path can be described by these five stages:
- Aware
- Appeal
- Ask
- Act
- Advocate
PAR implies the first four stages of this funnel: aware, appeal, ask, and act. This is where the fun part begins!
Although PAR measures only the conversion rate between “aware” and “act,” the stages located in between play an equally significant role. Therefore, to improve your PAR, it is crucial to understand what is actually happening in between these two stages.
Potential reasons for the low PAR
Let’s shortly look at each of these steps and define potential reasons for the low PAR.
A low conversion rate from “aware” to “appeal” might signify a low consumer attraction to the brand. That means that even though users are aware of the product, they don’t find it appealing. This can be a result of poor positioning or poor marketing communications execution. In this case, the company needs to focus its efforts on clarifying its positioning and improving its messaging and communication strategy.
A conversion rate from “appeal” to “ask” indicates the level of curiosity. The lower the conversion rate, the lower the interest, and vice versa. Important to understand that here it is better to strive for the golden mean. No or little curiosity means that your potential customers are not asking questions and are not interested in your brand. While too many questions from the audience also hardly mean something good. It is often a sign that your offer is not that clear, and you might need to focus on improving your website offerings.
And finally, a conversion rate from “ask” to “act” reflects the level of commitment. So, a low conversion rate indicates that although people are aware of the brand and are talking about it, they do not proceed with the further step – the actual purchase of the product.
What could be the potential reasons for the low conversion rate here?
In this case, the issue often requires a more complex approach which means looking into each of the Ps of your marketing mix: product, price, promotion, place, people, process, and physical evidence. It can be anything from a bad experience with the product during the free trial, unmet expectations to price sensitivity.
In this case, the company has no choice but to eliminate these flaws to increase customers’ commitment and brand loyalty. Therefore, the sooner you define the bottleneck, the sooner you can start improving your PAR.
Eager to track your PAR?
Please reach out to the Nexoya support to activate a PAR performance metric for your account!