Sales analysis gives us a good idea of a company’s situation. This is an exercise that goes beyond an accountant’s analysis. Progression, regression, stagnation of sales, the 80/20 rule, markets and geographic zones served are some examples of analyses that you can realize with an accessible tool like Excel. In addition to its simplicity, it can also be very useful and instructive.
Most of the time, when a client contacts us, it’s because he or she has encountered a problem which is often reflected in his or her sales. Analyzing this problem allows us to understand why the client has come to see us: stagnation or drop in sales, unreached objectives, cannibalized sales (when sales of one product increase to the detriment of sales of another product), etc. And no, clients rarely contact us to tell us that “everything is fine.”
That’s why we often analyze our clients’ sales figures. This is often the most efficient way to get a true picture of a company’s current situation and sometimes even to see past and future milestones.
Basic sales analyses
Several very simple analyses using Excel can be accomplished, for example:
- Your progression or regression during the past 5-10 years: what is the cause? Loss or acquisition of an account, fluctuations in the economy (the recent financial crisis), etc.
- Your 80-20: the notorious 80-20 rule haunts analysts, like the number 23 haunted Jim Carrey in the movie The Number 23 (for numerology fans: 80-20= 60-28 (le 2 de 20 et le 8 de 80)=32 (23 backwards!!!!). On a more serious note, you’ll find that 80% of your sales are realized by 20% of your clients, or that 80% of efforts by your sales force generate 20% of your sales.
- The main markets served by your company: get the NAICS codes (North American Industry Classification System) of your clients. To learn more about NAICS, visit Industry Canada or NAICS websites.
- Sales representatives: you can follow their sales on a regular basis (per week, semester, quarter or year). If you have a CRM, follow up with their sales funnel, or accounts in progress. This way you’ll be able to estimate your future sales and at the same time establish the foundations of sales team management.
And sales per geographic market, if there are recurring seasonal sales, etc.
Lastly, don’t forget that an accountant’s analysis is not the same as a sales analysis. The latter must absolutely consider aspects of sales and marketing.
