What Is Sales Analytics? (With Metrics and Benefits)

By Indeed Editorial Team

Published November 22, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Companies can evaluate their performance by analyzing various data relevant to their business. One area a company may consider is its sales, which can have a significant impact on its profitability. Learning about how various organizations analyze sales data can be beneficial if you're a senior manager or work as part of the sales and marketing team. In this article, we define sales analytics, describe some sales metrics that organizations can track and analyze, and explore their benefits.

What is sales analytics?

Sales analytics is the process of generating insights from different sources, including sales data, metrics, and trends, to set targets and predict future sales performance. It uses technology that collects and measures sales data, such as purchases, reach, and customer interactions with the brand. These analytics focus on improving and developing strategies that can increase sales performance. Through analytics, sales and marketing teams can define metrics as they begin their marketing campaign, allowing them to easily track their performance and progress. In general, analytics has four categories:

  • Descriptive: This answers the question, “What happened?” It involves using past sales data to compare and understand current trends.

  • Diagnostic: This answers the question, “Why did it happen?” It involves examining and scrutinizing data to understand the cause of an event.

  • Predictive: This answers the question, “What's going to happen?” It involves taking information from previous sales data and using it to forecast future patterns and trends.

  • Prescriptive: This answers the question, “What's the best solution or action?” It involves analyzing the data to develop an effective strategy or make an informed recommendation.

Related: How Business Analytics Impact Decision-Making (5 Ways)

What are the key sales metrics to track and analyze?

Identifying key metrics is crucial to monitoring the performance of the sales team and marketing process. Doing this provides you with relevant data for a more thorough analysis. Before you begin processing your data, it may help to understand the metrics and key performance indicators (KPIs) presented to you and lear about how you can use the information. There are many different metrics to consider, including:

Sales growth

Sales growth focuses on the team's ability to increase revenue. It provides data on how much the revenue increases or decreases in a given period and shows how well the team is performing. Determining your sales strategy can be vital to your decision-making process to improve revenue output.

Related: What Are Sales Metrics? (Definition, Types, and Importance)

Sales target

Sales target measures the current sales data with previous data or targets. This metric is often based on previous growth rates and revenue to sustain the business and remain competitive. Your target depends on what you want to measure. Sales target may refer to an actual monetary value, the number of closed sales, or the number of accounts opened.

Sales per rep

This metric shows the individual performance of the company's sales representatives. It involves monitoring the sales output of every person in a period, such as weekly, monthly, or quarterly. It focuses on the number of deals they make and the monetary value of each transaction. For example, if one agent closed 10 sales totalling $80,000, and another closed six sales totalling $90,000, the data shows the second sales representative likely sold goods or services with higher value.

You may consider every sales representative's experience level and other factors, such as vacation and the amount of time the salesperson spent at work, which may also influence the data. This metric can help you identify which team members to reward for their performance and who might require more training or mentorship.

Related: Practical Tips for Increasing Sales (With How-to Steps)

Sales by region

The sales by region metric considers the sales volume according to different geographical areas. It monitors the total sales per region within a set period, which may include neighbourhoods, cities, provinces, or countries. This metric helps determine the areas where the company's products or services are performing well, allowing you to direct marketing efforts accordingly. You can consider factors like the area of land and population when analyzing this metric to ensure the results have suitable context.

Sell-through rate

The sell-through rate is expressed as a percentage which allows you to assess how fast the company can sell the items in its inventory. This requires a record of a previous period's ingoing and outgoing inventory. A high sell-through rate indicates that customers are buying products, but it's important to maintain an ideal amount of stock to avoid a surplus or shortage of items.

Sales per product

This metric, also known as product peformance, determines the profitability of every product or service the company offers. When analyzing sales per product data, it's important to consider how marketing initiatives and seasonality can affect the popularity of certain items. For example, there may a significant increase in sales after announcing a holiday promo.

Related: The 4 Sales Funnel Stages (Definition and Benefits)

Pipeline velocity

Pipeline velocity shows you the behaviour of leads and prospects through the sales pipeline. This is an important metric because it's useful in business planning and forecasting. There are a few critical factors to watch out for when analyzing this metric, such as cutting of SQL or doubled sales cycle. Any change, big or small, impacts pipeline velocity and may also affect your team's goals and initiatives.

Quote-to-close

The quote-to-close metric or conversion rate demonstrates the team's efficiency at closing a deal. It shows you the quality of leads, the efficiency of the sales process, and the percentage of prospects that became paying customers. This metric is essential because it impacts the performance of your team. If the quote-to-close numbers are continuously decreasing, you may consider making price adjustments or providing your team with further mentoring and training.

Average purchase value

This metric provides you with the average value of every sales transaction. You can use this metric when making sales projections because you can easily estimate how many customers or closed deals are necessary to achieve the revenue goal. You can also use the information you obtained when planning marketing strategies or upselling. You can focus on improving the company's marketing efforts, pushing upsell opportunities, or selling higher-priced products to increase the average purchase value.

Related: 13 Effective Advertising Strategies to Increase Revenue

Sales opportunity

The sales opportunity metric helps you identify which opportunities have a higher probability of success. It helps you organize prospects based on the opportunity value and the probability of closing a transaction. The sortation of prospects depends on the possibility of a win (stage) and the value of a win (estimated value).

Cannibalization rate

The cannibalization rate metric allows you to determine the performance of a new product and its effects on existing merchandise. There are instances wherein newly launched products may result in a decrease in sales of older products. It's important to consider this when the company is about to launch a new product or service. You may try conducting a small test to determine how the increased profitability of the product affects the sales performance of other offerings.

Related: Important KPI Sales Metrics (With Definitions and Examples)

What are the benefits of sales analytics?

Sales analytics is a valuable that helps organizations identify the best strategies to achieve their goals. It also allows them to monitor the performance of their sales teams and make adjustments when necessary. Here are some additional benefits of using analytics in sales:

Improves decision-making

Analytics enables managers to make more informed decisions by providing them with data-driven insights. The data collected can help managers identify which products are selling well, what strategies are working, and where they require changes. This allows them to make better decisions about how to allocate company resources.

Encourages data transparency

Analytics encourages data transparency by making it readily available to those who need it. This enables managers to see where the company is succeeding and where improvements are necessary. It also allows employees to hold each other accountable for their performance.

Aids in performance evaluation of team members

Analytics in sales also helps in performance evaluation by providing insights into individual team member's strengths and weaknesses. This information is valuable when considering promotions or how to best use each team member's skills. Evaluating performance also allows managers to identify training needs and address them accordingly.

Enables identification of trends and patterns

Analyzing sales data helps companies identify trends and patterns in customer behaviour. This information can be valuable in predicting future sales and developing marketing strategies. It also helps businesses to identify opportunities and threats in the market. Understanding trends and patterns is essential for businesses to remain competitive.

Helps increase sales

Analytics optimizes the sales funnel and allows businesses to improve their existing sales processes. By understanding the customer journey and identifying areas of opportunity, companies can make changes that lead to more sales. Analytics can also help them track their progress and measure the results of their efforts. This information is valuable in determining if the changes made have the desired effect.

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