Sales Analytics: Understanding the market for Sales
What is Sales analysis?
As the name suggests, sales analysis involves analyzing the sales made by a company over a period of time. Many companies have a weekly sales analysis, a monthly sales analysis, or a quarterly sales analysis. A regular sales analysis helps the company understand where they are performing better and where they need to improve.
Every company has a sales target which its salesmen have to achieve. If the target was to be achieved in a month, then on the 15th day of that month, the salesmen should know where they stand. This is where sales analysis plays its role. It helps determine where the company stands in terms of sales and then helps in sales strategy to reach a predetermined goal.
Sales analysis is done from the bottom level to the top level of the company. Even the CEO of the company does a sales analysis to understand segments where the company is gaining in sales and segments where it is dropping in sales. Such sales analysis can also help product development.
Why monitor sales analytics?
If your business was a rock band, sales would be the lead singer. All eyes are on sales and revenue performance, and a strong (or weak) performance can become a potent rallying force for your entire team.
Monitoring sales analytics in the form of sales metrics helps increase your performance, optimize sales activities, and improve accountability. Your sales team has a wide range of activities to focus on and operate in a fast-paced environment. A well-defined sales analytics strategy provides your team with focus and clarity so they can concentrate on doing what they do best.
Importance and benefits of sales analysis
Do you know which products of your company are faring the best and the worst? Sales data analytics examines sales reports to evaluate how your company is performing against its goals. Here’s why you need to integrate it into your sales operations.
- Make data-driven decisions instead of relying on gut instinct – Effective and regular sales analysis unveils how your sales plan is panning out and measures the performance of every individual rep on your team in real-time.
- Find your most profitable customers – Your sales reps should spend the majority of their time engaging with high-quality leads that add value to your company. So it’s invaluable to identify the characteristics of customers that spend the most money on your products and remain loyal to your company.
- Get awareness on the market trends – Are you preparing to launch a new product? Are you planning your future course of action in terms of stocking inventory, rolling out schemes, and modifying your manufacturing process (if applicable)? A sales analysis report identifies market opportunities and trends to support these efforts.
- Serve your customers better – If you can nail down why a deal closed, you can keep your customers happy and forge deeper relationships. Once you understand their needs better and your brand develops goodwill, you can also upsell and cross-sell to these existing customers.
- Expand your market reach – Sales data analysis and interpretation will also fetch intel on your non-customers. The information is invaluable for sharpening your sales pitches and personalizing your future marketing activities to potentially find new customers.
Types of Sales Analysis
Although many companies may use various types tailored to fit their organization, here are the few common types of Sales Analysis performed :
- Periodic Analysis: This can be a month on month or year on year or year to date compared to the previous year to date as the need may be. This gives insight into the impact of time on sales.
- Product-wise Analysis: Sales of products during different times in different areas can be used. This is majorly used in large-scale equipment.
- Channel of distribution wise: This will give the trend of where the sales are maximum and answering Why will give more insights and help the company decide whether or not to continue with the current channel of distribution.
- Forecast vs Achievement analysis: This gives the details of sales which were used to forecast the numbers and inventory were arranged accordingly and what is the actual achievement of Sales and whether the inventory needs to be refilled or schemes need to be rolled out for the liquidation of stocks.
Top sales analysis metrics & KPIs
Sales reporting and analysis will mean dealing with lots of data. Below let’s look at the top ten sales analysis metrics. Think about which metrics will inspire action and provide your team with focus.
If you’re just learning about sales analytics, then you may find it helpful to review a few examples.
- Sales Growth – Sales analysis revolves around your ability to grow revenue. A small blip in your trend line will do more than furrow brows, it’ll have your team digging through the data for definitive answers.
- Sales Target – This KPI tracks current performance against a business objective. Sales may be represented as revenue, number of accounts, units sold, or any other measure that is relevant for your team.
- Average Purchase Value – One of the most effective ways to increase sales revenue is to increase the average purchase value of each sale. Incorporating this metric into your analysis and to track historical trends is a smart strategy.
- Sales by Region – Even global businesses will find they have regional differences in sales and revenue. Tracking this metric will give visibility into the territories in which you are competitive and profitable.
- Product Performance – For teams selling multiple products and with targets for each product, it’s important to track sales for each line.
- Lead conversion Rate – Insights like lead conversion rates help keep sales and marketing teams aligned throughout the customer journey. Conversion analytics allows for teams to continuously optimize performance to steadily improve customer experience.
- Cannibalization rate – A new product to sell may be exciting, as innovation often is, but sometimes it can adversely impact sales for an existing product. By tracking product cannibalization in your sales analytics, you can better manage customer experience.
Analyze Your Results
Once your data is present in charts and graphs; then the final step is to analyze your sales report and look for market emerging patterns and trends and asks questions like;
- What mix (product & service) is bought by the customers collectively?
- When certain items of a mix (product or service) are being sold mostly?
- Does the buyer follow any seasonal trends? Or any pattern emerges?
- Repetitive customers and first-time customers are buying the same items of certain or different products?
Most importantly, notice the changes in your sales over a period of time. If some product or service isn’t performing, find out why and how it could be improved.