Sales Analysis

In the article titled The Marketing Control Process for your Business – Explained, I outline what marketing controls are: 

“Marketing control is a process where company management or executives analyze and assess their marketing activities and programs.”

Hand-drawn graph for sales analysis post - Allen StaffordThe marketing control process includes four types of marketing control, they are,

  • Annual plan control
  • Profitability control
  • Efficiency control 
  • Strategic control 

This post focuses on the sales analysis part of the annual control plan. The other three types of measuring tools that fall under the annual control plan include,

  • Marketing share analysis,
  • Marketing expense-to-sales analysis,
  • Financial analysis.

The sales analysis measures and evaluates the firm’s actual sales as it relates to their sales goals. The two types of analysis tools used are the sales-variance analysis and the micro-sales analysis.

Sales-Variance Analysis

A sales-variance analysis is a metric that measures the relative contribution of different internal and external factors to a discrepancy in sales performance. The ability to calculate and identify sales variance is an essential metric to understand so that the firm may address issues in expected sales deficiencies.  

Sales-Variance Example

Suppose a manufacturer planned on selling 2,000 units of Product A in the fourth quarter at $2.50 per unit. The expected total revenue is $5,000. However, at the end of the fourth quarter, 1,700 Product A units were sold at $1.95 per unit for a total revenue of $3,315. The calculation below shows how much sales performance is due to a price decline and how much is due to a volume decline. 

Sales-Variance Example Calculation

Variance due to price decline:($2.50 - $1.95) (1,700 units) = $93555.5%
Variance due to volume decline:($2.50) (2,000 - 1,700) = $750 44.5%
$1,685100%

Metrics Analysis

Notice that almost half of the variance is due to a failure to achieve the volume target. The manufacturer needs to examine why sales failed to reach its expected sales volume. Possible reasons may include poor sales performance, lack of sales staff to cover a region, inferior quality product, or weak or no sales promotion activity. 

Micro-Sales Analysis

pie chart for micro-sales analysis articleThe micro-sales analysis examines specific products, sales regions or territories, and other measurable factors that underperformed the expected sales goals. For example, imagine that the manufacturer in our case above sells Product A into three regions. They set their sales goals for region one at 900 units, region two at 400 units, and region three at 700 units for the fourth quarter. However, the actual sales volumes were 800 units for region one, 498 units for region two, and 325 units for region three. Thus, the sales manager notices a 12% sales reduction for region one, a 22% increase in region two, and a dramatic 73% drop in region three sales.

From the data, the sales manager may come to several possibilities. They may conclude that the salesperson in region three is performing poorly, a new competitor entered the market in that region, or the product is priced too high for the market. Other possibilities may come into play as well.

The Takeaway

The sales analysis is just one tool for managing marketing programs. When used to analyze sales volumes, marketers can learn if internal or external factors are to blame for sales volume deficiencies or surpluses. The data collected can help marketers make adjustments to existing marketing programs as well as used to incorporate them into new programs in new markets.

 

To improve your customer engagement strategies, “Ask not how you can sell, but how you can help.”
-Kellogg School of Management

 

Mass Marketing: Marketing from the Past

If you do not have a customer engagement marketing strategy, you miss out on opportunities to build your brand and grow your business. Businesses engaging their customers are also involved in customer relationship management. In other words, they are improving their brands effectively and quicker by managing their relationships with customers. Companies that operate under the old way of marketing are not effective at managing customer relationships and thus miss the mark in gaining valuable custom insights through customer engagement.

The way companies marketed in the past was a one size fits all strategy. The old way included mass marketing brands to broad segments of consumers. It’s sort of like casting a wide net into the vast ocean, hoping to catch a few fish, and as we have all heard by now, “hope is not a strategy.” At least I “hope” you have heard that quote.

A mass marketing approach created challenges for brands. Marketers had limited channels for customer involvement, if any, at all. Brands had little interest in customer involvement. Direct customer communication was practically non-existent, and marketers missed opportunities to profoundly and intimately engage with their customers’ needs and wants. Also, non-existent with the old marketing method was collecting any customer data or sentiment they had toward a brand and its products. Firms could not capture those insights that could lead to improved customer service or new product ideas, like Cake pops and Pumpkin Spice latte products that consumers created on Starbucks customer engagement platforms

Customer Engagement Marketing

The internet and mobile devices gave rise to a new marketing paradigm known as customer engagement marketing. Customer engagement marketing nurtures direct and continuous customer involvement in shaping brand conversations, experiences, and community. Customer engagement marketing leads to brands creating meaningful brand stories to make the brand a significant part of consumers’ conversation and life. A great example of customer-engagement marketing is the Dove brand

Dove’s Real Beauty Campaign targets women of all ethnicities and allows them to directly engage via Dove’s social media pages. Dove’s Real Beauty Sketches campaign, a video depicting how women view themselves and how others see them, launched in 2013 and has received almost 69-million views on their YouTube channel. The campaign video has generated conversations from thousands of consumers that range from positive to negative responses. By allowing consumers a platform to voice their opinions through their social media channels, Dove can gain valuable insights about their consumers and provide a medium for consumers to engage with the brand. Dove’s customer engaged marketing makes the brand a meaningful part of the consumers’ conversation and lives.

What Drives Customer Engagement Marketing?

Ever since Tim Burns Lee created the first graphical web browser in 1991, businesses began populating the internet with their webpages. As consumers started to shop online, and social media took root, consumers became better informed about brands. They were more connected and empowered as consumers because they had a platform to voice their likes, dislikes, and opinions about brand products. Social media took away the power of marketing from brands and handed it to consumers. In turn, brands are engaging customers in ways that help forge and share their brand experiences.

Because consumers are more empowered than before, brands need to create market offerings and messages that engage consumers and not interrupt them as they once did with the mass marketing approach. Brands need to listen to customer sentiment and provide feedback as needed. Companies can do so through various customer engagement platforms, such as:

  • Social media sites: LinkedIn and Facebook
  • Microblogs: Twitter and Instagram
  • Video: Youtube
  • Blogs: Your company blog
  • Mobile apps: Most social brands have apps that allow customer-engagement
  • Consumer-generated review systems: Yelp

All of these platforms help brands entice customer engagement on a personal, interactive level.

sketched light bulb icon

The Key to Customer Engagement Marketing

There is no magic formula for customer-engagement marketing. The key is to find ways to enter target consumers’ conversations with engaging and relevant brand messages. Merely posting a random, funny video, creating a social media page, and not staying consistent with posts, or hosting a blog isn’t enough. Marketing managers need to understand their customers and the high target value social sites where their customers congregate.

Offer Real Value

An excellent place to start is to offer customers real value. Rather than providing only product information, create meaningful content that adds value to your customer’s life. For content to be valuable, the brand needs to connect to that content legitimately. Looking back at the Dove Real Life Sketches example, the brand can legitimately connect with the content. Dove produces beauty products, and women buy those products, and the campaign speaks to women about their perception of beauty.

Inspire People

Customers want real information and education about brands, but they also wish to be inspired. Airbnb’s Cheers to Ten Years of Hosting video inspires its customers while providing informational content. 

Provide Entertainment Value

A brand can inform and inspire, but it also needs to entertain. The “stickiness” of a brand’s engagement message comes from its entertainment value. The stronger the entertainment value, the more your customer will remember and get engaged. Take a look at Always’ inspiring, yet entertainment video for their #likeagirl campaign. They deliver a powerful message that informs, educates, inspires, and entertains.

Be Consistent

You can have the best intentions as a brand, but if you are not consistent in delivering your message, your customers will not engage with your brand. Develop a brand engagement calendar that includes content posting days and times, and your company’s communication channels to engage customers.

 

Remember, not everyone wants to engage deeply or regularly with every brand. Successful customer engagement marketing means making relevant and genuine contributions to target consumers’ lives and interactions. For customers that want to engage, you will gain valuable insights. For customers who do not wish to engage with your brand, your content will reinforce your brand story and message.

[VIDEO TRANSCRIPT]

Mystery can increase your sales!

That’s right.

Being mysterious with your product or service can increase the likelihood of more sales, which, well, as we know can increase your bottom line.

And this translates into more money in your pocket or your businesses pocket.

How is this possible, you ask?

After all, isn’t something mysterious or uncertain considered, a risk or Unpleasant?

Well, not exactly.

You see,

In a Journal of Business Research study,

researches conducted two experiments that demonstrated when a business, often a retail business, incorporates mystery in their marketing strategy; they increased the likelihood that consumers will make a purchase.

Hmmm, that sounds pretty mysterious.

Companies like Groupon, Banana Republic and American Airlines are just a few organizations that have used mystery to pique the interest of customers and drive their sales upward.

So, how does this work, you ask?

In one experiment, researches told their subjects that they would receive one of three items for a small shipping fee of just $10.

The researches also showed the participants a list of potential items they may receive.

The items included a board game, a handmade necklace, or the latest version of a piece of software.

They also showed pictures of products previously sent to customers, like a low-quality camera, gloves, and a remote control car. So the first group was armed with information about their potential mystery gift.

In a second group experiment, participants received less information about the mystery product they may receive. The only thing that researchers told them was that the item was guaranteed to be worth at least $10 MSRP, that’s manufacturer suggested retail price,

And if it were not worth at least $10, the shopper would be refunded their $10 shipping fee.

In both studies, researchers found participants had increased levels of curiosity after exposure to the mystery product. This, in turn, led to an increase in purchase motivation.

It is also worth noting the absence of information in the second experiment, where the participants did not receive the extra information about the mystery gift, did not significantly decrease the motivation to make a purchase.

So, if you provide a little information about the mystery gift, there may be a slight advantage, but not a significant amount as compared to the group that did not receive information about the mystery gift.

So, how can you apply the mystery study to your own business and reap the rewards of endless profit?

Okay, it may not be endless profit, but you may boost your sales and gain the financial rewards that many other retailers enjoy when exercising mystery in their marketing strategies.

An Example of Using Mystery in Your Marketing Strategy

An example may include a small retail store selling a specific product, like beauty supplies. Perhaps you offer a small mystery gift with every $20 purchase of your product. Remember to identify the possible mystery gifts available to your customer and that the mystery gift has a perceived MSRP of at least $20. It doesn’t have to cost you $20; It must have a perceived value of $20.

The mystery marketing strategy can be applied to almost any business or product with a little imagination.

If you try this strategy, I would like to hear about it and what worked and what may not have worked. And, if you found this information useful, please hit the like button or share it with someone who may find it equally useful.

Thanks for watching. I’m Allen Stafford for the Stafford Group.

 

Research Source

Krista M. Hill, Paul W. Fombelle, Nancy J. Sirianni,
Shopping under the influence of curiosity: How retailers use mystery to drive purchase motivation,
Journal of Business Research,
Volume 69, Issue 3,
2016,
Pages 1028-1034,
ISSN 0148-2963,
https://doi.org/10.1016/j.jbusres.2015.08.015.
(http://www.sciencedirect.com/science/article/pii/S0148296315003525)