9 Types of Sales Analysis Techniques for Businesses

Sales Analysis October 01, 2020

Chloe Henderson

Writer

Many businesses set short and long term sales goals to boost purchases and revenue, but some neglect the importance of tracking their progression. Through conducting regular cash flow analysis, management can view their sales team's performance from various perspectives.

Representatives can view the effectiveness of customer interactions, demand for specific products, and emerging market trends. Access to these insights allows companies to optimize sales efforts to promote sales, revenue, and cash flow.

What is a Sales Analysis?

A sales analysis is a detailed report that shows a business's sales performance, as well as customer data and generated revenue. The report defines the strengths and weaknesses of products and sales teams by referencing historical and current metrics to detect emerging trends that are most relevant to a company.

Typically, a sales analysis is mostly comprised of quantitative data, such as key performance indicators (KPIs) and charts. The most valuable KPIs include-

Regional Sales

Sales Per Rep

Average Purchase Value

Sell-Through Rate

Cannibalization Rate

Conversion Rate

Sales to Date

Sales Opportunities

Sales Targets

Sales Growth

Sales analysis provides critical values from which analysts can form actionable insights. This enables management to make data-driven decisions rather than relying on guesswork. With insights into various sales channels, companies can discover where their most-profitable customers lie, where additional promotions are needed, and which products need quicker turnover.

A thorough sales report gives businesses the ability to pinpoint performance weaknesses and make effective improvements to promote sales, revenue, and the bottom line.

9 Types of Sales Analysis Methods

Businesses can run several different types of analyses, depending on their sales goals. Every sales analysis method is directed towards a specific element to generate performance insights.

Therefore, management should determine where they need to improve, and which technique best fits their need.

1. Sales Trend Analysis

A sales trend analysis focuses on finding patterns from sales data within a specific timeframe. Many retailers use this method to determine micro and macro trends. A micro-trend covers a particular line of product for a week or so, while a macro trend may track a range of goods over the course of months.

This method enables management to determine their progress towards sales goals and detect increasing or decreasing product demand.

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2. Sales Performance Analysis

A performance analysis measures the effectiveness of a sales strategy by monitoring a sales team's performance. Aside from tracking sales per rep and other KPIs, this method often requires a financial analysis based on revenue generated from a certain department or period.

Analysts can also tailor the report to cover win rates, revenue growth, profit margins, and any other area of interest. This tactic shows sales teams their current performance levels and how it compares to what is expected.

3. Predictive Sales Analysis

A predictive sales analysis is generated by forecasting software, which uses historical trends to anticipate future risks and opportunities. This enables companies to mitigate threats and prepare teams to capitalize on emerging customer demand.

By utilizing predictive solutions, businesses can improve conversion rates and define opportunities to upsell or cross-sell, promoting sales and revenue.

4. Sales Pipeline Analysis

Sales pipeline analysis monitors consumers' activities before they finalize a sale or abandon their shopping carts.

These reports can generally cover several sales channels or breakdown interactions from a specific source. This discovers how sales representatives should interact with customers to improve conversion rates and finalize transactions.

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5. Product Sales Analysis

Businesses that offer several product lines and variances need to conduct a routine product sales analysis to determine which items are lagging sales. A product sales report considers KPIs and revenue breakdowns to discover item performance within a specific time frame.

Depending on what KPIs are used, companies can view product sales from the perspective of different demographics or customer demand. The results enable management to decide which products should be discontinued or promoted.

6. Sales Effectiveness Analysis

Also known as sales management, sales effectiveness analysis monitors each representative's performance to teach them how to finalize a purchase.

This report requires analysts to study generated metrics and patterns to create actionable insights. An accurate effectiveness analysis can enhance customer interactions to boost sales rates.

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7. Diagnostic Analysis

A diagnostic analysis finds the causes behind KPIs and sales trends to determine how to make improvements. For example, a company might discover that the reason the sales for a popular item has declined is not due to poor customer interactions but because a competitor launched a similar product line.

Management can identify obstacles and develop plans of action to improve team performance and overcome roadblocks. By regularly conducting a diagnostic analysis, companies can define new barriers and evolve their sales approach to remain competitive.

8. Prescriptive Analysis

While similar to the predictive method, the prescriptive analysis considers emerging trends and generates insights on how to handle different scenarios, based on available data.

For example, a predictive analysis would determine that customer demand for a particular product is going to increase within the month. A prescriptive analysis would take this piece of data and determine what sales channels customers will pursue and how representatives can maximize sales.

This enables businesses to capitalize on future opportunities, rather than investing in an approach that may not pay off.

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9. Marketing Research

Dedicating time to research market trends keeps businesses in the know of evolving consumer preferences to remain competitive. Management can contact customers directly via phone, email, or in-store to gain insight into what modern consumers are gravitating towards and how buyer personas are changing.

It is also helpful to discover the top competitors' statistics and methods, such as pricing strategies, customer interactions, and marketing efforts. With this information, management can accurately evaluate their strengths and weaknesses to develop effective marketing strategies.

By utilizing the different sales analysis methods, businesses can gain a well-rounded perspective of their overall performance to determine where to make improvements. With routine evaluations, management can ensure that teams are adapting their tactics to maximize sales.