Plan for the future with periodic business analysis
Frank Lloyd Wright advised, “Get the habit of analysis—analysis will in time enable synthesis to become your habit of mind.”
A clever business is one that looks at every facet of the sales cycle. This includes a periodic, thorough sales analysis. According to business intelligence software company MicroStrategy, “Sales reporting and analysis provide visibility into a company’s sales pipeline, integrating information from sales, customer and financial sources for a complete picture of sales performance.
“Business intelligence enables organizations to associate sales pipeline data with financial, marketing and customer information to make informed, strategic decisions to improve sales effectiveness.”
In a nutshell, sales analyses indicate to business owners where to best spend their time and money.
Failure to consider the sale after the fact through sales analysis will mean a business is ill-equipped to adequately predict and prepare for future sales trends. This means potentially wasting time and money through endless “guesstimating,” which can have a large impact on the bottom line.
Questions to Ask
Often, business owners — particularly those whose businesses have been in operation for a considerable amount of time — hold unique intuitive ideas on what sells best when, by whom and why. This may seem adequate for some; however, intuition is not easily transferrable. Difficulties may arise when delegation becomes necessary for actions such as stock ordering.
A sales analysis gives business owners the tools they need to adequately drive their businesses forward. It answers important questions such as:
- Which products or services are bestsellers? This means understanding which products are your best performers and why. Is it because your salespeople are pushing a certain product or line? Does the product have the best internal or external marketing and public relations? Is the product simply the best option?
- Which products or services have the highest margins? The bestsellers do not necessarily have the best margins. This needs consideration when attributing efforts in selling, because moving smaller amounts of high-margin sellers often is more profitable than moving larger amounts of low-margin sellers.
- What kind of customers is the business attracting? Build a customer profile using information such as gender, age, income, socioeconomic background, marital/family status, wants and needs. This information will assist in directing marketing strategy going forward.
- Which sales representatives are the best sellers? Who are the best performers and what is their process? Could lower-performing salespeople learn from these star sellers?
- What are the sales forecasts for the coming year? Determine when peaks and troughs are likely to occur.
- What external influences will likely impact sales, and are they predictable? Impacts such as seasons can be predicted easily, and a strategy formulated accordingly; however, spontaneous influences such as politics and the economy are not as easy to predetermine, so concessions need to be allowed for them.
Once a business begins to collect this information, historical figures and trends should lead to an indication of what is to come.
Businesses may wish to utilize a variety of tools to analyze sales figures and gain insight into initial trends.
A simple spreadsheet can suffice for initial analysis. This means inputting data and sales figures on the products and services the business currently sells. This can often be time exhaustive, so if the inventory is particularly large, more technical software may be appropriate.
Sales analysis-specific software such as ExcelIdea.com and Zoho Reports are just two options that have attracted reputable reviews and give dynamic results to sales queries and basic reporting. Each is enabled to receive spreadsheets, so a program such as Microsoft Excel for initial analysis is still a good option.
Implementing software options such as these also can begin a customer-relationship management (CRM) process.
CRM is the result of technological advancements and the growing need for businesses to better satisfy customers in order to retain them. It is a business strategy that enables a company to get a better understanding of its customers and how best to attract new ones, thus leading to increased profitability.
CRM enables a business to customize a product or service offering and understand a customer’s wants and needs before he or she realizes them. Sales analysis with built-in CRM can evaluate which customers are once-offs, which customers are loyal repeat customers, what repeat customers usually buy, and more. From there, a strategy can be formulated based on that customer’s buying habits, such as marketing products or services that complement previous purchases.
In the current economy, businesses cannot afford to waste time and money on products and services that customers do not want. Guesstimating worked for many business owners in the past, but now we are able to take advantage of technologies that can help with intuition. Better understanding customers’ buying habits, when sales are likely to occur and how best to be profitable is a strategy all businesses should adopt. We cannot predict the future, but we can certainly get a good idea.