How to perform a sales analysis (step-by-step with methods &
metrics)
Steli Efti · 13 min read
TABLE OF
CONTENTS
- What
is sales analysis and why is it key to your sales strategy?
- Importance
and benefits of sales analysis
- 9
types of sales analysis methods and techniques
- How
to perform sales analysis: a 3-step process
- Top
10 sales analysis metrics & KPIs
- Conclusion
- Actionable sales
advice
If you want to achieve your sales
goals month after month, then guesswork and intuition aren’t
your best friends. You need cold hard data, and your sales CRM must
capture all necessary information on the deals closed by your reps.
To
improve your sales effectiveness and make informed data-backed decisions, you
need to conduct sales analysis regularly.
As
you’ll see in the article, sales data analysis provides intelligence about
your sales strategy, the performance
of your team, and much more. It’s a competitive advantage that you
can’t afford to miss out on. So let’s get started with its basics:
- →
What is sales analysis and why is it key to your sales strategy?
- →
Importance and benefits of sales analysis
- →
9 types of sales analysis methods and techniques
- →
How to perform sales analysis: a 3-step process
- →
Top 10 sales analysis metrics and KPIs
What is sales analysis and why is
it key to your sales strategy?
Sales
analysis is mining your data to evaluate the performance of your sales team
against its goals. It provides insights about the top performing and
underperforming products/services, the problems in selling and market
opportunities, sales forecasting, and sales activities that
generate revenue.
Regular
sales data analysis provides an understanding of the products that your
customers are buying and helps you dissect why they are behaving in a certain
way. You can also find patterns in your lead conversions and drop offs. All of
these aspects enable you to optimize your sales process.
With
an intelligent sales CRM like Close, you get actionable
reports to keep a close eye on the essential sales KPIs. Such a
continuous sales analysis helps in iterating your sales strategy so that you
can continue growing your business sustainably.
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 actions 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.
Now
that you’re convinced about conducting sales analysis, let’s look at the
different types of sales analysis methods...
9 types of sales analysis methods
and techniques
Based
on your sales goals, you can refer to different kinds of sales analysis reports
for getting insights. Here are nine types of analysis methods you need to know
about.
1. Sales trend analysis
This
type of sales analysis is about finding patterns in sales data (whether they
are going up or down) over a specific timeframe. A micro trend might last for a
week for a specific product, while a macro trend might last for a quarter over
a range of products.
For
instance, the graph below shows that a company has
seen an increase in ‘orders shipped’ and ‘sales.’ However, the ratio of sales
per orders shipped is decreasing, which the company might want to investigate.
Why
sales teams should measure this: Sales pattern analysis is
an easy way to track progress towards your sales goals while simultaneously
understanding the sales patterns in specific products, customers, or
geographies.
2. Sales performance analysis
If
you want to gauge the effectiveness of your sales strategy and how your sales
team is performing, a sales performance analysis can come in handy. It can
involve conducting a strictly financial analysis based on the sales revenue
generated and how it’s meeting your sales targets.
Image
source: inpaspages.com
Based
on what you intend to achieve, you can also seek to evaluate parameters like an
improvement in your win rates, faster closing rate, quicker revenue growth,
better price margins, and the like. You can work on the gaps found in a sales
performance analysis to put your business back on track to “where you need to be.”
Why
sales teams should measure this: Sales performance analytics shows
how you are currently faring vs. the expected performance. It’s useful for
sales managers to coach their reps and fix the vulnerabilities in their sales
process/pipeline.
3. Predictive sales analytics
Predictive
analytics software can automate sales forecasting for you by predicting your
future risks and opportunities. 50% of the global financial planning &
analysis teams (FP & A) have described predictive analytics as a priority in 2020.
By
conducting past sales analysis, you can predict the likelihood of a prospect
converting into a customer and make personalized offers to leads that are ready
to buy. You can also increase the lifetime value of existing customers by
identifying upselling and cross-selling opportunities in customer behavior.
Why
sales teams should measure this: Integrating predictive sales
technology with a sales CRM enables data-backed suggestions for improving your
conversions and accurate sales forecast analysis.
4. Sales pipeline analysis
I’ve
already told you how sales
pipeline metrics can be misleading. However regular pipeline review meetings are
important to get the context of the deals your sales reps are after. Such
sessions involve sales pipeline analytics that looks at the activities your
prospects go through before they convert or fall off.
Close
offers robust sales pipeline forecasting analytics by letting you quickly
review your pipeline through the opportunities page.
It
also lets you zoom into your interactions with a specific contact through the
leads page.
Why
sales teams should measure this: It lets you gain context
around a deal so that you can instruct your sales reps to perform sales
activities that carry their deals forward.
5. Product sales analysis
If
your company offers many products, then you need to conduct regular product
sales analysis to find out the items that are overcrowding your product lining.
You can use KPIs and revenue bar charts to look at the product sales overall or
in a specific time frame.
Image
source: microstrategy.com
Why
sales teams should measure this: It lets you approach
product sales data from various angles like the demographics, product
popularity, and the like. Multi-product firms can use the results from this
analysis to take constructive actions, like discontinuing unprofitable
products.
6. Sales effectiveness analytics
Sales
management reports are important to monitor the effectiveness of your sales
reps and help them identify selling opportunities in customer interactions.
Essentially these reports are about crunching meaningful patterns in your data
and actionable insights to improve the sales performance of your team.
With sales
management software like Close, you can trust that your sales
reps will stay organized, efficient, and spend time on deals that positively
affect your bottom line. Our dashboards will let you identify the traits of
your top performers so that you can shape your sales training.
You
can even share feedback with your reps for filling the gaps in sales
skills and improve their effectiveness.
Why
sales teams should measure this: Sales effectiveness analytics not
only improves the quality of your business decisions, it also enables
automating tedious business processes. Thereby your sales reps can spend more
time selling, and your sales force can grow stronger.
7. Diagnostic analysis
This
sales analysis involves justifying the trends and observations in sales related
data with reasonings. For example, the increased competition in the industry
might lead to a decrease in your product sales. Sales leaders conduct internal
diagnostics to identify the roadblocks for their teams, list their
observations, and brainstorm ways to improve.
The Center for Sales Strategy has prepared a
diagnostic list that you can refer to as a starting point for auditing your
performance.
For
your first audit, you can follow the five steps laid out for conducting an internal sales diagnostic here.
Why
sales teams should measure this: It lets you review the health of
your sales organization by giving detailed insights into different aspects of
your sales operations.
8. Prescriptive analysis
Remember
the “do this, not that” series? Prescriptive analytics involves generating
predictive inferences about customers and prospects. It empowers your SDRs to
know the right prospect opportunities they should go after and the offer they
need to pitch them (“sell this, not that”).
Indeed
your reps are empowered with a granular game plan for every prospect (based on
the analysis of past successful sales pursuits). They know the specific sales
action, including the sales cadence (i.e. the sequence of touch points across
email, phone calls, rich media, and social media), to increase the probability
of closing a deal.
Why
sales teams should measure this: Guided selling through
prescriptive analytics will make the jobs of your sales reps easier. It will
also improve the effectiveness of your salespeople and raise your win rates.
9. Marketing research
Occasionally
the good old market research helps make informed business decisions.
The
technique could involve surveying your customers over the phone, email, or
in-person. You can also study your competitors and general sales statistics.
Once
you get a good handle on the market conditions, you can evaluate your company’s
performance and identify the weaknesses of your sales team. It also identifies
potential business opportunities and gives a better understanding of your
customers’ needs, thereby improving your sales effectiveness.
Why
sales teams should measure this: Sales data analysis and
interpretation are based on your past sales data, but market research can fill
in the gaps of such analyses. For sales directors, it serves as a gateway into
the future.
How to perform sales analysis: a
3-step process
Once
you’ve chosen a sales analysis technique, here are three simple steps to create
your first sales analysis report.
Step 1: Identify the data you
want to track
You
need to analyze the right kind of sales data for generating meaningful insights
that positively affect your bottom line. Begin with objectives around the
departments or products whose sales performance you want to focus on. Here are
a few you can get started with:
- Measure the impact of
your sales training
- Find the top-selling product from a campaign
- Determine the characteristics
of your repeat customers
Next,
you need to identify your data sources, the variables that are relevant to your
above objectives, and the performance metrics you’ll rely on.
And
finally, choose a time frame for collecting your data. You can consider
choosing a weekly, monthly, quarterly, or yearly period depending on your
requirements. Regular tracking is essential, and you may want to conduct
analysis more frequently during special promotions.
Step 2: Choose a sales analysis
tool and analyze your data
Microsoft
Excel is a robust tool for sales data analysis and interpretation. To get
started, ensure that you have sufficient quantity and quality of data to make
informed decisions. You may have to lengthen the period of your data to arrive
at meaningful behavioral patterns.
With
Close, your sales reps can operate efficiently and dedicate maximum time to
selling. Indeed much of the sales analytics and reporting is
available inside the CRM.
Once
you’ve crunched numbers, you should get a historical overview of your sales
performance and insights into the success/failure of your team. You can draw
preliminary conclusions at this stage.
Step 3: Share your results with
relevant stakeholders
It’s
time to present your sales data analysis. Unless you’re asked to share the
process you used to arrive at the results, only show the key findings. You can
use graphs and visuals to help your audience interpret the data.
For
example: If you lead a team and want to share your sales performance with the
CEO, then you might include charts around your sales goals, your best selling
products, the revenue and expenses of your team, and the like.
Overall,
keep your presentation actionable and easily digestible. Depending on the
nature of your meeting and the role of the stakeholder,
you may want to dissect the sales trends and create recommendations for
improving your performance.
Top 10 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. If you want to explore more, please
check out the full list of 18 sales KPIs that you can track.
1. Monthly sales growth
This
metric tells us how your sales revenue has grown/shrunk month-over-month. It’s
an actionable metric that you can use to optimize your sales process and
strategies.
How
to calculate it: (Current month’s performance - previous month’s performance)/100
This
KPI dissects the effectiveness of your sales process by telling you about the
opportunities that your sales reps are creating. You can use it to forecast
sales and determine which opportunities are worth the most.
What
to track: Total
number of opportunities created by the sales team in a specified period
This
gives a broad overview of how your entire team is performing by telling you how
many leads are converting into sales. You can work backward from it to
understand why and how leads converted, then prepare a foolproof plan for
acquiring future customers.
How
to calculate it:
(Number
of leads that converted into opportunity in a given period)/(Number of leads
created in this period)
4. Average conversion time
This
sales analysis metric gives an insight into the productivity of your funnel by
telling you how long it takes for a lead to convert. Alongside lead conversion
rate, sales opportunities, and other metrics, this KPI gives you a bird’s eye
view of your sales pipeline.
How
to calculate it: Sum
of all lead conversion times within a specified period / number of lead
conversion times included in that period
5. Monthly onboarding and demo
calls booked
Prospects
that have made their way this far in your funnel are highly likely to convert.
So tracking this metric month-over-month is a great primer for determining the
health of your sales funnel.
What
to track: #
of onboarding & demo calls booked
6. Pipeline Value
This
metric tells you the expected revenue from all the sales opportunities in a
specific time frame. You get a quick overview of the current value of the deals
in the pipeline. And the progress of your sales reps towards your goals.
How
to calculate it: Value
of projected sale x percentage of confidence in seller that they will Close.
7. Sales targets
This
KPI gives historical data on how your team is performing in terms of revenue
generated, the number of product subscriptions sold, and the like. Instead of
setting ambitious sales targets, you should set attainable future goals so that
your reps remain motivated and don’t burn out.
8. Customer lifetime value (LTV)
This
sales analysis metric tells you how much revenue an average customer generates
for you during their lifetime with your company. You can use it to predict your
future revenue, but you need a large data set for accurate assumptions.
With
LTV, you can make informed decisions on how much your company can spend on
acquiring new customers (CAC).
How
to calculate it: Sum
of all revenue generated by an individual customer
9. Calls and emails per rep
This
metric tells you the volume of calls and emails that your sales team is making
over a month, week, or a day. Besides functioning as a sales productivity
metric for sales reps, it gives sales managers and leaders an idea if something
is off in your sales funnel.
What
to track: Sum
of all calls & emails made by the sales team in a specified period.
10. New and expansion Monthly
Recurring Revenue (MRR)
For
most SaaS companies, this is an important metric
that tells you the number of paying customers multiplied by the average amount
they pay.
How
to calculate these two metrics: The new MRR tells you
additional recurring revenue you added by acquiring new customers (or lowering
your acquisition cost). Expansion MRR is the revenue you collected from
existing customers as they upgraded their plans.
If
you’re just starting your sales process, then the above sales analytics metrics
might overwhelm you. So resort to the basic AQC
framework to stay at the top of your sales performance.
A
= Activity (for example: the number of cold calls your team is making)
Q
= Quality (for example: the actual number of decision-makers that your team
gets to speak on the phone i.e. your reach rate)
C
= Conversion (for example: how many sales your reps closed or how many demo
calls they booked)
Conclusion
Regular
sales analysis creates accountability, reveals insights
about your customers, the traits of top performing sales reps, and
more aspects that will improve your bottom line. I have shown you the different
types of sales analysis methods and given you a step by step strategy to
perform your first sales analysis.
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