If you want to hit your sales goals each and every month, guesswork and intuition aren’t going to cut it. You need data and lots of it. Sales data analysis relies on your CRM to capture all of the information about the deals closed by your sales reps.
Conducting sales analysis regularly is the most efficient way to make informed data-driven decisions and increase your sales effectiveness.
As you’ll soon see in this article, sales data analysis provides you with intelligence regarding your sales strategy, performance, and more. Sales analysis and the information it provides gives you a competitive edge that you can’t afford to ignore.
- What sales analysis is, and why it’s critical for your business sales strategy
- The most significant benefits of sales analysis
- The three steps to perform sales analysis
- Different sales analysis methods and techniques
- The KPIs and metrics you should be tracking and how to achieve them
So, let’s get started.
What is Sales Analysis?
Sales analysis, in short, is the mining of company data which is then used to evaluate its overall sales performance and generated revenue by comparing its successes against the established goals of its sales team. This analysis is typically presented in the form of a highly detailed sales report, which provides an in-depth description of the company’s overall strengths and weaknesses (and the strengths and weaknesses of its various products and services) by referencing both current and historical metrics of performance. This allows analysts to detect present or emerging relevant trends that the company can use to enhance said performance and overall profit generation. Such analysis also provides a vast array of insights into how a company’s products and services may be over or underperforming, potential issues in market and selling opportunities, sales activity and corresponding profits, and even sales forecasting.
Why is Sales Analysis Critical for a Business’s Sales Strategy?
The use of sales analysis is essential because successful businesses don’t become successful by just working off of guesswork and intuition alone to produce and sell their range of products and services. Instead, companies rely on collecting and analyzing complex data utilizing various tools and techniques, such as customer relationship management (CRM) technology. CRM serves to manage and enhance company relationships and interactions with customers while streamlining multiple processes and improving overall company profitability. By using this and other advanced sales analysis techniques, businesses can improve their sales effectiveness while also making more informed, data-backed decisions that are more likely to lead to higher, more successful profit margins and overall company performance within the market.
Additionally, regular sales data analysis provides companies with a more comprehensive understanding of why customers behave in a certain way regarding specific products. By analyzing and finding patterns in this data, companies can actively work to optimize their performance, conversions, and drop-offs, enabling them to optimize their sales processes and enhance their financial returns.
Without effective sales analysis, however, a business is unlikely to see much success within the market. This is because they will not fully understand the value of various key performance indicators (KPIs) within the market or know how to properly adapt to the various market changes that can occur over time. The majority of the most valuable KPIs provide businesses with quantitative style data and tend to include information regarding:
- Sales opportunities and targets
- Regional sales
- Average purchase values
- Sales to data
- Sell-through rate
- Product performance
- Conversion rates
- Sales per rep
- Cannibalization rates
- Sales growth
Effective and continuous sales analytics is the only way for businesses to monitor and use these KPIs successfully while also ensuring that they can pivot and adapt to the ever-changing demands of fluctuating markets. This article intends to explore effective sales analysis processes and the range of critical benefits such processes can provide to the businesses that use them. It’s also intended to examine a range of essential tips, tricks, and techniques that companies can use to make the most out of their sales analysis practices. Please proceed to learn more about these critical business elements and the amount of success they can bring to your company should you choose to use them effectively.
The Benefits of Quality Sales Analysis
As stated above, practical sales analysis is essential for businesses to succeed, especially in today’s fast-paced and ever-changing market. The process allows companies to better understand the various strengths and weaknesses of their products and services. It also allows them to evaluate how well they are performing concerning their overall sales patterns and goals. However, these are far from the only benefits that quality sales analysis can provide. Five other essential benefits also include:
- Finding the Most Profitable Customers
A significant portion of practical sales analysis involves sales representatives searching for and engaging with high-quality leads that can increase the overall value of the company as a whole. Because of this, sales reps must be able to identify key customer characteristics of the various consumers who have proven themselves to be loyal to the company and who spend the most money on the company’s products and services. By finding and capitalizing on these customer characteristics, a company can more effectively appeal to these customers to grow their brand and generate more sales over the long term.
- Having an Awareness of Market Trends and the Ability to Respond to Them
Businesses need to keep track of and understand how to leverage popular market trends appropriately to generate the most revenue possible, especially if they are in the process of developing or getting ready to launch a new product or service. Knowing these trends and having the ability to respond to them can also help companies plan more effective practices for rolling out new services and products, stocking their inventory, and modifying aspects of their basic manufacturing process. Thorough sales analysis reports can provide companies with this critical information while also identifying opportunities that they can take to better support these efforts.
- Making Data-Driven Decisions to Better Ensure Business Success
Regular and effectively planned sales analysis depicts how well a business’s sales plan is working. It also measures the general performance of each sales representative working within the company. This information allows businesses to make significant decisions based on data rather than intuition or guessing, making it far more likely that the business will be successful in its aims.
- Serving Customers More Effectively
Sales data analysis can be used to help determine why some business deals were successful and why others ended up falling through before they even had a chance to start seeing success. By deciding why some deals succeed or fail, businesses can begin to better understand how to keep their customers satisfied and develop more profound, more meaningful relationships with them in the future. Once the wants and needs of customers are understood, a business can leverage that information to ensure higher levels of customer satisfaction while enhancing brand quality, recognition, and goodwill with consumers. Additionally, this allows companies to also have a better chance at upselling or cross-selling to these previously satisfied customers.
- Expanding the Business’s Reach Within the Market
The analysis and interpretation of a company’s sales data can also provide businesses with extensive amounts of information on non-customers and potential customers. This information is invaluable in helping companies develop compelling sales pitches while also allowing them to more effectively personalize future marketing campaigns to attract new consumers and convince them to use their products and services over those of competing businesses.
How To Perform Top-Quality Sales Analysis in 3 Easy Steps
There are several ways to perform top-quality sales analysis depending on the methods, techniques, and tools that a business chooses to use (which will be discussed in more detail in the following section). Generally speaking, there is a simple and effective three-step sales analysis process that businesses can use no matter which tools and techniques they decide to employ. Said three-step process involves:
- Identifying the data a business should track to enhance its performance.
- Selecting and using top-quality analysis tools.
- Sharing their analysis results with the necessary shareholders invested in the company’s performance and success within the market.
Please continue to learn more about these three critical steps and the roles that they can play in enhancing a business’s potential returns.
Step 1: Identify The Data Your Company Needs to Track
The first step to an effective sales analysis process involves a business selecting the various kinds of data they want to actively keep track of and analyze at regular intervals to determine their overall performance and success. Generally speaking, a company should start by tracking specific objectives regarding their products and services and the departments in charge of them.
Common examples include measuring the impact of sales training, determining the best-selling products and services from a specific business campaign, and determining the characteristics of loyal, repeat customers. Other essential data that should be tracked also includes leads, conversions, channel output, branding and engagement, finance and cash flow, human resources (HR) processes, customer support processes, and more.
Once a business has selected the data it wants to track, they need to identify all of the sources of that specific data and the relevant variables involved, and the base performance metrics that it will rely on to analyze the data. Finally, the business will need to determine the most effective interval to track and analyze said data, whether weekly, monthly, quarterly, or yearly. Additionally, companies should also keep in mind that there are times when additional data collection and analysis may be beneficial, such as during special promotions or seasonal campaigns.
Step 2: Selecting Your Sales Analysis Tools to Start Analyzing Your Data
Once a business has decided on the data it intends to actively track and analyze and has acquired a sufficient quantity of that data, it will need to select a quality data analytics tool (or tools) to most effectively monitor and interpret it. Microsoft Excel, Close, HubSpot Sales Hub, Groove, Aviso, SharpSharing, XANT Playbooks, and SharpSpring are merely a few examples of effective sales analysis software that businesses can make use of.
Step 3: Share Your Analysis With the Relevant Stakeholders
Once sales trends, patterns, and data have been analyzed and included in a descriptive report through specialized sales analysis software, a company should be ready to share and distribute its key findings to relevant and interested stakeholders. This can be done by providing these stakeholders with basic and easily digestible versions of these analytic reports.
However, it may be beneficial also to utilize graphs and visuals to help them interpret the overall data. Depending on the role of the stakeholder, it may also be effective for businesses to include a dissection of general sales patterns and trends and develop a list of recommendations for how they may be able to enhance their performance and profitable returns further.
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Sales Analysis Methods & Techniques: The 9 Types
Depending on a company’s specific goals and aims, they can utilize various sales analysis reports to gain insights into their overall performance within the market. In general, most companies will use reports that include the following sales-related information; sales trends and performance, predictive sales, pipelines, product sales, sales effectiveness, diagnostics, prescriptive analysis, and market research analysis. Here is what business owners should know about each of these nine analysis methods:
Type 1: Analysis of Sales Trend Data
Analysis of sales data trends is about finding specific patterns in sales data throughout a specified timeframe. For example, micro trends typically appear and last for a short amount of time for particular products (usually a week). On the other hand, macro trends tend to last for much longer (usually at least several months or a single quarter). One of the best ways to interpret this data effectively is through graphs and other visual tools. For instance, a data analyst could create a chart depicting the relationship between the number of orders shipped by the company and the number of successful sales.
This type of sales pattern analysis is an easy and effective way for businesses to track their progress towards specific sales goals while simultaneously identifying sales patterns related to specific products, customers, and geographies. Additionally, it enables business management to better determine their current progress towards established sales goals while also detecting increases and decreases in product supply and demand in the market.
Type 2: Analysis of Overall Sales Performance
Businesses who want to assess the overall effectiveness of their sales strategy and the performance of their sales teams will often make use of sales performance analysis. This type of analysis typically involves conducting a strict type of financial analysis based on the overall generation of sales revenue in relation to how well that generation meets established business targets. Depending on the goals a business may wish to achieve, they may also evaluate other parameters to help improve aspects of business performance.
Such aspects could include faster closing rates, win rates, expedited revenue growth, more effective price margins, and more. In short, this type of analysis effectively demonstrates the current performance levels of a company compared to its expected performance levels. This metric is exceedingly helpful for sales managers and those looking to coach employees on addressing vulnerabilities or complications within sales processes and pipelines.
Type 3: Analysis of Predictive Sales
Predictive sales analysis typically involves the utilization of specialized software that can automate sales forecasting and predict future risks and opportunities that a business may end up encountering down the line. As much as 50% of global financial planning and analysis teams from companies worldwide have described predictive analysis as a top priority as of 2020. Through this use of predictive sales analytics, businesses can determine the overall likelihood of a project successfully converting prospective customers into loyal buyers and users of the company’s products and services.
Additionally, this method of analysis can also be used to increase the lifetime value of existing customers by indicating opportunities for upselling and cross-selling based on general customer behaviors and attitudes. This metric is one that sales teams should consider if they aim to improve business conversions and accurate sales forecast analysis.
Type 4: Analysis of Sales Pipelines
The analysis of sales pipelines allows businesses to monitor the activities of consumers before they either finalize their sales or walk away from it altogether by abandoning their online shopping carts. This data is vital because it provides sales representatives with the context of deals and whether they were successful or not. This information can be challenging to assess and utilize effectively. Still, expert sales reps can use the data to help enhance specific sales activities that are more likely to result in successful sales and business transactions, increasing conversion rates and overall business profits.
Type 5: Analysis of Product Sales
Suppose a business or company provides an extensive array of various products. In that case, they must use regular product sales analysis to determine which items are the most successful and which ones are overcrowding their product lineup within the market. One effective way to approach this type of analysis involves using KPIs and revenue bar charts to determine the overall performance of product sales within a specified timeframe.
This analytical method allows businesses to approach their product sales data from various perspectives, including product popularity, consumer demographics, and much more. Additionally, multi-product businesses can utilize these analytical results to help them make constructive decisions, such as abandoning or discontinuing the production of unprofitable products and promoting the most profitable products.
Type 6: Analysis of Sales Effectiveness
Also sometimes referred to as the analysis of sales management, sales effectiveness analysis is responsible for monitoring the performance of company representatives while also teaching them how to effectively finalize a purchase, identify promising selling opportunities, and enhance customer interactions overall. Essentially, these particular analytical reports are used to identify meaningful patterns in sales data while also providing insights on improving the performance and effectiveness of a business’s sales team. Not only does this data involve the overall quality of a business’s decisions, but it also enables companies to automate several tedious business processes, thereby allowing sales reps to focus more fully on selling their products.
Type 7: Analysis of Diagnostics
Diagnostic analysis involves justifying the observations and trends found in sales data with practical reasoning. For instance, say that a sudden increase in market or industry competition leads to a sudden decrease in a company’s product or service sales. Sales leaders can conduct a range of internal diagnostics to identify potential roadblocks for sales teams, note their observations of said roadblocks, and develop ways to overcome them while improving business performance effectively. Businesses can make use of several methods to audit and improve their performance. However, The Center for Sales Strategy has also prepared a detailed diagnostic list that many businesses may find helpful, especially if they are only just starting to utilize diagnostic analysis.
Type 8: Prescriptive Analysis
Prescriptive analytics involves the generation of predictive interfaces concerning customers and business prospects. This type of analysis helps empower sales development representatives (SDRs). It helps them more fully understand how to approach the right prospect opportunities and effectively pitch them to enhance the probability of closing essential deals. Making use of guided selling through perspective analytics can make the jobs of sales representatives much easier while also helping to improve the overall effectiveness of a business’s salespeople. Additionally, this method can also enable businesses to capitalize on future opportunities shown to have the highest possible chance at success, rather than to invest in an unproven approach that may not payout in the long run.
Type 9: Analysis of Market Research
Primary market research is a tried and true method that can help businesses make informed and educated decisions that have the best chance at enhancing their performance and sales. Techniques involved with market research include customer surveys (via phone, email, or in-person interviews). The data collected from these surveys can be utilized alongside the statistics and sales methods used by competitors and general sales statistics to help a company determine how to improve its performance. When a company can gain a comprehensive understanding of overall market conditions, they are more easily able to identify sales teams’ internal strengths and weaknesses and work to improve them. It also allows businesses to identify potential opportunities while providing a more thorough understanding of customers’ needs.
The Top KPIs and Metrics for Quality Sales Analysis
Practical sales analysis requires using a massive amount of data and several specific analysis metrics to make sense of said data fully. There is an enormous selection of different metrics and KPIs that businesses can utilize for this purpose, but several are more frequently used than others. The primary KPIs and analysis metrics that companies should consider utilizing include:
KPIs that are designed to track and measure sales processes help dissect the overall effectiveness of a business’s sales process by describing the opportunities that sales representatives are actively creating for the company. This data and its analysis can be used to forecast future sales and help companies fully determine which business opportunities are likely to be the most profitable. This metric aims to track the total number of opportunities that a sales team can create within a specific timeframe.
Monthly Sales Growth
The monthly sales growth metric tells business owners how their sales revenue has grown or shrunk on a month-over-month basis. It is classified as a type of actionable metric used to optimize a business’s sales processes and strategies. This metric can be easily calculated by taking the business’s performance during a current month and subtracting the previous month’s performance before dividing that figure by 100.
Average Conversion Time
The average conversion time sales analysis metric provides business owners with an insight into the overall productivity of a business funnel by indicating how long it takes for a specific lead to convert into profitable returns. Along with sales opportunities, conversion rates, and a range of other metrics, this KPI can provide a sort of bird’s eye view of a business’s sales pipeline. Average conversion time can be easily calculated by taking the sum of all lead conversion times in a specific period and dividing it by the number of overall lead conversions to occur within that particular period.
Lead Conversion Rates
Lead conversion rates can provide businesses with a broad overview of how an entire team performs by indicating how many leads in total are being converted into sales. Once this metric is acquired, a business can also work backward to understand how and why specific leads converted into sales while others didn’t. The company can then start developing a comprehensive, foolproof plan to acquire future customers more effectively. This metric can be calculated by taking the number of leads converted into an opportunity in a specific period and dividing it by the number of total leads created in that same period.
The sales targets metric provides a range of historical data on how well a sales team performs in terms of revenue generation, the number of products or services sold, and more. Businesses should avoid setting any ambiguous sales targets and instead should actively establish attainable future goals to help motivate sales reps and ensure that they won’t burn out in the long run.
The metric of pipeline values can indicate the expected revenue gain from all sales opportunities in a specified timeframe. It provides businesses with a quick overview of the value of the deals currently in the pipeline and the progress that sales representatives have made towards the company’s goals. This value can be calculated by taking the value of a projected sale and multiplying it by the percentage of confidence in the seller that they will close the deal.
Customer Lifetime Values (LTV)
Customer lifetime value (LTV) is a sales analysis metric indicating how much revenue an average customer generates during their lifetime with a particular company. This metric is helpful in helping to predict future income. However, it requires an extensive data set for accurate assumptions and forecasts to be effectively generated. This metric can be calculated by finding the sum of all revenue generated by individual consumers. Once calculated, businesses can use these values to make more informed decisions regarding how much they can reasonably spend on attracting and acquiring new customers.
The Bottom Line of Sales Analysis: Final Thoughts to Consider
Sales analysis is a critical element of operating a successful business, no matter what types of products and services it provides to consumers or what sector the company is actively working in. Businesses that make decisions based on guesses or intuition are doubtful to survive for long in competitive markets, and they are even less likely to see significant profits and returns.
Businesses must use a range of sales analytics to ensure that they are making effective marketing decisions based on solid data and market proof. Without an effective sales analysis strategy, the chances of a business failing and going under become extremely high, so please ensure that your business is making full use of these analytics when it comes time to start making big financial decisions.
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