What is Sales Analytics? Stages and Metrics

Sales is an integral part of the retail industry that determines how often a product is being sold and at what speed. When it comes to sales, any and every company has a set of determinants to take into account to achieve good sales and perform well in the market. 

 

That said, service sector companies can only claim to be successful if their sales are prosperous enough to sustain their efforts in the long run. 

 

However, the question is how can a company determine whether its sales department is progressing in the right direction or not? The answer is sales analytics. 

 

A proven method of analyzing the performance of the sales of a brand, the use of analytics in sales is deemed to be a very helpful field to help companies achieve success and make their sales fly high. 

 

Defined as a method of identifying, modeling, understanding, and predicting sales trends and outcomes while fueling sales management strategies and understanding the tactics behind sales. 

 

“Sales Analytics systems provide functionality that supports discovery, diagnostic and predictive exercises that enable the manipulation of parameters, measures, dimensions or figures as part of an analytic or planning exercise.”

 

In order to get an in-depth insight as to what factors are affecting the sales of a brand, sales analytics comes to the rescue and has emerged as a helpful tool over the years. 

 

Only a handful of teams are as data-driven as the sales team in your organization is. This is because sales encompass a wider goal of achieving success on behalf of the organization while taking care that the brand loyalty and customer experience do not get lost in the way. 

 

While the process of sales analytics is much of a data analytics procedure, it includes certain steps that will be discussed at length in the next segment. The process of sales analytics consists of a descriptive statement, diagnostic affirmation, predictive analytics, and a prescriptive solution. 

 

All these components of the sales analytics process together build the foundation of the team that looks after this process.   

 

 

Stages of Sales Analytics

 

Simply put, data analytics in sales is a method of modeling your insights and understanding the current sales patterns to give way to predictive analytics based on data-driven background. 

 

Even though there are various components that play an essential role in the making of sales analytics and its profitable outcomes, there are only 4 stages of sales analytics that are considered to be extremely goal-oriented when it comes to this matter. 

 

1. Descriptive

 

The first stage of sales analytics is known as the descriptive stage. This stage deals with identifying what happened and tracking all the historical sales data to formulate past reports. 

 

The descriptive stage is generally concerned with the task of laying down the sales performance so far and describing the pattern that has been prevalent to date. 

 

Compared to this, the descriptive stage also allows one to identify the current differences in sales and recurrent patterns that define how the company is currently performing in the market. 

 

This may also include the analytics experts digging into data of other competitor companies so that a comparison may be established between the performances of the main company and its competitors, both in the past and in the present. 
 

2. Diagnostic

 

Suppose your company is currently witnessing heavy losses in the sales department. Now that you have established what is happening currently and passed through the descriptive stage, you are now ready to diagnose the problem. 

 

This is when the sales analysts sit together to diagnose the cause of the problem. In their journey of identifying the root cause of the problem, the sales analysts may also identify other auxiliary factors that are directly or indirectly contributing to the problem. 

 

Yet, it is important for one to understand that a company may run its sales data with or without reporting any major issue. This is important as sales analysts might unknowingly identify a problem that could otherwise have been ignored easily. 

 

Thus, the diagnostic stage of the sales analytics process is very important to ‘detoxify’ the pipeline of sales data and remove any problems, if there are any. 

 

3. Predictive

 

The third stage of the sales analytics process is the predictive stage. As soon as the descriptive stage leads to the diagnosis of the problem, analysts move on to establishing predictive standards as per the historical trends that they have been able to identify as per the available data. 

 

The predictive stage allows the analysts to predict what is going to happen next, lay some future trends, and in a way create a ground for predictive analytics.

 

The predictive stage is the most crucial of all, as it not only explains how volatile the future trends can be, but also leads to expert-led trends that might occur in the future. 

 

This is important as any changes in the future other than those suggested in the predictive stage can lead to severe changes and thus, impact the whole performance of the sales department. 

 

4. Prescriptive

 

The last stage of the sales analytics process is the prescriptive stage. The prescriptive stage is the stage wherein solutions and goal-oriented strategies are offered to the sales officials so that they can work along those lines and do better in the upcoming future. 

 

The prescriptive stage can be understood as the ultimate stage of sales analytics that allows experts to offer the best plan of action. 

 

This is usually related to creating more customer-oriented products or reducing the prices of a product. Whatever the measures are, the goal is only to achieve better and bigger. 
 

The process of sales analytics can be understood with an easy and everyday example. Suppose you feel that your elbow is hurting immensely. Firstly, you would try to go back in time and think of the possible cause. 

 

However, if you are not able to do so, then you would visit a doctor. The doctor would first ask you what is happening. You will undertake the ‘descriptive’ stage wherein you will mention the problem and what is upsetting you. 

 

Then, the doctor will carry out a check-up to ‘diagnose’ the problem. As soon as the doctor is able to diagnose your problem, s/he may then move on to ask if you have had any such injuries or pain in the past as well. 

 

Based on this answer, the doctor will lay out some trends that you will discover to have turned true in the upcoming months or days. Finally, the doctor will ‘prescribe’ you the best cause of action or treatment to get better and bid adieu to your problem. 

 

The process of sales analytics is very similar to that of illness. The stages of description, diagnosis, prediction, and prescription are included in the process in such a way that the brand is able to recognize its shortcomings and work on them with its sales resources. 

 

Also Read | Prescriptive Analytics

 

Sales Analytics Metrics

 

As you have so far understood the process of sales analytics and its consequent stages, you will now get to read about the different sales analytics metrics that help sales analysts to carry out the process. 

 

These metrics can also be considered as factors that affect the work of sales and its performance in the long run. 

 

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Sales Analytics Metrics

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1. Sales Growth

 

The best way to reflect on sales analytics is to determine the sales growth of your brand and the speed at which your company is reporting sales revenue in a financial quarter. 

 

Sales growth can also report a product’s or a company’s ability to grow revenue, which definitely calls for a sales analytics action. The speed at which your sales performance is growing is exactly why and how you should be looking at analytics to drive sales. 

 

Any dip recorded in the past months or any increase in the sales revenue is a clear indicator that helps you measure the sales performance of your team in the near future. 

 

2. Product Performance

 

Another metric that can be employed to analyze the sales performance of your brand is product performance. This is usually carried out by identifying the sales of different products that reside under the leadership of the company. 

 

In addition, the product performance also indicates what kind of product is doing better and under what circumstances. This can be achieved by laying out a competitive analysis with other products being watched closely. 

 

This metric is helpful in not only determining the sales analysis of your company but also in indicating the overall performance of your product as a separate entity. 

 

For any team that is selling multiple products at a time, the diagnosis must be widespread so that even the minutest of the problems can be identified and cured in the process of working with sales analytics metrics. 

 

3. Lead Conversion Rate

 

The field of sales is not only confined to the selling frequency of a product. It is much more than that. The lead conversion rate defines how many people have turned out to buy your product after your salespersons had approached them for the same. 

 

While lead conversion is more inclined towards digital marketing, it is equally prevalent in the field of sales where conversion analytics help sales teams convert target audiences into potential buyers and thus, optimize their performance for the future. 

 

Throughout the journey of selling a product, conversions help a business get an insight into their selling capacity and market popularity.

 

4. Average Purchase Value

 

The average purchase value determines the average value of each purchase made by your customer as compared to the number of units bought. 

 

This metric in sales analytics helps businesses to determine the average purchase value of their product, which in turn can be increased to make their business more profitable. 

 

This metric is very essential as it directly relies on the amount of money your customer is giving to buy a particular number of units of your product. 

 

5. Sales Target

 

Lastly, the target your team or you as a business head wish to achieve says a lot about the kind of analysis that goes into determining your selling capacity. 

 

This can refer to any determinant that your sales team deems to be fit - number of units to be sold in a month/ year, revenue generated over a period of time, or even number of accounts reached. 

 

The success determinant can be determined by your sales team which will help sales analysts to provide prescriptive measures in the long run.  That said, sales targets can be analyzed by evaluating the performance of your business and more realistic goals or targets can be suggested in the process. 

 

Also Read | Guide to Sales Metrics

 

To sum up, sales analytics is not child’s play. However, it is not rocket science either. If you are looking to analyze the selling capacity and caliber of your business and products, then sales analytics with the help of important sales analytics metrics can help you achieve an insight into the same to enjoy sales analytics benefits.