(This post was last published on November 28th, 2017. We’ve updated it for accuracy and completeness.)
Do you know your sales trends by product type, region, or time period? Do you know how much inventory you have of each product?
Most retailers wish they knew more about their sales and customers’ buying habits. They want to know the right levers to push and pull to increase sales and customer satisfaction. However, there are many obstacles in their way that keep them from these insights.
It could be that your data is split between disconnected systems or that you’re dealing with legacy systems that can’t keep up. It’s complicated to converge your sales from different online and offline sales channels for analysis. With the right tools though, this doesn’t have to be a problem for you.
This post will discuss what capabilities you need to perform sales trend analysis and its benefits for your business.
The Benefits of Using Sales Trend Analysis
Performing sales trend analysis gives you valuable insight into the inner-workings of your business. Merchants use their data to make informed decisions like when to raise or lower prices on your products. These decisions shouldn’t always be a “gut” feeling.
While your gut can sometimes be reliable, it shouldn’t be your only decision-making tool.
When looking for trends or patterns in your sales data, you can determine both opportunities and potential problems. You can track if a particular product is increasing or decreasing in sales. If it’s declining, you can make timely decisions such as to cut prices, market more, or discontinue the product. If an item is selling off the shelves, you can be sure to stock inventory accurately across channels.
Sales trend analysis also helps you determine if you’re meeting your sales goals by providing you an easy, measurable way to track your progress. You’ll actually know if you increased sales from last year and by what percentage. If you didn’t meet a goal, you can drill down to sales of a specific product or location to see what’s stopping you.
All retailers should have the ability to become data-driven businesses. With the right capabilities, you can have confidence in the decisions you make because they are backed by your own data.
How to Perform Sales Trend Analysis
To perform sales trend analysis, you need a place to input and analyze your sales data. You could use Microsoft Excel or a software platform that is specifically designed for data insights.
Many managers use Microsoft Excel for sales trend analysis to unlock insight and set up alerts. Users can import large amounts of data and create powerful dashboards. Excel’s built-in tools allow users to customize graphs according to key business metrics that need tracked.
While time-consuming to set up and maintain, anyone can learn and make use of the Excel for their business. There are many available resources online that help users leverage Excel. To see some of them, read about 10 Excel Gurus to Follow to Become an Expert.
Another option is to use a platform built for business analytics or data insights. There are software options that automatically pull in data from your different systems. They then provide the same type of powerful dashboards and reports, without all the manual inputting and analysis work on your part. You can check out a comparison of some of the top retail analytics platforms here.
With either option, you’ll want to consider certain functionality to get the most out of your data.
The Capabilities Needed for Sales Trend Analysis
To gain meaningful insight from your data, you need the following key capabilities:
- Centralized location to view data
- Real-time sales data updates
- Data visualization tools
- Anytime, anywhere access to data
- Drill-down by location, product type, and channel
- Time-based data analysis
Without these capabilities, you won’t be able to take action from your data. I’ll dive into each one in detail and how you can implement them for your own sales trend analysis.
Centralized Location to View Data
Even when your data resides in multiple systems or through different sales channels, you should be able to view all of it from one location. You need a unified view of all orders and inventory by product, category, sales, and more to map KPIs to actual sales. When it’s not centralized, you can’t easily define the impact of one of your sales channels or product lines on your entire business.
Your sales trends should include all your channels so you have a single source of truth of your sales data. This allows you to have a trusted source of data so you can make accurate and timely decisions like when to move inventory from one location to another or mark down products.
How to Do It
This central location can be one or multiple Excel spreadsheets based on the key metrics that you’re measuring. If you’re working with just one Amazon account or webstore, Excel could be easy for you to start with.
On the other hand, if you have several sales channels, you’ll have to pull data separately from each system. Then, you’ll have converge it into one location. In this case, you’ll want to use more robust data mining software to centralize all this information.
Real-Time Sales Updates
When looking for potential opportunities and problems, you’ll want to track your sales day by day, even down to the minute. It’s important your sales are updated in real-time.
If you change the price of an item, you need to know right away if it’s the right adjustment according to your sales. You don’t want to find out a week or so later, after manually totaling the data, that you lost sales.
How to Do It
Some business analytics platforms can automatically make real-time updates. If you’re using Excel, you’ll need to set a time, like the beginning of every week, that you pull your data manually. Or, if you have a technical background, you can see how to import data to Excel from an external database.
If you’re a growing retailer, you have a lot of data to make sense of. And, it’s probably stored in seemingly never-ending rows and columns of just numbers. In this format, it’s almost impossible to easily see trends. It then becomes difficult and time-consuming to make accurate interpretations.
Data visualization tools, like a sales dashboard, make it easier to analyze your sales trends. Dashboards with interactive charts and graphs can readily be understood. You’ll be able to analyze information quicker, which means you can also act on it quicker.
People respond better to numbers in a graphic format. When managers better understand what’s driving performance, they can make the right adjustments when needed.
How to Do It
Excel has plenty of tools that help you create customized dashboards full with graphs and charts. There are many resources dedicated to helping people learn how to create these different sales dashboards. When comparing business analytics platforms, be sure to check out what tools are available to create graphs and tables.
Anytime, Anywhere Access of Sales Data
It’s not useful to have real-time sales data if you can’t access it from anywhere at any time. You shouldn’t be limited to just viewing your sales data when you’re in the office. Your sales dashboard should be accessible by any device – phone, tablet, or computer.
This way, it doesn’t matter if you’re on the warehouse floor, in the car on the way to a meeting, or at the office, you always know how your business is performing. You can also easily share it across your business and easily collaborate with others when needed.
How to Do It
A business analytics platform offers the best mobility. Platforms are usually cloud-based and accessible through a web browser. If you’re using Excel, you’ll have to fake it. Store your spreadsheets in the cloud (Google Drive, Microsoft OneDrive, etc.), so that you have almost anywhere access to them.
Drill-down by Location, Product Type, or Channel
It’s not enough to just view your sales trends for your business overall. You need to be able to narrow it done to specific locations, product lines, or sales channels. This granular view is important when understanding your business as a whole.
You’ll want to see what’s contributing the most to your success or narrow down to the cause of what’s hurting you. Being able to drill-down to more precise levels makes sure you understand every aspect of your sales.
How to Do It
From a visual standpoint, you’ll want to be able to see a sales graph for an entire geographic region and then drill down to individual states or cities in that region. Most business analytics platforms have sleek designs that make this possible with just a few clicks. Excel also has some features to produce drill-down charts for the same effect.
Analyze by Time Periods
You need to be able to analyze your sales trends over a particular time period. This becomes evident when viewing performance for sales cycles or holidays. When you’re preparing for how much inventory to carry from November to December, you’ll need to know how much you sold last year during that time. You then can adjust accordingly.
When you can view sales by time period, you can quickly compare your performance year over year. You’ll see where you improved and where you didn’t. You can determine if the measures you took after last year helped you meet your goals this year.
When you combine these capabilities, retailers can gain major benefits from performing sales trend analysis. You can take your business to the next level.
How to Do It
Any business analytics platform should give you the ability to do time-based analysis, but evaluate which ones allow you to do it the easiest. Also, consider functions like month over month and year over year analysis, so you can compare performance with past time periods.
Your ability to do time-based analysis in Excel depends on how you have your data structured. But, you can unlock a lot of interesting trends by using pivot tables and filters to realign different data sets.
Choosing the Right Systems and Integrating Them
Keep in mind that many of these capabilities rely on what endpoints you use and how they are integrated. Many legacy systems can’t keep up with the processes you need to perform to meet today’s customer expectations.
On top of that, without integration, these legacy systems can’t talk to rest of the systems you use to run your business, which results in manually moving data between systems and spreadsheets. This can lead to sales information that is rarely timely, accurate, or actionable for store associates and management teams. You won’t know when to mark down products or how to market in one region versus another.
To gain better control of your sales data, you might first want to consider upgrading your technology stack. Legacy or on-premise eCommerce, ERP, or POS software could be holding you back from managing your purchasing, inventory, sales, marketing, and finance functions. You need user-friendly interfaces that integrate well with your other systems. If you’re not sure what the top platforms are, check out our buyer’s guide that compares different eCommerce, ERP, and POS software so you make the best decision.
After choosing the right platform, the next step is integrating your systems. Capabilities like gaining a single source of all sales data, real-time data updates, and anytime, anywhere access rely on system integration. Your front-end sales channels should be tied to your back-end fulfillment locations so you can sync data between your systems. This provides you with one point of control for your operations. See how an integration platform like nChannel can help.
Once your technology stack is in place, you’ll have the right data in front of you so you can make trusted business decisions.
What to Do Next
Being able to effectively analyze your sales trends can have a major impact on how you run your business. Through your data, you can gain valuable insight into your operations. Through key capabilities, like real-time updates and data visualization, you can make better informed business decisions.
To analyze your sales trends, you can use Microsoft Excel or a business analytics platform. With many available online resources, mangers can use Excel to create customized dashboards of their sales trends. Just keep in mind the amount of time and effort you’ll have to put in to make Excel work the way you need it to.
At a certain point, using Excel to manage your business data will not scale. You will have to invest in a solution that automatically provides insights about your business’s performance.