Your company has to make sales to be profitable. That’s true whether you’re selling products or services or a product as a service.
You can tell how well your business is doing by your ability to pay your bills. You might subtract your total expenses from your sales revenue to divine the profit you’re earning, for example.
However, there are other ways. One of the most well-known is sales volume. Sales volume is a unique performance indicator.
It’s more involved than simply calculating your business’s performance. Instead, sales volume lets you analyze how well each of your products and services is doing. That information is invaluable when it comes to making business decisions as you move forward.
The results of your calculations for sales volume might fall short of where you want them to be. For instances in which that’s the case, we also include ten ways to increase your sales volume.
What is Sales Volume?
Sales volume is the number of units of a particular product you sell within a set time frame. It’s not about finding the total revenue brought in from sales. Instead, it helps you identify which products or services aren’t meeting expectations.
That data is helpful in and of itself. However, it can also help your sales team identify the pain points potential customers are facing. Why isn’t a particular product performing well?
Together with your marketing team, they can work to address those issues. Ideally, your sales process and bottom line will both improve.
How to Measure Volume and Calculate Sales
If you love serving customers and the exciting world of sales but dread math, don’t worry. First of all, you’re not alone. Secondly, measuring your sales volume isn’t as complex as you might fear.
Gross and Net Sales-Volume Data
Imagine that you’re the owner of a small hardware store. Now, let’s say you sell 100 60-watt light bulbs during June. That’s what’s called your gross sales volume.
It’s just the number of units you sell within a given time frame. You can replace light bulbs with any product or service you sell. Instead of looking at June, you could look at days, weeks, quarters or even years.
Continuing our same example, let’s say customers return two of those 100 light bulbs for some reason. To find net sales volume, you take your gross sales and subtract the number of returns and chargebacks. In this case, your net sales volume for 60-watt light bulbs in June is 98.
That was pretty simple, and it results in data you can use.
Let’s say the number of these light bulbs you sell each month has been steadily declining. That’s been happening for the past five years. During the same period, sales for a different light bulb brand with a more eco-friendly reputation have increased.
There hasn’t been a drop in your total sales revenue, so you wouldn’t have noticed without looking at sales volumes. Now, you know to order fewer of the initial type of light bulb in our example. You can also extrapolate that your customers are interested in green products.
That’s where sales volume variance comes in. Volume variance is the difference between how many sales you expected to make and how many you actually made.
In the light bulb example, let’s say you continued to project the same number of sales for both bulb types. You calculate sales volume variance in dollars. For the sake of ease, let’s say the price per unit for each bulb is $2.
You expect you’re going to sell 200 units of Bulb A and 25 of Bulb B. Instead, you sell 100 of Bulb A and 125 of Bulb B.
To calculate variance, multiply the difference between actual and expected sales by the price per unit. In this case, Bulb A has a variance of $-200. Bulb B’s variance is $200.
You can also calculate gross and net sales revenue for the lightbulbs. To do so, multiply the price per unit by 100 or 98, depending on which revenue you want to find.
Another essential value is your break-even point. That’s how many units of a product you need to cover expenses without earning a profit.
Percentage Sales Volume
For more detailed information about your sales volume, you can calculate percentages. Let’s stick with our hardware store example.
Your hypothetical store sells products in a few different categories. We’ll call them “Home”, “Garden”, “Tools”, “Electrical” and “Building”. Your store does a lot of business, and the total sales volume for June is $10,000.
The breakdown of sales volumes and percentages among the categories is as follows:
- Home: $1,500, or 15 percent.
- Garden: $2,000, or 20 percent.
- Tools: $500, or 5 percent.
- Electrical: $3,000, or 30 percent.
- Building: $3,000, or 30 percent.
You can use the information calculating percentage sales volume provides to make decisions. It’s best never to use a single metric, however.
Based on the percentage sales volume in our example, Tools appears to be underperforming. However, it’s important to note that sales volume doesn’t account for price-per-unit.
Your customers probably aren’t buying a new table saw every year. They might be buying a few packages of seeds for their garden each year. It’s going to take a lot of seeds to add up to the cost of a power tool.
Finding a sales calculator online or writing an Excel formula can make sales volume even easier to calculate.
Established Ways to Increase Your Sales Volume
So, you ran the numbers and calculated your sales volume. Do you like what you found? Even if you did, do you think there’s room for improvement? If so, check out these well-established ways to increase your sales volume:
Focus on the Benefits You’re Providing to Customers
Too many companies make the mistake of focusing on themselves rather than their customers. Arguably, this is a matter of framing. It’s the difference between “here’s what we can do” and “here’s what we can do for you.”
Make the benefits you provide to your customers the center of your sales strategy. Illustrating the value you offer is one of the best ways to convert leads.
Follow-ups with past customers can help analyze how well you’re doing.
Make Sure Your Process for Qualifying Prospects Is Thorough
The sales process can go amiss in a lot of ways. One of the most common is targeting the wrong prospects. To ensure this isn’t the case, make sure you’re thoroughly qualifying them.
That means asking the right qualifying questions to ensure a potential customer is a good fit. When you do, your sales prospecting efforts will be much more successful.
Understand and Address Your Customers’ Pain Points
To provide value for your customers, you have to understand what they need. That means discovering and addressing their pain points.
Being able to point to a problem your customers have is the first step. Offering them a solution to that problem is the next.
Your sales volume increases and your customers are happy. Everyone wins.
Switch Up Sales Territories
This idea for increasing sales volume is only relevant if territory management is part of your sales strategy. If so, transfer your best sellers to the areas where they can do the most good.
Generally, that will mean moving them to the areas with the most significant potential for sales. Sites that are already performing well don’t need extra help. Areas that aren’t performing well but don’t have the potential to do so don’t need it either.
Ensure Collaboration Between Your Sales and Marketing Teams
Marketing-sales collaboration is critical to your company’s success.
At Selling Revolution, channel alignment is one of our top priorities. By that, we mean ensuring that your salespeople, advertising efforts and website are working in concert.
You’re far more likely to succeed when everyone is working toward the same goal and communicating about their efforts. Divergent or even conflicting goals will get in the way of your business’s future.
Don’t Underestimate the Power of Rewards Programs
How many rewards programs are you a member of? A quick look through the average person’s wallet will reveal a wide range of reward cards.
People love free stuff, even when the deals aren’t all that good. Buying nine coffees and getting a tenth one free isn’t a high-value offer. Despite that, people line up every day to order a latte and get their card punched.
Whatever product or service your company offers, rewards programs can help increase your sales volume. You can offer a reward for a referral, buying something multiple times or multiple items at once.
Avoid Unnecessary Risks by Identifying Areas Where You Struggle
When you calculate sales volume, you can identify areas in the sales cycle where your company is struggling. For decision-makers, that’s essential.
Let’s say you’re the one tasked with calculating the budget for the next fiscal year. It’s a big job, and any mistakes you make can have lasting consequences.
You can use sales volume data to identify regions where additional funding for marketing would be helpful. If you manufacture a product in-house, you can also decide how much raw material you need. You lower the risk of incorrect budgeting.
Knowing where problem areas are is also half the battle when it comes to improving your sales volume. If you don’t know something is wrong, you can’t do anything to fix it.
Sales volume is essential, but it isn’t everything. It’s usually better to have more data rather than less when you’re making decisions.
Keep Your Sales Representatives Motivated With Incentives
Customers aren’t the only ones who benefit from incentives. Each sales rep on your team can, too.
Monetary incentives are among the most effective. However, this might not be an option with your current profit margin. There are other options.
We love the idea of creating a leaderboard. Even if the only reward is having one’s name at the top of a list, friendly competition is motivating. It’s also easy to implement, making it ideal.
Know What Sets Your Product Apart From the Competition
A good salesperson can sell just about anything. However, their life will be a lot easier if the product they’re selling is good as well. A good product can boost your sales performance, especially in the area of inbound sales.
What makes a product good, you might ask? In our opinion, it’s the value the product offers potential customers coupled with its unique features.
Unless you’re in an incredibly niche or new industry, you probably have a lot of competitors. You’re all offering products that customers can use. Unique product features are what set you apart.
To capitalize on them, you need to identify them. Research your competitors and discover what you’re doing that customers can’t get anywhere else.
Set Realistic but High Standards and Expectations
Company leaders often overlook the value of setting standards and expectations. It’s something many companies do, but how much thought goes into it?
The expectations you have are what drive your business forward. Something open-ended like, “we want to sell more this quarter than last,” won’t cut it.
Expectations are crucial if you’re a business start-up. Established companies have years of data and experience to look back on. You don’t, and the sooner you start building it, the better.
Your standards tell your employees where they stand. Setting realistic but ambitious goals can help keep your employees motivated.
It’s essential to provide the proper sales training to ensure your team can do what you need them to. From a list of sales tips to practice roleplay scenarios, training can make or break a team. If you’ve ever found yourself in a professional environment without the proper training, you know that.
These ten ways to increase sales volume are only a few of the methods out there. Here at Selling Revolution, we want to help you find the ones that work for you.
With affordable prices, experienced consultants and a drive to succeed, Selling Revolution can help your business thrive. If you’re ready to take your company to the next level, book a call with us today.