Sales data analysis enables managers to make forward-thinking decisions. If professionals know which metrics to concentrate on, they can use this knowledge to boost their sales and income. This approach has proven to be equally efficient for organizations of all scales and spheres of activity. In the article below, we will talk about how to analyze sales data and how to fine-tune this technique to your company's needs.
What Is Sales Data?
It would be tricky to give a concise definition of "sales data" because it is a very broad notion. Basically, it includes all the measurable characteristics that are relevant to the sales procedure.
Today, managers do not need to collect facts, names and figures manually. They can obtain them from CRM systems and other similar solutions, most often cloud-based. But it is not enough to accumulate all these insights to carry out sales data analysis. Professionals need to interpret statistics and make conclusions. Then, they should think of how to apply the findings to their workflow to maximize its productivity.
This sales data definition might confuse commercial managers because it is too abstract. Instead of worrying about how to analyze sales data, they should rely on software that has relevant embedded functionality. People would be able to focus on immediate sales while technological solutions take care of gathering the data.
Which Metrics to Pay Attention to
Specialists should not aim to collect as much data as possible. Instead, they should concentrate only on the information that adds value to their organization or department:
● Number of calls made
● Number of emails sent
● Number of leads generated
● Lead response time
● Time spent on sales
● Follow-up time
● Sales forecast accuracy
● Average deal size
● Average time to close a deal
● Sales revenue
These were just a few examples of metrics. For small organizations, two or three of them might be enough. Large corporations might rely on tailor-made lists that feature dozens of elaborate metrics.
Methods of Gathering the Data
The most affordable sales data analysis tool is a spreadsheet. But it lacks specialized structure and automation tools. A good CRM would be an optimal solution for those businesses that can afford it. No matter which tool you select, make sure to conduct training for your staff before you start using it. All your team members should share an identical vision of the system's functions and opportunities.
The Pros and Cons of a CRM
This type of software automatically captures and saves all the relevant data. You will not need to insert the information manually. Normally, CRMs are accessible both in the desktop and mobile format and easily integrate with third-party solutions.
Once the system detects an efficient sales pattern, it will inform you about it. Managers can employ this pattern immediately to enhance their sales strategy. The more data you gather over time, the more precise will your forecasts become.
The Strong and Weak Sides of Spreadsheets
Unlike CRM, spreadsheets are free in most cases. Open Office or Google Sheets can serve as worthy examples of this type of software. Their primary shortcoming consists in the fact that managers need to type all the data manually. This might take too much precious time that the specialists could otherwise spend on immediate sales. Nevertheless, managers can automate certain functions of spreadsheets, such as carrying out calculations.
Additional Methods of Obtaining Useful Data
Not all the information that you can apply to your analysis comes from your own business archives. To expand your knowledge, you can gather insights from outside your company and take some proactive steps.
Follow the Industry's Trends
To deliver more accurate sales forecasts, follow the news of the sphere that you are working in. These should complement the data that you have gathered from your CRM but never overshadow it. If your time is limited, pay primary attention to the news about legislation updates and seasonal industry reports. Your second priority should be the trends and initiatives coming from entrepreneurs working in your sector. Finally, in your free time, you can read articles written by business owners.
Managers might be curious to get to know the following metrics:
● What is the current volume of the market in their segment?
● How many competitors does the company have? Which are the strongest ones?
● What are the commercial indicators of their competitors (if they disclose them)?
● Which measures do they take to improve their sales?
Today, many business owners openly share their experiences on the Internet. They tell their readers which problems they detected when developing their business and how they solved them. But of course, this is just the tip of the iceberg. When reading an interview with an entrepreneur or a guest post written by them, you should not expect them to reveal the most valuable information: how they processed the data they gathered to achieve the result that they are now proud of? How did they fine-tune the publicly available information to make it work wonders for their organization? Nevertheless, such publications can inspire you to apply a creative approach to data analysis.
Carry Out Marketing Surveys
If you cannot afford to order a survey at a professional marketing agency, compile a questionnaire yourself and distribute it among your loyal customers. There is nothing new in this method of gathering information but it remains consistently efficient.
How to Process the Data Collected
Most businesses would be curious to get answers to two questions. How easy will it be to sell their services or goods? And how many of their products will they manage to sell? Sales data analysis will help them to make accurate predictions.
Sales Potential
To estimate the overall potential revenue, managers should assess their chances of closing a deal at each phase of the sales pipeline. Stick to the following scheme:
- Compare those deals that you failed to close to successful ones.
- Figure out why and when you lost the deals.
- Based on the insights obtained, estimate your chances of closing a new deal in each section of your pipeline.
Let us back up this theory with an example. Segment all the leads that you handled last week according to the channel of communication: phone, email, personal meetings and so forth. Calculate the percentage of those leads where you closed the deal. Multiply the relevant percentage by the number of leads in each category (phone, email, etc.) that you have planned for next week. This enables you to estimate the number of deals you are likely to close next week, according to the channel of communication.
Managers should assign an estimated deal price to each of the leads. This will allow them to estimate the revenue they might expect and the customer acquisition cost. Plus, they can predict the chances of each lead moving to the following phase of the pipeline.
Sales Forecast
All the organization and not only the sales department should be looking forward to this forecast. Commercial managers should try to estimate the revenue that they will bring into the company in the next months. This will help determine the budget of all the departments of the business.
Sales forecasts are by no means synonymous with sales potential. The latter does not take the context into account. The sales potential would be equal to a forecast only in case the circumstances of sales do not change. Yet in reality, customers' demand might fluctuate depending on the season, a competitor might launch a powerful rival product or a financial crisis might hit the market.
Professionals in charge of compiling a sales forecast cannot use a crystal ball to check the future. But they can scrutinize historical data and reveal patterns that may apply to the current situation.
Old patterns might become useless during or after a period of unprecedented growth. When the organization has to deal with a steadily growing number of leads, its team might need to invent new sales instruments or an innovative sales structure.
When the context or the scope of your sales change, you should not simply discard the old data. You can still rely on the statistics that you accumulated earlier, but be ready to take multiple new factors into account. Keep in mind that the accuracy of your forecasts will not be too high during volatility periods.
Enhance Your Sales Strategy
The information described above explained how you can obtain valuable insights. Now, let us focus on how you can implement them in practice. After you learn how to do it, your performance will increase. You will not need to overstrain or work extra hours to achieve better results. Your staff will be closing more deals and reporting greater job satisfaction.
Get Rid of the Bottlenecks
At this phase, you do not need to change anything in your workflow. Just scrutinize the pipeline and identify which parts of it could be enhanced.
Analyze the statistics of your sales potential. Estimate the chances of each lead to proceed to the next phase of the pipeline. This will enable you to locate bottlenecks in your sales process.
You should not strive to close more deals than you lose. This would be an unrealistic strategy that might lead you to premature burnout. Instead, continuous and systematic improvement should be your goal. Detect and eliminate problems one by one and do not allow global goals to blur your vision.
Working on Your Sales Technique
This process can be split into six meaningful steps. Below, you will discover detailed recommendations for each of them. To achieve tangible results, you should apply all of them simultaneously, activating the synergy effect.
Generate Better Leads
Quite often, word of mouth delivers better results than paid promotions. If possible, ask your loyal clients for referrals on social media. This might bring you new leads. Use your CRM to select suitable clients for this.
Prioritize your leads. Aim to attract individuals that will purchase the full version of your product. Do not spend too much time on the segment of your audience who can only afford the trial version so far.
Try to trace trends between the source of your leads and their sales potential. This will enable you to better focus your efforts on the most prospective sources.
Enhance Cold Leads
To improve sales conversion, sometimes it is enough to prolong calls. The longer the salesperson talks to the client, the higher their chances to close the deal. If you are not satisfied with the efficiency of your cold calls, arrange a team meeting and discuss how you could involve your audience in longer conversations.
Build Relationships with Your Audience
To increase the demand for your goods or services, convince your audience that your products meet their needs. Let them know that you can solve their problems. For this, you should understand the demands and preferences of your audience very precisely.
Detect the key points on your pipeline. You can then analyze the data that is relevant to these key points. Try to estimate the chance of your leads moving to the next phase.
To assess the open and click-through rate of your personalized emails, run A/B tests. If your strategy works, then more leads should proceed to the next phases of the pipeline.
If compared to new clients, repeat customers tend to spend 67% more on your products. This is why it is essential to invest time and effort into building long-lasting relationships. Below, you can find a list of the easiest and most affordable ways to stay in touch with your audience:
● Inform your customers about your new goods or services.
● Interact with them on social media.
● Automate your marketing campaigns to deliver valuable information to the inbox of your existing clients.
Automatization will allow you to detect which campaigns encourage your audience to show interest in your products once again. Using a CRM, it should be easy to compare the revenue that you receive from your new customers and the loyal ones.
Enhance Your Communication
Personalization is the key to efficient negotiations. Fine-tune your email templates for the different phases of the pipeline. Define the goal that you want to reach with each template. Then, you can decide on the news that you would like to deliver to your readers. Once the template is ready, do not send it out to the recipients right away. Instead, run a series of A/B tests to try out diverse approaches.
To estimate the success of each stage, analyze the audience's response to your campaigns. How long does it take a commercial manager to send out emails? How quickly do recipients react? What is their reaction?
Do not be afraid to experiment. Aim to contact your audience on different days of the week and times of the day. This will enable you to identify the best time for sending emails or making calls. You should not rely on generalized statements like "People do not check their inboxes on weekends". Your target audience might use their emails on Sunday, but you will never find that out unless you try to send them something.
Also, you can experiment with the number of calls you make or messages you send. This will allow you to analyze the chances of pushing the lead to the next phase of the pipeline.
Make the Most of Your CRM
The process of sales consists of four steps:
● The manager approaches a potential client
● The client establishes a relationship with the company
● The manager convinces the client that the product has a unique value
● The deal is closed
In each of these phases, you can apply the accumulated insights to enhance your performance. This process, in turn, will provide you with valuable information that you can add to your analytics. The more details you put down, the better. Small nuances enable you to accurately detect reasons and differences. They tend to be most helpful when analyzing historical data and compiling forecasts.
Here are just a few examples of how the sales team can use a CRM to improve the results of the four phases described above:
● Email follow-ups allow sales managers to efficiently convert leads to customers. They should set automated alerts to remind them about the follow-ups.
● In the CRM, staff can prioritize follow-ups, which will allow them to increase the lead retention rate.
● They can use the integrated instruments of the CRM to establish personal relationships with leads. The better the sales team knows their clients, the higher the conversion rate.
A CRM helps managers to improve time management too. Commercial managers often fail to meet potential clients in person because they are too busy. The in-built tools of the CRM will enable them to plan their time more efficiently. Besides, they can scrutinize the conversion rate of various meetings with clients and decide whether they have a high or low priority.
Team Reports
All your team members should compile daily, weekly, monthly and annual sales reports, using unified templates. Each timeframe has a specific mission and structure.
● Daily. These reports help sales managers to better organize their working routine. They make sure that they coped with all the tasks planned for the day. They put down the number of emails they sent, the leads they generated and other meaningful indicators. This helps them to assess their own productivity. Their supervisors do not need to spend their time micromanaging each team member.
● Weekly. At the end of each week, you should organize a meeting of the whole team to discuss the progress. Here, you should focus not on individual achievements but on trends typical of all the staff. Each team member should express their opinion on the efficiency of the sales process and be allowed to initiate the debate.
● Monthly. This type of report is especially insightful for estimating sales potential and compiling sales forecasts.
● Annual. Stakeholders are always looking forward to seeing such reports. These documents allow them to assess the strategy and success of the business.
A unified template for each timeframe is essential. It saves the efforts of the sales representatives and facilitates the process of interpreting the data. All the reports should be saved in a well-structured database. The managers should be able to access them and use the insights for compiling forecasts.
How to Share Your Insights with Colleagues
It is not enough to carry out the analytics. You need to share your vision with all your team members. The whole staff should modify their workflow based on the insights that you obtained. Top managers will be especially interested to find out the reasons for the company's successes and failures.
When processing the data, specialists handle large bulks of information and draw conclusions. When preparing a presentation, they should act in reverse order. First, talk about their findings and then back them up with facts and statistics. When speaking in front of the audience, they might want to rely on the following recommendations:
- Treat insights as a narrative. Create a story with a beginning, several chapters and an end.
- Avoid overloading the slides with complicated data. This would confuse and bore the listeners.
- Target the narration to the audience. The financial department would love to hear about the revenue, while the marketing department would be primarily interested in the ratio of leads conversion.
If the data is rather homogenous, a spreadsheet should be enough to put it together. If the information is bulky and diverse, resort to specialized software that enables you to create complex dashboards that contain multiple diverse metrics.
Conclusion
Hopefully, this article came in handy. Now you should understand the definition of sales data and the most important tips on how to analyze sales data. Mind that it is not enough to carry out the procedure once or twice. You should work with the accumulated data regularly and systematically. The exact frequency depends on the scale of your business and the volatility of your sphere of activity. For instance, the demand for restaurant meals made from seasonal food products might fluctuate more than the demand for medicines for a sore throat. Sales analytics should help you to better realize your competitive edge and withstand fierce competition. This should lead to a bigger revenue and the growth of your company.
FAQ
Why is it important to analyze sales data?
Analyzing sales data can provide valuable insights into customer behavior, market trends, and areas for improvement within your sales process. By understanding these factors, businesses can make data-driven decisions to optimize their sales strategy.
What types of sales data should I track?
Every business shoul track sales revenue, sales volume, customer acquisition cost, customer lifetime value, conversion rates, and sales cycle length.
How can I visualize sales data for better understanding?
You could use bar graphs, line charts, pie charts, and heat maps, dashboards or data visualization software to create interactive visualizations.
What are some common pitfalls to avoid when analyzing sales data?
It's important to ensure that your data is accurate and up-to-date, and to avoid making assumptions based on incomplete or biased data.
How can I use sales data to improve my sales process?
By analyzing sales data, you can identify areas where your sales process may be falling short, such as low conversion rates or long sales cycles.You can experiment with different strategies and tactics to address these issues and improve your overall sales performance.
