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Understanding Sales Analysis - Its Importance And The Different Types

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(Credit: Understanding Sales Analysis - Its Importance And The Different Types) Understanding Sales Analysis - Its Importance And The Different Types
May 22
5:04 PM 2021

Generating sales reports is crucial to understanding the progress or performance of a business in terms of profits. Weekly sales reports are indeed insightful and can offer a fair understanding of how things are going. But truth be told, they don't provide enough depth; only a partial understanding of the overall performance metrics. 

This is where sales analysis comes in handy; it helps devise an effective sales strategy that boosts profits. 

So what exactly is sales analysis, and how does it help - let us find out.

What is sales analysis?

Sales analysis is a detailed report that goes beyond the generic weekly sales data rather, it gives various other metrics like the performance of the sales team, their strengths and shortcomings, customer shopping data and preferences, total revenue earned, and more. There is scope for tracking different metrics with a sales analysis report, including -

  • Regional sales data is one metric that is very useful for a business that has gone global, and this can help in tracking the sales data from different regions. It will give an idea to the enterprise which areas are the biggest buyers of the products and services and which are lagging.

  • The average purchase value is another crucial piece of data that gives an idea of how much customers are spending on your products per purchase, and this gives an idea about which are the best selling items and which are not.

  • The sales per rep data give an idea about how much the sales team is achieving sales per unit time which can be per day, per week, or month as per the discretion of the business.

  • There are various other metrics like Quote to Close time that gives an idea of how much average time is spent in the successful conversion of a business or the product performance, Sales to date, and many more other metrics. It helps the enterprise to devise a strategy. The strategy facilitates addressing issues and capitalizing on the organizational strengths as far as sales are concerned.

Different kinds of sales analyses

There are different kinds of sales analyses and each comes with its own key benefits. Overall, a mix of multiple different strategies can help a business achieve the best results possible. Some of the most vital types of sales analysis include-

  1. Market research - It is a simple type of survey that can be done by the sales team. The team members can survey the leads and customers to gain insight into the current market. It can even be done in person if needed, and the business type necessitates that an in-person survey is done. Market research can tell the business: what the customers prefer, what they are looking forward to buying, and what kind of products the business should concentrate upon. It is done to ensure that there is growth in sales. And it also offers an idea of the selling approach that needs to be followed.

  2. Perspective analysis - The perspective analysis gives a business a clear indication of which deals need to be chased and have a greater chance of conversion and which ones may be left off as there is a minimum chance of converting these leads. It is generally done by using predictive information that is collected by the sales team mostly when pitching. It provides the sales team a better chance of closing the deals they wish to pursue.

  3. Diagnostic analysis - This is done on the past sales data to provide insights and pointers that will help in future sales. The past sales data have massive information with them, and they can particularly help in understanding why some products fail to live up to the expectation of the business. The analysis and findings of the diagnostic analysis can help businesses to better plan their approach, as far as sales of products are concerned. They can also help plug gaps in the system for quick resolution of issues regarding sales of these products.

  4. Sales effectiveness analysis - This comprises data that is pulled from past sales. This data is vital for a business because it stresses the efficiency of the human resources working in the company. It is a known fact that no two persons can have equal effectiveness, and the same is true for sales representatives. In this regard, the data that can be pulled out through this analysis tells which representatives are most effective and handle the most types of customers well resulting in higher sales volume overall on their part.

  5. Product sales analysis - This is analyzing data from the past about your products. No product can have strong and continued high sales for an infinite period. Most products need to be either evolved or discontinued altogether to maintain and improve the profitability of a business. This analysis should be conducted at regular intervals, and the findings of this analysis must be used to take steps regarding those products which have dropping sales volume. 

  6. Sales pipeline analysis - An in-depth analytics that stretches from the beginning to the end of sales. Here the various significant data that a business can expect to get are: how many leads get converted over the process and how many failed to convert. Furthermore, understanding how long they took to convert, which are the most qualified leads along with how much money they are making, and which sales member is working with them are a few more factors that make it easy. The data can, however, be erroneous to some extent. In some cases, meetings with team members regularly help in plugging gaps and making the system robust.

  7. Predictive sales analysis - Predictive analysis is actually sales forecasts; this is automated with preset inputs to provide a sales strategy that is most likely to yield the best returns and best results for the business. This strategy is worthwhile for all sizes of companies, starting from small establishments to huge ones.

So, in a nutshell, analyzing sales from various angles is the key to gaining an accurate picture of the performance of your business. Sales analysis actually helps discover data that most people would not even realize is there.

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