Evaluating Sales: Making everything count Pt. 3//
Sales – seen by many as the ultimate measure of success. But number of sales alone is a dangerous metric to base future decision-making upon.
True, the number of sales will tell you how many products you have managed to sell, but what it doesn’t give you is any context for those numbers. For example:
- Were the products sold at full price or reduced for any reason?
- Did the products all sell at the same price?
- Did you make any money from selling these products?
When it comes to evaluating sales, the following metrics are a useful guide and cover both online and offline activity:
Target vs actual. Did the total number of sales meet or exceed the targets set at the outset? If they fell short – what was the reason for this?
Revenue. How much money your sales have generated in total
Profit (total sales revenue – total costs). Once you take into account all the costs concerned with bringing your product to market eg raw materials, production, marketing etc how much additional money (profit) have you actually made?
Share of wallet. The percentage of a customer’s spend, with a given company, over a specific amount of time eg if a customer buys cupcakes 4 times a month and 3 out of the 4 times they buy from you – you have 75% share of their wallet
Cost per acquisition/lead (total activity costs/no of acquisitions or leads). Tells you how much, on average, you are paying for each acquisition/lead
Conversion rate (no of transactions/no of visitors or leads x 100). Tells you percentage of leads that convert. Conversion rate is often used in website analytics to identify success in achieving pre-set website goals.
Average transaction value (total retail sales/no of transactions). Tells you how much, on average, each sale is worth
These are just a few of the many metrics available for evaluating sales. If you need a hand with any aspect of marketing measurement and evaluation get in touch today.
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