JOURNAL

ANALYSING YOUR SALES, STOCK + PERFORMANCE 

One of the simplest ways to drive a successful product-based business is to know your numbers (inside-out). In order to drive more revenue, you need to first understand what is driving your current revenue.

UNDERSTANDING YOUR BUSINESS IS UNDERSTANDING THE NUMBERS 

Below I have listed out the 12 specific areas you need to analyse at the end of every month. And use this information to drive decisions for the month ahead.

TOTAL GROSS SALES

This is the number of sales you took in total - how much money came into the business from the 1st - to the end of the month. No outgoings need to be taken into consideration.

 

 

TOTAL EXPENSES

This is the total outgoings. They can be fixed, so you pay them every month. Or variable, so it was a one-off, ever-changing or unexpected payment.

-      Fixed; Website Fee. Insurance. Employees.

-      Variable; Postage. Repairs. Charges.

 

 

TOTAL NET PROFIT

This is the total profit that was drawn from a particular month.

Gross Sales - Expenses = Net Profit.

 

 

SALES v  LY & FORECAST

This is a little tricker - but so valuable.

In order to grow a business, it needs to perform better than in previous years/months. Knowing what you took last year (LY) will allow you to understand what the growth was.

-      January Sales 2020 = £1000

-      January Sales 2021 = £1200

-      This is a £200 increase.

But the key is to forecast future sales.

-      February 2020; £900

This shows February 2020 was a quieter month than January 2020, so a large increase this month would be unrealistic - but we always want to stretch our businesses.

-      February 2021 Forcast; £950

You can then not only understand how you performed from LY, but also against the forecast

 

February Sales for 2021; £920

 

This would mean you were +up on LY, but -down to forecast.

 

Your forecast figure is what you need to follow if you want to hit new annual goals. If you want to achieve 100k in one year, you need to break that out realistically, over the quarters, and again into each month. You won't hit a yearly goal on its own. It will take the planning of the smaller steps.

 

 

AVERAGE TRANSACTION VALUE (ATV)

This is the average value of all transactions. Your website will be able to tell you this, but here is how to work it out.

Total Gross Sales / the number of transactions = ATV

 

The Gross sales for January 2021 was £1200, and there were 27 transactions made.

1200 / 27 = 44.4

This shows me that the average transaction value was £44.40.

CONTINUING TO LOOK AT THE PRODUCT:

 

AVERAGE TRANSACTION VALUE (ATV)

This is the average value of all transactions. Your website will be able to tell you this, but here is how to work it out.

Total Gross Sales / the number of transactions = ATV

 

The Gross sales for January 2021 was £1200, and there were 27 transactions made.

1200 / 27 = 44.4

This shows me that the average transaction value was £44.40.

 

 

UNITS PER TRANSACTION (UPT)

This is the same as ATV, but rather than looking at the spend, you analyse the number of items that were bought in each transaction. We want our customers to be buying multiple items from us, and we always want to be increasing this.

(This is where you may need to look at your overall product offer - to increase multiple options).

 

 

BEST + SLOW SELLERS

It is important at the end of each month to really understand what IS and what IS NOT selling well. = and ask yourself why.

Best Sellers.

-      Did it feature on social media? Email Marketing? What types of photos?

-      Where is it on the website?

-      What volume is remains?

-      Can more be reordered/make additional?

-     What sizes/colours sold well?

Slow Sellers

-      Plan to feature on social/email marketing.

-      Can it have a stronger presence on the website?

-      What quantity of stock is there left? What selling period is left before markdown start?

-      Can new photography be taken?

-      Can an incentive or bundle be created with these items?

 

 

STOCK ON HAND

This tells us our optimal selling opportunity. You may want to hit £100k in a month (!!) but if you don't have the stock to sell - you won't achieve it.

 

But on the flip side, if you have 30K worth of winter coats and it's coming up to the end of February, you have to start building a plan to sell it - as it will very soon become "out of season".

It is vital to always know what stock you are sitting on and its seasonality. This should drive your in-season decisions.

 

 

TOTAL WEBSITE TRAFFIC

The main point of knowing your website traffic is to understand your conversion (point below). In a separate blog post, I will be discussing the analytics you should be considering for your website traffic.

 

 

CONVERSION RATE

Each visitor on your website is only worth counting if they make a purchase. You need to be able to identify what rate in which customers are converting. People may be coming to your site from a social post, or clicking through on via email marketing - but if they aren't converting you need to know - as well as understand why.

 

If you have 100 visitors on your site within one month, and 1 transaction was made - you have a 1% conversion rate. This may seem incredibly low - but a "good" conversion rate can sit between 2%-5% on most e-commerce platforms.

This is why it is so SO important to be driving more traffic to your site than just from social media.

 

 

RETURNS RATE

This is understanding the number of returns you received vs the number of transactions. But it shouldn't stop there. For any independent business, returns are a big issue and one that is only getting worse - costing businesses a lot.

You need to understand what and why returns are being made. What information can you be providing on your site to better serve the decision making of the consumer? If you are seeing regularly returns on a particular item, can new photography or descriptions be used?

 

 

RETURNING CUSTOMER RATE

And finally, and one of my favourite points. Understanding how many of your transactions are from previous shoppers is key, and this is a number you should be continually trying to increase. I'm a big believer in the "post-customer-journey". The part after they have paid. It is within this time frame that you will convert current customers back again. 

 

So there you have it, the 12 areas of your stock and sales that you should be analysing at the end of every month. There is a lot to think about - but it is through this work you will become more educated on your business performance - and will make more authority decisions moving forward.