How to Analyze Sales Performance: The Complete Guide

How to analyze sales performance" is a question that often resonates in the corridors of businesses, big and small. In an era dominated by data-driven strategies, dissecting sales metrics is not just about counting revenue, but understanding the dynamics that drive those numbers.

The metrics don't lie. According to a recent study by McKinsey, companies that effectively analyze their sales performance are 23% more likely to outpace their competitors in terms of revenue, and they achieve 33% higher close rates.

Meticulously dissecting sales data, can help businesses uncover invaluable insights into the efficiency and effectiveness of their sales strategies and practices.

Yet, with the global market size for sales analytics expected to reach $4.2 billion by 2025, the challenge isn't just about collecting data but understanding how to sift through, interpret, and leverage it.

In a pivotal case study by AIHR on key drivers for retail sales performance, it was noted that 4 important aspects helped analyze sales performance in retail units:

• The presence of a merchandiser was one of the main factor that drives growth in retail stores
• The different lines of products increased sales volume by 1.3x
• Including stronger and more familiar brand names that resonated with the customers in the area
• The merchandiser psychometric profile affected the sales of the retail outlet by 20%.

This blog aims to demystify the process, taking you through the integral steps and techniques essential to effectively analyze sales performance.

10 Tips to analyze sales performance

Using an effective sales performance strategy, companies can not only record, but also measure and match sales performance across industry benchmarks to identify the current level. This helps in bridging the gap between the actual and desired level of efficiency.

In a case study on how to analyze sales by Elizabeth Mac Halele, she explains that looking at sales figure should be from many different aspects and not just at the items and their sale value or the dollars of revenue you made over the last couple months.

Businesses must be able to consider various approaches by analyzing smaller things in detail such as-

• Singular item performance
• Cross referencing SKU and sale volume
• Sale through rate over different periods of time etc.

Here are 10 tips that you can implement in your business to help the process of analyzing sales:

1. Set clear objectives

First and foremost, it is important to set the right goals and objectives for the sales team to achieve.

Knowing the clear objectives helps sales personnel to work towards achieving those goals. It helps the sales team to prepare themselves, be clear about their overall and individual targets and make use of sales tools that can enable them for their goal achievement. Setting clear objectives includes:

• Preparing and coming up with the yearly, monthly target for the sales team
• Giving out individual sales targets for sales personnel
• Laying out clear guidelines to achieve sales targets
• Enable sales personnel with the tools and techniques needed to achieve the target

2. Track KPIs

KPI or Key performance Indicators help sales performance measurement. Measuring KPIs help in establishing the performance levels by looking at some of the indicators. Here are some important KPIs that sales managers should be looking at:

• Annual contract value - The value of total customer sale volume. This includes the actual sale volume achieved, cross selling or upselling opportunity that has been gained from the customer.
• Customer lifecycle value - The entire time and volume of purchase spent by the customer with the brand is an important metrics of sales performance in a company
• Customer retention rate - The value of customers that are retained by analyzing repeat purchases by existing customers is a crucial metric for analyzing the sales performance and the linked customer satisfaction value.
• Conversion rate - the amount of leads that are present in the pipeline and the number leads that actually convert to customer is an important parameter for sales performance

3. Segment data

Customer segmentation using the data collected by the sales personnel is an important factor for sales performance. Using segmentation techniques, customers can be prompted to buy the right products, thereby increasing sales turnover and sales satisfaction.

Segmentation not only helps with better customer targeting and therefore better sales conversion, but also makes the sales process easy by offering the right product to the right customer.

Customer data can be segmented using following criteria:

• Demographics such as age, gender, location etc
• Customer preferences
• Past purchase history
• Competitive product that is used by customer
• Average spending power or capability

4. Use a CRM system

A CRM system helps in recording customer performance and customer satisfaction is an important tool that can help with tracking customer needs, wants, customer purchase history etc.

CRM and sales platform works side by side to make sales performance better and record data so that customers can be serviced well after the sales process concludes.

It encourages repeat sales and referral from a satisfied customer. The data gathered by CRM software helps sales team with crucial business insights such as:

• Pipeline analysis
• Lead conversion and drop out rate
• Length and turn around time of sales call
• Sales team performance with customer satisfaction score
• Repeat purchase history or loss rate with reason

5. Analyze sales funnel

Sales funnel is the entire journey from start to end for a customer when buying a product.

By means of a sales funnel you can predict how potential customers behave using the sales funnel. The sales funnel helps in understanding how customers come to know of the brand once they realize that they have a need and how they end up purchasing a product.

It is most important to identify where the customers tend to wean off and not purchase the brands offering and why this happens.

• The top end of the funnel is marketing - where the brand needs to make the customer aware of their pain point and then introduce the product
• The middle part is the sales - where the actual sales takes place between the two parties
• The end of the funnel is the happy and satisfied customer who comes through the sales cycle and through the sales funnel.

6. Compare periods

Period over period analysis and Year on Year analysis are two important tools that help in measuring sales performance over two periods.

Using this method, performance metrics can be measured using different KPIs over two different periods to understand many important insights over two measurable period of time such as:

• Marketing efforts and their analytical reports to see the difference
• The effect of marketing efforts on the sales performance
• Difference in turnover and sales revenue in the two periods
• Customer satisfaction, repeat purchases and satisfaction score
• Overall growth between the two period of time

7. Competitor analysis

Competitor analysis helps in understanding the industry standards and competitor techniques that are being used in the market.

Using this analysis, companies can analyze the market and check for the customer trends when compared to competitor products.

Competitor analysis also helps with learning from the new trend in the market and fine tuning the sales process.

• Research methodology into competitor brands, products and services
• Helps with value proposition of the competitor product and our own product
• Check for market trends, competitor techniques and learning from them
• Identify weakness of competitors and capitalize on that
• Helps in establishing an overall market benchmark using competitor product reviews

8. Customer insights

Customer insights or customer feedback is one of the major tools that helps in assessing sales performance.

If the sales team does a good job, customer satisfaction is high, the repeat purchase is high, the sales team gets more referrals, and the customer feedback and customer insight is also positive.

Using a detailed method of capturing customer insight, data can be collected, organized, and studied and sales performance can be improved based on this data. Some modes for collecting customer data are:

• Phone-based survey
• Website survey form
• Mobile based poll option
• POS feedback collection
• Social media and digital testimonials

9. Sales team assessment

Assessment is a part and parcel of any organization. Constant analysis and assessment helps in keeping things on track and also assists with compliance of sales policies.

Sales teams can be assessed using online and virtual assessment tools today, thanks to sales enablement and training softwares. These tools help in assessing various skills of a sales person while also enabling and training them in the right manner based on their performance. Some modes of sales assessment are:

• Online Theoretical tests
• Practical case based scenario assessment
• Communication assessment
• Mock Pitch test
• Verbal tests using role plays

10. Visualize data

Visualization of data is an effective way to enhance sales performance and analyze them over a period of time.

Sales data visualization makes use of graphs, charts, analytical tools using sales dashboard, marketing analytical reports and many other such visual aids to help organize and display data in a clear way to put things in perspective.

Visualization makes data more easy to perceive and more effectively delivered to the intended recipient so that crucial sales performance related business insight can be made from it. Some popular benefits of data visualization reports include:

• Helps measure KPIs of sales performance
• Makes data decluttered and easy ingestion of information
• Visual representation of data for better understanding
• Multiple data from various sources can be compared visually
• More effective than theoretical data and visually appealing.

How to improve sales performance with Xoxoday Compass?

Xoxoday Compass is a cutting-edge sales performance management platform tailor-made for revenue-driven teams. Let's break down how Compass can dramatically improve sales performance:

1. Maximized sales performance with gamification: Compass offers an intuitive commission management solution, equipped with gamification templates. This keeps sales teams engaged with rewards, badges, and cash payouts upon achieving set goals. A gamified approach promotes a healthy competition, ensuring motivation and productivity.

2. Accurate insights lead to faster deal closures: With Compass, sales teams receive pinpoint insights which allow them to finalize deals swiftly.

Moreover, the assurance of timely payouts maintains their motivation, ensuring continuous performance enhancement.

3. Unified data view: No more switching between multiple tools. Compass serves as a single source of truth, offering a consolidated view of all your data in real-time. It eliminates confusion and boosts data-driven decision-making.

4. Engagement amplified: The platform's custom nudges and push notifications, sent to email, SMS, or WhatsApp, keep the sales team consistently oriented toward revenue goals, ensuring a sustained momentum.

5. Scalability at its best: Compass boasts a low-code technology, allowing businesses to scale their commission programs smoothly, even when dealing with millions of records.

6. Quota management made simple: Whether you're dealing with top-down or bottom-up quotas, Compass is versatile. It's seamlessly integrated with CRM, ERP, and HCM solutions, and offers predictive quota planning using real-time, historical, and simulated data.

7. Real-time reports & analytics: Track your team’s performance with real-time data. With Compass, you can visualize data trends across different metrics and customize dashboard views for different roles, thereby driving faster and smarter decisions.

8. Data integration for a complete picture: Compass allows you to sync your sales data with commission plans for up-to-the-minute insights. You can also upload KPIs and pipeline data, creating rules, variables, and conditions for a holistic view.

Conclusion

It is important for companies to adopt a strategy that helps them identify how their sales performance is and how to improve it.

Using an effective sales performance analysis strategy not only can companies and businesses help in fine tuning the sales efforts, it helps in the overall improvement of the business turnover.

Sales performance software is one of the many ways to record and implement various strategies that help improve the sales techniques and help with improving the sales performance in the company.

These 10 tips mentioned above can help companies to implement a simple yet effective strategy to help companies grow and prosper in today's competitive world.