Sales Analysis

Manju Omprakash Yadav

JSKB , Rollno: 11
Where sales analysis has emerged from?
Sales management is the process of developing a sales force, coordinating sales operations,
and implementing sales techniques that allow a business to consistently hit, and even surpass,
its sales targets.

There are three “umbrellas” to manage within the

sales process:
• Sales Operations
• Sales Strategy
• Sales Analysis
What do you understand by sales
analysis?
• Sales analysis is the process of comparing your actual sales to previously stated company
objectives. It is a measurement process used by organizations to evaluate sales
effectiveness and consider improvements.
• 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.
Through looking glass
Importance of Sales Analysis
Missed opportunities
• Analyzing the available data can show the company where it has missed the opportunity and if
or not that can be claimed.
Future decisions
• Sales data will help a company to take a future decision in terms of inventory management,
marketing activities, schemes or offers to be rolled and changes in manufacturing processes if
applicable.
Contd..
Market Trends
• Sales analysis will also show the current market trends to the company
Customer analysis
• Effectively, Sales Analysis is nothing but Customer Analysis. Answering why did a particular
customer buy the product in a particular month may give crucial customer insights which will
help with the planning of the company.
Detailed analysis
• A detailed Sales Analysis is broken down product wise, customer wise, year and month wise
and geography wise is a source of huge information for the company.
Lets take a look into basic of sales analysis!
Sales by SKU
• The first, most basic level of analysis is examining sales data by product and stock keeping
unit (SKU); that is, each size and variation of each product by state or smaller geographic
areas and across time. What is the trend in sales of each SKU over several years for each
state, metropolitan service area (MSA) or other geographic areas?
Sales by channel of distribution
• The next level of analysis involves distribution channels. What is the trend in sales by type of
“retail’’ outlet? Large individual retailers should be looked at separately, and retailers should
also be grouped by type (supermarkets, convenience stores, warehouse club stores,
distributors, vending machines, online, etc.).
Contd..
Per capita sales
• Sales data take on new meaning and reveal new understanding when examined on some type
of relative basis. Per capita sales analysis is one of these relative techniques
Per comparable economic data
• Another way to analyze sales data on a relative basis is to compare sales to various economic
data.
Category development index
• A widely used measure of product category development is the category development index
(CDI). The index can be calculated for any geographic entity, such as city, county, state or
groups of states.
Contd..
Brand development index
• The brand development index (BDI) is a very similar measure to CDI, but it focuses on an
individual brand within the product category. The method of calculating the BDI is analogous
to that for the CDI, eg: The brand’s per capita sales by state are determined, and the brand’s
per capita sales are calculated for the whole U.S.
Competitive trends
• If companies monitor their market share via a syndicated service, or some type of tracking
study, then they know what the total market is doing, and they know what their competitors are
doing.
Analytical database
• The sad truth is that virtually no company has the important and relevant sales data and
related variables neatly organized and maintained in a pristine database, and that’s why
building an analytical database is often the first step to any type of sophisticated sales
analysis.
Contd..
• An analytical database would contain all of the historical sales data, of course, but it would
also include related competitive data, if available, plus demographic data and economic data
by the smallest geographic units feasible. If budget and time permit, marketing variables such
as advertising spending by media, pricing information, promotional spending by type,
distribution levels, etc., would be continuously added to the analytical database
Cross-tabulations
• Once the analytical database is in place, some very powerful analytic work can be
accomplished by creating cross-tabulations. One method is the “contrast of extremes.” How do
the geographic areas with the highest BDIs contrast to the areas with the lowest BDIs? What
do these differences reveal about the reasons for a product’s success or failure? What about
the contrast between geographic areas receiving heavy media advertising versus those with
little media spending?
Contd..
Multivariate analyses
• What’s really driving the sales of a given product category or a specific brand? Companies
always have explanations for the success – or failure – of a product, but these explanations
are typically mythology. Few companies have done the scientific econometric analyses to
measure “cause and effect’’ and determine what variables are driving a company’s (or
brand’s) growth or decline.
Loyalty programs
• Many retailers, but not manufacturers, own reams of loyalty program data about their
customers.
Marketing research
• Marketing research is often the “missing link” that helps analysts understand the patterns and
shadows they see in their sales analyses.
• Sales analysis tends to be backward looking, since it is based on historical data, but marketing
research can help marketing directors look into the future.
Sales analyzing methods
• Descriptive
• Inferential
• Exploratory
• Casual
• mechanistic
Advantages of Sales Analysis
Opportunities
• Sales analysis of own products as well as competitor products is important as analyzing sales
of competitors allows insights into the market from a different perspective and may help the
company to reach the missed out customers and grab the missed opportunity.
Decision driver
• Sales analysis, as explained above acts a decision driver for the company to make major
changes in their products. If the Sales of a product are not up to the mark, the company may
discontinue the product with immediate effect. For example, as the Sales of Touchscreen
phones increased all the traditional button models changed their phones to touch screens.
With the advent of Facebook and Twitter, earlier sites like Orkut had to be shut down because
of lack of revenue and shift of audience from one platform to other.
Contd..
Customer Service
• Knowing the reason behind why a particular sales occurred during particular time will help
the companies to keep the inventory ready and help them to serve the customers better.
Delighting the customers will, in turn, benefit the company by increased sales further and help
to develop goodwill and establish the brand value of the company.
Marketing support
• Sales of a certain product may require one-time marketing support or multiple times or
seasonal support. Those decisions are taken based on Sales analysis. For example, products
like cough syrup would require marketing and ad campaigns just before and during winter
while airline services require constant marketing support.
Disadvantages of Sales Analysis
Reliability
• A lot of times, Sales Analysis might have done in a haphazard way or the reasons for the
increase in sales of a particular product may go up purely on the effort of the Salespersons or
offers rolled out. This may have nothing to do with customer or trends and relying on those
conclusions can be problematic for the company.
Political factors
• 12 countries in Europe introduced a single currency in 2002 which caused temporary
disruption of the economy. In such cases, even though the trend may say that the Sales is
supposed to increase, owing to unavailability of purchasing power of customers, the company
may face a dip in sales. The following year to this incident when the economy may again
stabilize, comparing previous years’ data will show askew results again since the customers
are purchasing normally as per their requirement but there would be a tremendous growth in
the analysis.
Contd..
Technical knowledge
• High technical knowledge is required for Sales Analysis and not everyone may be suited to do
that. Good arithmetic skills along with high market knowledge are basic requirements and
those may not be fulfilled by every Salesperson.
Cost
• A detailed Sales Analysis along with its interpretation is outsourced by many companies. The
dedicated firms or software may be costly which the company would have to bear regularly.
Also, the privacy of data would be compromised when sharing the Sales data to the third party.
A Sales analysis performed by an internal employee instead of outsourcing would increase the
cost of the firm in terms of salary, training the person for technical knowledge and there are
chances of human error in Manual Sales Analysis.
Website links
• https://financesonline.com/top-20-sales-
analytics-software/
• http://analytics-magazine.org/basic-sales-
analysis/
• https://smallbusiness.chron.com/define-
sales-analysis-5258.html
• https://trackmaven.com/marketing-
dictionary/sales-forecasting/
• https://www.leadsquared.com/what-is-sales-
analysis/
• https://www.marketing91.com/what-is-sales-
analysis-why-is-it-important/
Thank you
End