How to Build a Sales Dynamics Chart

The profit of any business depends on how well the sales process is established. By understanding the current profit and the extent to which the plan is being implemented, the head of the enterprise will be able to predict the growth or decline of revenue, optimize the promotion of products. The analysis is performed to:

There are 10 methods of analysis that focus directly on sales, and several more for studying secondary factors. But no matter which method is chosen, research is carried out according to the same algorithm:

As a result, the analyst makes the following conclusions:\n✔ whether it was possible to sell more than last month, whether there is an increase in sales;\n✔ how much sales have increased compared to last year;\n✔ whether there is seasonality, that is, fluctuations in demand compared to the average value for the year.

This is usually the way to analyze the winnings. But you can also use other indicators, for example, the size of the customer base (including the analysis of only active customers who bought at least once during the selected period), profit, sales volume in pieces.\nIn any case, the same formula will be used:\nIndicator of the current period / indicator of the past period\nIf you need to calculate the growth rate in percent, then the result obtained must be multiplied by 100%. Next, the result is analyzed:\n✔ a growth rate of more than 100% means that sales have increased compared to the previous period;\n✔ a growth rate of less than 100% indicates a decline in sales;\n✔ the value is equal to 100% - sales have remained at the same level.

ABC-ANALYSIS ABC\n\n-analysis refers to structural, that is, it allows you to look at sales from the point of view of their composition. The analyst will see exactly what was sold and brought in more revenue. Basic ABC analysis of revenue study. The method can also be used to analyze sales by product group and sales channels.\nIn any case, sales will be divided into 3 or 9 groups, depending on the type of analysis. The distribution is based on the Pareto principle: to get 80% of the desired result, you need to identify 20% of the most effective actions and concentrate on them.\nTo conduct research, you need to list all products and indicate the sales volume for each of them, and then form a rating from the highest revenue to the lowest. Then it is necessary to start summing up the received winnings with an incremental total. That is, next to the second item, you need to indicate the amount of revenue from the sale of the first and second goods, next to the third - the revenue from goods 1–3, etc. For convenience, you can calculate the share of total revenue. Then you need to divide all items from the list into groups:\n\n✔ group A will include all items whose revenue was 80% of the total value;\n✔ products with a total revenue of 5 to 15% will fall into group B;\n✔ group C will include all the remaining products.

After ABC analysis, similar XYZ segmentation can be performed. To do this, you need to select the second indicator related to the first. For example, if the ABC analysis studied product positions, then for XYZ you can look at the quantity sold. The result will be information about which products are in demand and at the same time bring the most profit. After all, sometimes an unpopular but expensive product is sold only a few times during the month, but due to the high price it makes up the majority of the revenue. And the sought-after inexpensive trifles fall into groups B and C. However, the segmentation of goods according to the uniformity of demand is carried out somewhat differently than according to the volume of sales in money. Product data must be entered into an Excel table, in which the formulas for determining the coefficient of variation will already be entered. Depending on the ratio, the products on the list fall into groups:\nX - products with a ratio of less than 10%;\nY - positions with a ratio of 11-25%;\nZ - products that are more than 25%.​​\n\nThe coefficient of variation is the deviation of the sales volume from the average value. For example, product 1 has been sold steadily over the last year, about 1,000 units per month, and as a result, brought the company 1 million hryvnias for the year. And product 2 was sold with different intensity, from 200 to 5,000 pieces in different months, but as a result brought the company 7 million in revenue. It seems that the second product is more profitable, but its sales are unstable and poorly predicted.

The bigger the company, the more branches, distributors or networks it has, the more important it is to analyze what and in what quantity was sold at each point of sale. For this, an analysis of the revenue structure and check is carried out. As part of the analyst's research, several indicators are important:

Ideally, the calculation should be carried out in a special program, but you can also calculate it manually using the formula:\nAmount of sold SKUs in all retail outlets / number of outlets\nIf there is a positive trend in the average SKU, the company occupies a larger market share, which indirectly indicates an increase in demand for its products. Therefore, it is better to conduct this analysis in a comparative form, calculating the average SKU both for the past and for the current period.

Analyzing the dynamics of sales, it is necessary to look at the product groups that bring the most profit and income. The analysis is based on the calculation of several indicators: the market share occupied by an individual product, the dynamics of this market share compared to several past periods, the volume of sales in monetary or physical terms.\nAs part of the analysis, these indicators are calculated either for all products that are in the assortment, or only for key products or product groups in general. Then, the sales data is distributed across the matrix, which is a graph with horizontal and vertical axes. One axis shows the product's market share, and for objectivity it is better to compare the market share of all products with a given reference value. If X is taken as a sample, the market shares will be 1X, 3X, 0.1X and similar values. On the second axis, the growth rate of the market should be noted from 0 to the highest value that was obtained for the products.\nProducts are distributed according to the matrix, taking into account their share and growth rates. The sales volume is also entered into the matrix: the higher the sales volume of an individual product, the more prominently it should be marked in the graph.\nThe result is a graph with four squares, each of which contains several products. A different sales strategy is defined for positions from different squares. For example, the assortment includes products that are very actively sold and are rapidly increasing their market share. As a rule, the demand for these products is dictated by temporary trends. In order to continue to make a profit from their implementation, it is necessary to maintain attractiveness against the background of analogues for as long as possible

Other products have a small market share, but may differ in growth rates. There are positions that grow quickly, that is, you can invest additional funds in them. Then they may move into the trending category and bring in a lot of revenue.\nThe remaining products have a low market share, low growth rates, and small sales volume. It is unprofitable for the company to keep them in stock and bear the costs of delivery and storage in the warehouse. Easier to remove them from sale.

A control analysis of sales volume and profit volume should be performed by all departments in which employees face a plan. If the sales plan is implemented in full, the manager needs to determine deviations between the plan and actual results with the help of control analysis.

Such an analysis can be carried out taking into account various indicators: as revenue, but also profit, profitability and other metrics, provided that they characterize the effectiveness of sales.\nFor example, for the last year, the company set planned indicators:\n✔ to sell product A for a total of 1 million hryvnias;\n✔ to sell a product for the amount of 1.5 million hryvnias.​​\n\nIn fact, products A and B were sold for the amount 750 and 950 thousand hryvnias, respectively. It is necessary to calculate the percentage of implementation of the plan by dividing the actual value of the plan and multiplying by 100%. It turns out that the plan for product A was fulfilled by 75%, and for product B - by 63%. You can compare the results of work with the past. Then the profit was 650 thousand and 1 million hryvnias, respectively, and the plans were fulfilled by 95% and 115%. Such an analysis allows us to draw the following conclusions:\n✔ in general, there is an increase in revenue compared to the past; since the implementation of plans has decreased, it will be considered that the increase in revenue is not related to the development of the company, but to inflation;\n✔ seeing the over-fulfillment of the plan last year, the director set a higher bar this year, but supported it with additional investments in marketing and sales training. As a result, managers were unable to sell more.​​\n\nProduct B's plan was severely underachieved, so ROP needs to understand when employees started having problems. According to the decomposition of the plan, it can be seen that in the first quarter it was necessary to sell 400,000 out of 1.5 million, and the employees coped with this task. And in the second quarter, out of the same 400,000, it was possible to sell only 200,000. It is important to understand what influenced such a low result.

If it is necessary to identify the factors affecting the volume of sales and revenue, factor analysis is used.

Because the price of goods depends on the costs and cost of production, and the price and volume of sales, in turn, form revenue. By changing any of these values, you can adjust the revenue up or down. The analysis is carried out as a comparison of the current period with the past. For example, a company is experiencing revenue growth, but profits are not increasing because the revenue growth was due to scaling, which required additional costs. However, the director of the company wants to increase the profit and for this he is trying to understand what exactly affected him. For analysis, he uses the following data:\n\n✔ revenue for the current and past periods;\n✔ cost of goods;\n✔ commercial expenses;\n✔ Administrative expenses;\n✔ price change index, i.e. the ratio of prices in the current and past periods;\n✔ sales volume.​​\n\n\nIf the profit has changed, it is necessary to look at other indicators and find among them those that have also changed. Most often, the profit decreases according to the following metrics:\n✔ reduction in sales volume;\n✔ increase in the cost of production; \n✔increasing commercial and management costs.‍\n\n\nNow it is necessary to see if there was really a change in these indicators. According to the report, it can be seen that the sales volume and the cost price remained the same, while the commercial expenses increased. Therefore, only they affected the profit. They need to be reduced, optimized, then a higher profit can be calculated in the next period.

Revenue growth, which always entails an increase in sales efficiency from an economic point of view. For example, the volume of sales increased, and the profit remained at the previous level. To increase sales, the company had to invest, for example, spend more on product advertising and automation of sales processes. But since the profit remained unchanged, the company's investment did not pay off.\n\nIn order to monitor the economic efficiency of sales, it is necessary to conduct a profitability analysis.

Profitability is determined by the following formula:\nProfit/revenue\nFor example, the company trades goods from three groups. For this year and last year, the indicators were as follows:\nProduct A had a target profitability of 45%, and this indicator was 51%. That is, the plan was exceeded. But last year the profitability was 53%, that is, compared to last year, there is a decline;\nthe product had a plan of 55% profitability, and it turned out to be the same. Last year, the profitability was 50%, that is, positive dynamics are now observed;\nproduct Z practically exceeded the profitability plan, as 45% was expected, and the result was 48%. Last year, there was the same plan, and it was slightly overdone. So, although the plan was exceeded this year, nothing has changed compared to last year. Now the company can assess which products are the most profitable to sell. It turns out that it is product A or product C, because economically they bring more returns to the company.

Different buyers contact the company with different frequency and leave different amounts. Therefore, it is worth analyzing the customer base and finding those groups of consumers who buy more actively.\nIn order to control the customer base, it is important to know two indicators:\n\n✔ the total volume of the base. This includes current customers with whom the deal is under discussion, past customers who have not been active for a long time, regular customers who buy regularly and the deal with them no longer requires long discussions. In this case, the customer base does not need to include the contact details of those who once signed up for the newsletter, but have not shown interest since then;\n✔ active customer base This is the number of buyers who have shown activity during the reporting period. For example, if such a period is a quarter, then only those who showed activity during the quarter are included in it. If there are regular customers who make purchases regularly, but this quarter they did not cooperate with the company, then there is no need to enter them into the active customer base.​​\n\nNext, the growth of the base in general and the number of active customers are analyzed. For example, over the past six months, the sales department concluded 5,000 contracts, that is, during this period, the active base was 4,500 people, because some of them made two or more purchases in six months. However, the total customer base is 9,000 people, that is, only half of the customers have shown activity.\nLow customer activity can be due to several reasons:\n\n✔ managers work inefficiently when calling customers. Part of the base was not called, people did not learn about new products and promotions and therefore did not make a purchase; remarketing and retargeting are poorly configured in the marketing department, work is not conducted with customers who have left;\n✔ during two months out of six, the sales department lacked employees, because managers went on vacation and on sick leave. At the same time, the peak of client activity (relative to the total client base) fell on March, which is connected with the seasonal demand for goods.

Many entrepreneurs are interested in how to determine the volume of sales quickly. This can be done with expert analysis. However, due to the fact that the research is carried out in an express format, its results may be biased. However, it will help to form a general idea of ​​how things are going in the company.\nExperts participate in the expert analysis, for example, specialists from the company or invited economists, marketers, sales managers. However, if the analysis is carried out regularly and the same employees are involved each time, the probability of obtaining unreliable results increases. After all, each expert has his own established view of the market situation. You can get more benefit from the research if you involve customers or partners, suppliers in it. The essence of expert analysis is this: the factors that influence the company's success are determined. Then the counterparties are interviewed: they say whether this or that factor is important enough for them. Counterparties rate each factor according to the level of significance. The estimates are then grouped and the analyst receives a summary table.

In some cases, the involvement of the firm's employees, rather than external contractors, is justified. For example, the director thinks in which direction to develop in order to increase sales: to introduce novelties into the assortment or to attract new customers, to enter new markets. The director attracts experts:\n\n✔ a full-time financial director to describe exemplary financial costs for a particular development path;\n✔ a sales specialist to characterize the needs of existing customers;\n✔ a marketer to characterize current customers and a new sales market;\n✔ a supplier manager to tell whether counterparties have any interesting products.

In addition, you can implement several more methods of analysis, which are indirectly related to sales, but affect them. It is recommended to regularly check how effectively the processes of purchasing, sales, and placing products on store shelves are built.\nThen the analysis of sales dynamics will affect all areas of the company's work. The more qualitative and comprehensive the study of sales is conducted, the higher the chance that the company will increase profits and occupy a higher position above the market.