Two Indicators for Evaluating Sales

In general, two indicators are often used to evaluate sales.

One of them is "Sales Budget".

In the store business, achieving the sales budget is an important indicator to achieve the company's profit target.

The budget is usually set based on the past performance of the store and the size of the expected return.

A "budget ratio" is calculated from the actual sales results and the budget and used for evaluation in many cases.

The second is the "period comparison" method, which targets a specific period of time such as the previous year.

This is a method of evaluating how much sales have increased or decreased compared to a certain period.

It is common to calculate the "period (year-on-year) ratio" from the actual sales and the actual results of the period (previous year) and use it for evaluation.

These two evaluation methods are frequently used, but there is actually a big difference between them.

When the evaluation axis is "budget ratio"

When the evaluation axis is "budget ratio", sales are evaluated based on the "target value set by the company (or store)".

When the evaluation axis is "period ratio".

When the evaluation axis is "period ratio," sales are evaluated based on "events that occurred in the past.

For example, let's say that sales for a certain month were 10 million yen.

If the budget was 11 million yen, the ratio to the budget would be 90.9%.

On the other hand, if the previous year's actual sales were 9 million yen, the yearly ratio would be 110.0%.

If the person receiving the report (especially the supervisor) wants to know "how the results (or progress) are doing against the target," the evaluation axis should be "budget ratio".

On the other hand, if you want to know "how things have changed from the past to the present," you need to use the "period ratio" as your evaluation axis.

If you are not good at reporting and have been instructed by your supervisor to "be specific" or "start with the results", I recommend you learn the "PREP method" conversation, model.

To understand the current situation

To understand the current status of your store, compare the past with the present, and focus on how changes are occurring.

Typical examples of comparisons are "previous week comparison", "previous month comparison", and "previous year comparison".

The merits and demerits of each are briefly introduced below.

Previous Week Comparison

The previous week's comparison is a comparison method used when evaluating weekly.

It compares how much sales have increased or decreased compared to one week ago.

It is an effective method of comparison when implementing the improvement process every week.

Previous Month Comparison

Last month comparison is a comparison method used when evaluating every month.

It compares how much sales have increased or decreased compared to one month ago.

In some cases, this method is used for month-by-month checks. However, stores that handle products that are affected by seasonal/temporary factors need to be careful when using this method for decision making because the situation can change significantly from month to month.

Year-on-year comparison

The year-on-year comparison is a comparison method to see how much sales have increased or decreased compared to one year ago.

The unit of comparison can be "day," "week," or "month.

However, the shorter the unit of comparison, the greater the impact of uncertain factors (weather, temperature, social conditions, etc.).

Conclusion

In this article, how to evaluate sales using data from your own store.

There are also other ways to evaluate your store's sales using data other than your own, such as "comparison with other stores" to compare stores within your company and "comparison with competitors" to compare stores of other companies that open stores in the same tenant.

Thank you for reading and if you have any questions, please feel free to contact us by clicking "Start a Conversation" on the contact form.