Two florists have their petty carts near my apartment. The one on the left side of my apartment ( let us call him florist_1)
always has the same kind of flowers in nearly the same numbers throughout the year. The other one(florist_2 for the sake of our analogy) stocks up a lot of red roses around valentine’s day, a large number of flower bouquets in the wedding season, and traditional flowers during the festival season. Florist_2 has understood his market and consumers well. Therefore he has less wastage, more sales and hence more profits. Florist_1 could learn a thing or two from florist_2 to improve his sales. For a business like florist’s, it is easy to assess the market and derive conclusions because most of the use cases are visible out in public. If businesses whose products were not so apparent want to assess their markets and get feedback, how can they do it? How can an app developing company or a logistics company measure its market? The answer is, sales analytics.
By definition, sales analytics is simply the process of analyzing sales data. To elaborate further, sales analytics consist of measurement, management, and analysis of sales data. This is followed by modeling and predicting sales for the future.
By incorporating sales analytics tools, businesses can reap more benefits out of sales data. Apparent benefits comprises a deep insight to product and staff performance. This insight will help the businesses define their strategies for future growth by focusing on opportunities and pain areas
In simple words, sales analytics gives a sort of direction to businesses. They guide the company which practices to start, what to keep doing and what practices to stop.
Types of Sales Analysis
Several different kinds of data crunching can be done on recorded sales data. Some of the popular ones are listed below. Before we move into the crux of analysis, it is important to verify that we have uncluttered and clean data.
Analytics by SKUs
SKUs or Stock Keeping Units are unique codes that are assigned to each product (e.g barcode) that holds information about the inventory ,category and other details pertaining to the product. Tracking the SKUs is one of the basic forms of sales analytics.
This gives you an insight like what kind of product sells more in a particular geographic location and in what time of the year.
Analytics based on channel of distribution
A product can be sold in different channels of distribution such as retail stores, in brand shops, or on online e-commerce portals. The logistics, transportation, and operation costs for each of these channels is different
Analysing the sales on each of these channels can give a good idea for coming up with business strategies. With this approach, businesses can find answers to questions like Which channel in which demographic generates more sales?
Per capita analysis
A kind of relative analysis, per capita analysis can reveal surprising sales trends. The method of doing this analysis is to divide the amount of sales ( per annum for one brand) in a given area( a state or district) by the population of that area. This gives the amount of sales per person per annum. For more insights, the sales can be analysed for the male population, female population or people of a certain age group.
This analysis can help businesses accelerate sales with better targeted advertisements
Similar to this approach, businesses can also do a per comparable economic data analysis by including the GDP of the demographic area in the per capita analysis
Category Development Index(CDI) and Brand Development Index(BDI)
Category development index(CDI) aims at calculating the sales index for a particular category of products. This is calculated as the percentage ratio of an area’s per capita index to the per capita index of the country.
Generally, a value of 100 is considered as a benchmark average index. If the calculated CDI for a certain product category amounts to a value greater than 100, then the product category is considered to be above average market.
If the process is repeated for a particular brand in the product category, it becomes the BDI (Brand Development Index)
These indexes can help the businesses decide which regions need more attention in terms of advertising and promotions
Analyzing competitive trends
For a brand or business to stay relevant in the market, it is important to know their share in the market. Analysing competitive trends gives exactly this information.
For example, you know from independent survey agencies that your brand of cooking oil has a 10% market share in a certain state. Knowing your annual sales in that state, you can calculate the total worth of cooking oil market in the state.
Having an analytical database is very useful for analysing competitive trends. An analytical database is a database of all sales data along with relevant economic, competitive and demographic data.
This analysis is particularly helpful for businesses to understand their market and competitors better. Knowing what lies ahead of you helps you to come up with appropriate roadmap for progression
Loyalty programs give more insights into the spending pattern of an individual over time.
This micro-level data helps businesses to understand sales trends at different times of the year
While sales analytics deals with operations on historical data, marketing analysis focuses on the future. It is useful for identifying opportunities and problems. Sales analytics along with marketing research can steer the businesses towards better growths and profits
When used in the right way, data can be a currency for the future of businesses. To make the best use of available data, it is equally important to use the right technology and analytics. These processes are the building blocks of Digital Transformation and consultants like Pace Wisdom can help you out to pick the right analytics tools for your businesses.