Definition : Sales performance
Sales performance is a key indicator for companies wishing to measure their success and profitability. But what is sales performance, and how do you measure it?
What is Sales Performance?
Sales performance is closely linked to sales efficiency. When we talk about performance, we're talking about doing better, achieving a better return that encompasses the act of buying. It can be defined as a company's ability to sell more and better. It can be assessed through the following KPIs, using data analysis tools and dashboards to accurately measure each indicator.
1. Sales figures
Sales represent the total sales achieved over a given period, a key indicator for identifying the performance of sales teams. The higher the sales figure, the better the sales performance.
2. Gross margin
Gross margin is the difference between the selling price of products or services and their cost price (manufacturing costs, purchasing costs, etc.). This financial indicator measures the company's overall profitability, and also helps to optimize sales strategy over the long term. A high gross margin indicates good sales performance, as it means that the company makes a substantial profit on the sale of its products or services.
Gross margin calculation method :
Gross margin = Sales - Cost of goods sold
Or as a percentage:
Gross margin (%) = [(Sales - Cost of goods sold) / Sales] × 100
3. Market share
Market share is a measure of a company's position in its sector of activity. It is calculated by comparing the company's sales volume with that of its sector. A high market share is often synonymous with good sales performance, as it reflects the effectiveness of a company's sales strategy, commercial positioning and customer care.
Market share calculation method :
Market share = (Company sales / Total market sales) × 100
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4. Conversion rate
The conversion rate or transformation rate is an indicator that measures the proportion of purchases made in relation to the number of visitors or prospects who have been in contact with the company. It therefore indicates the ability to transform a prospect into a customer, which is a crucial element in sales performance, since it enables us to evaluate the efficiency of the lead conversion process and the prospect-customer relationship. The higher the conversion rate, the more powerful the company's sales process, and the higher its conversion rate.
Method of calculating the conversion rate :
Conversion rate = (Number of conversions / Number of prospects or visitors) × 100
5. Average basket
The average basket represents the average amount spent by a buyer on a purchase. This indicator is essential for assessing sales performance, as it measures the value of transactions carried out by the company. A high average basket means that customers are willing to invest a significant sum in their purchases, which may be linked to the quality of the products or services on offer, the effectiveness of the marketing and sales teams in cross-selling, or the use of high-performance CRM tools.
Average basket calculation method :
Average basket = Sales / Total number of transactions
6. Customer acquisition costs
Customer acquisition costs include all the expenses required to attract new customers to the company. These include budgets allocated to marketing, advertising and prospecting to generate qualified leads. Low acquisition costs mean better sales performance, as it means that the company is able to acquire new customers without having to invest large sums in its marketing activities.
Customer acquisition cost calculation method :
Customer acquisition cost = Total marketing & sales expenditure / Number of new customers acquired
7. Retention rate
The customer retention rate measures a company's ability to retain customers over time. A high retention rate is a sign of good sales performance ! It also underlines users' interest in the products on offer and the relevance of the customer relations strategy implemented by the company over the long term.
Loyalty rate calculation method :
Retention rate = [(Number of customers end of period - New customers) / Number of customers start of period] × 100
8. Customer satisfaction
Customer satisfaction is an essential element in assessing sales performance. It is a measure of how satisfied customers are with the products or services they have purchased. High customer satisfaction indicates good sales performance, as it shows that the company is meeting its customers' expectations and convincing them to return.
How to calculate customer satisfaction? :
- NPS (Net Promoter Score): % Promoters - % Detractors
- CSAT (Customer Satisfaction Score): Average satisfaction score
- CES (Customer Effort Score): Average perceived effort to perform an action
9. Brand image
Brand image is the perception buyers have of a company and its products. A strong brand image testifies to a company's good performance. The more positive a brand's image is perceived to be, the more likely a buyer is to make a decision to buy from that brand.
10. Innovation
Finally, innovation is an important aspect in assessing a company's commercial performance, even if it doesn't directly concern sales or margins. It shows a company's ability to renew itself and inject novelty into its offerings, which can make all the difference in a competitive market.
