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