Fixing Poor Sales Revenue

Poor and unsatisfactory Sales Revenue is a common problem for businesses.  A weakness in Sales Revenue will normally contribute to unsatisfactory Profit levels.  Since all Profit starts with a Sale, fixing poor Sales is a good place to start any remedial work on your business. Yellow Belt

 First: Compare Sales Revenue Over Time

Looking at a single sales figure does not provide very much information.  It is much more useful to look at sales over two or more periods so that you get a trend in the direction your Sales Revenue is taking.

Although you can compare any two  or more periods you like, it is important to try to remove the effect of unusual movements in your sales.

When selecting the periods to compare, consider:

  • Comparing full years of data to remove the effect of seasonal fluctuations.
    This can be due to holiday periods and major shopping times that might occur in some months and quarters.
  • Comparing the sales in one month or quarter with the sales in the same month or quarter in the previous year.
  • Picking periods without major and unusual events that are unlikely to occur again. 
    These are aberrations, you can't plan for them.

Go to the Diagnostic tools in the 12Faces ScoreBoard range
These will give you a data template for your analysis.

Fix your poor Revenue: Use the data set you have developed and determine which of the following analysis steps apply.

Case 1: Same or Increasing Sales Volume but Less Revenue

If you are:

  • Selling much the same volume of products.
  • But earning less revenue.
  • The likely culprit is a reduction in prices.

Often this comes about from applying discounts to buyers.  The idea is that the discounts will stimulate more than enough additional sales to compensate for the lower Revenue per sale.

If the discounts have not stimulated enough additional sales, consider reviewing your discount strategy.

Learn more by searching our KnowledgeBase for topics like discounts and pricing

Case 2: Static or Falling Sales Volume

In this scenario, your sales volume of products is either falling or static and unsatisfactory.

Begin by:

  • Indicating some general reasons for falling sales.
  • Then look more specifically at sales from new and continuing buyers separately.  

Depending on the state of your data collection tools, you may not have hard statistics on some of the issues raised.  Your intuition is likely to be "fairly" right and good enough to get you started, in some cases.

Based on your experience with this level of detail, we encourage you to invest in our ScoreBoard tools designed to help with informed business decisions

Case 2.1 Common Reasons for Falling Sales

Consider the following and, where they seem relevant, search our KnowledgeBase for solutions

  • Increasing competition: This might come from physical new comers in your area and/or from online suppliers increasing activity.  
  • Stock shortages: you are more likely to run out of your best selling lines because they are popular.  Less attractive products are not so fast moving.  Sales lost in this way can have major impacts directly (lost sales) and indirectly (customers learn to shop elsewhere and leave you).
  • Fewer customers visiting:  you might not be attracting new and returning customers as well as before, your marketing needs an overhaul.
  • Customers not engaging: if you have visiting customers but they are not buying, consider:
    • Is your product range out dated or not up-to-date with popular and trending products.
    • Is your presentation of products and your business slipping, you are less appealing.
    • How do your prices compare with alternatives.  If too high, customers might be buying elsewhere.
  • Customer retention: having secured a new customer, have you changed the way you retain them so that they keep buying.
  • Weakening Sales Funnel:  the Sales funnel is the top to bottom process of finding possible new customers and eventually converting them to buyers. 
    If there are new weaknesses at any of the stages in your sales funnel, total buyer numbers can drop off.

Case 2.2 Sales Volume to NEW Customers Static or Falling

This topic is a little more advanced as it assumes you have the tools in place in your business to measure sales to new buyers.

Your intuition may take you part way to a solution, if you don't have the necessary recording systems.

Access the ScoreBoard tools designed to help with informed business decisions

Consider the following and, where they seem relevant, search the KnowledgeBase for solutions

  • Acquiring fewer new customers: your Sales Funnel may need an overhaul.
  • Acquiring the wrong customers: are you getting the numbers of new customers but not the sales volume? This can mean your marketing needs work. 
    It can also mean your sales staff are incentivised for numbers of customers, rather than quality, they are recruiting less desirable customers to make their quota.
  • Increasing acquisition cost/customer: you might be spending more to get customers. 
    If your budget has not changed to reflect this, you will be doing less marketing.
  • Reduced marketing budget: if your marketing budget has been reduced or limited, that is likely to have a direct impact on the number of customers you recruit. 
    Reconsider the budgeting.
  • Average sale/customer: as well as the factors in this section, have a look at the same topic in the following section.

 Case 2.3 Sales Volume to EXISTING Customers Static or Falling

This topic is also a little more advanced as it assumes you have the tools in place in your business to measure sales to existing buyers.

However, your intuition may take you part way to a solution.

Access the ScoreBoard tools designed to help with informed business decisions

Consider the following and, where they seem relevant, search our KnowledgeBase for solutions

  • Repeat business falling: less repeat business from previous buyers. 
    Common reasons for this include:
    • For some reason they are buying less frequently.
    • They are losing interest in your business.
    • Competition - especially on-line.
    • Declining service levels leading to reduced customer satisfaction.
    • Stock outages.
    • Delivery delays. 
  • Pricing:  your pricing has become uncompetitive so buyers are going elsewhere.
    • You have put in a discount system that is not producing results sufficient to offset the price reduction.
    • Consider trying a subscription model.
    • Consider value-based pricing, people buy on value to them rather than just on price.
  • Less marketing:  your advertising is less effective. 
    Consider:
    • Less advertising volume. Often due to budget changes.
    • Less marketing efficiency suggesting a review of the marketing channels in use.
    • Lower quality advertising materials like signage.
  • Environmental problems: this may have to do with the time of the year (e.g. holiday season) or a general downturn in the market.
  • Poor product mix: 
    Things to consider include:
    • Not stocking trending items.
    • Running out of fast selling products and forgoing Revenue (possibly losing the buyer to another venue that does have the item). This is an inventory problem.
    • Ageing technology, lack of innovation in your products and their presentation and operation.
  • Geographic: see if the problems are at just one location or country wide.
  • Ageing sales channels: 
    • With changing population demographics, customers will move towards different sales channels.
      Facebook has largely replaced newspaper readers and advertising, for example.
    • If you are not using the marketing channels your buyers are, they will not see your offerings.

What Next

Have some of the possible reasons for static or falling revenue listed above caught your attention?

Most likely there will be more than one reason, you are faced with the decision of what to work on first.

For more on how to master this dilemma:
Go to the article: Business Changes Planning: How to Choose Next Step

To find specific solutions to the issues you have identified, search the KnowledgeBase for solutions

Go to the 12Faces Dodeca catalogue: D1: How to Grow Revenue

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