The formula for increasing sales in the store, or how to eat a mammoth?

06.09.2023 14:47

Author and content analyst on trade automation

Формула продажів у магазині Increasing sales is a long-term process, and it often requires a combination of different marketing strategies and constant analysis of the results. There is no specific recipe that would allow you to increase sales instantly and without mistakes in any situation. In this article, we will consider various formulas for increasing sales, including the formula of the famous marketer Philip Kotler, which is more than 30 years old.

Analytics in marketing

"The income statement and the balance sheet are the two main reporting financial documents used in the practical activities of companies. The balance sheet reflects the company's assets, its monetary liabilities, and the value of its property minus liabilities as of a specific point in time.

The income statement, or profit and loss statement, is the most important of these two documents in terms of the marketing information it contains. It provides information about the store's sales volume, cost of goods sold, and expenses for a certain period of time. By studying the income statements for successive periods of time, a company can identify favourable or unfavourable trends and take appropriate action. (from Kotler's book "Fundamentals of Marketing").

Consider the report on the performance of the men's clothing store "Dale Parsons", which is given by Philip Kotler in his book "Marketing Fundamentals". This report is a logical sequence of calculating the net profit of the company in the amount of 5 thousand dollars.

What determines the increase in sales?

Increasing sales is a logical aspiration of the owner. But such a task often seems like a heavy boulder, before which the entrepreneur's hands either give up or do not reach at all. However, it is precisely because of the lack of systematic approach that the task of increasing store turnover becomes ineffective.

Do you know the best way to eat a mammoth? That's right, in parts! So, let's deal with everything one by one.

Many factors usually influence sales growth: advertising, pricing, product strategy, customer service, and innovation. There are several strategies that can help increase sales profitability. The formula for success depends on the implementation of certain marketing strategies:

Increasing the volume of advertising and marketing. With the help of intensive advertising and marketing campaigns, you can attract more attention to your product or service.
Competent pricing. Reducing prices for goods or services can attract more customers. A well-thought-out pricing strategy will help you retain them. Take into account the type of product, its seasonality, and fluctuations in demand, which will shape the price.
Improve the quality of goods or services. There is no doubt about it - a quality product attracts more customers.
Expanding the assortment. Adding new products or services can increase customer interest and, consequently, sales.
Improve customer service. Satisfied customers are more likely to return and recommend the store to others.
Use of technology and innovation. The introduction of new technologies and innovative solutions can help attract new customers and increase the loyalty of existing ones.

How to calculate sales volume?

Sales can be calculated in different ways depending on the data you have.

✓ Simple sales - the formula is used to calculate total sales without taking into account additional factors:

Sales = Number of units sold x Price per unit

✓ Sales volume with discounts

If you offer discounts on your products, this formula will help you take them into account in your sales.

Sales = (Number of units sold x Price per unit) - Total discounts

✓ Sales including value added tax

Sales volume = (number of units sold x price per unit) + VAT amount

✓ Sales volume for the period (month or quarter):

Sales for the period = Sum of sales for each day (week, month) during the period

✓ Sales per customer:

Sales per customer = Total sales / Number of customers

Kotler's sales formula

Sales = Number of customers x Average purchase frequency x Average check (amount of average purchase)

To measure sales using Kotler's formula, you need to take several steps.

Measure current sales figures. Those who use the Torgsoft accounting program can do this in special analysis modes. In the "Analysis of customer activity" mode, you can analyze the number of sales per month, the size of the average check, and the frequency of customer purchases.
Develop measures that will increase these three indicators. To do this, you need to divide the available resources, think over a marketing strategy for promoting the store, find performers, and work together to improve sales factors.
Constantly monitor changes and find out what measures have increased or decreased sales. In the Torgsoft program, you can compare indicators for any time period.
Calculate how much revenue (and profit) has increased, and which indicator has influenced it the most - to find out the most effective way to increase sales for your store.

Let's use an example:

Let's say your store's turnover is now on average 250 thousand, and you would like it to be 500 thousand, that is, 100% more. Does it look unrealistic? Let's estimate it by calculations.

Let's imagine that you have about 600 regular customers who make purchases from you twice a month for an average of 200 UAH:

600x2x200 UAH = 240 thousand.

If you try to increase the number of customers from 600 to 650 (i.e., literally by 8%), the frequency of purchases from 2 to 3 times a month, and raise the average check from 200 to 260 UAH, you will get the coveted 500 thousand in revenue:

650x3x260 UAH = 507 thousand.

Is such a task feasible? Yes, it is. Now you need to work on each indicator separately.

Increase the average check

We wrote in detail about increasing the average check in the article: Affordable ways to increase the average check in your store.

To increase the amount of the check, you can offer a bonus, gift, or discount when purchasing over a certain amount or several items. This is a classic scheme to increase sales. You can also combine products into a bundle and offer a discount on it. Add an attractive product to the set and one that needs to be sold immediately, for example, at the end of the season.

In the "Marketing - Promotions" mode of the Torgsoft program, you can create an unlimited number of promotions for different product groups, types of customers, combine products with each other and set discounts. You can customize various combinations of promotions with the parameters you need.

You can order sales training to teach your staff to sell more and better, to make additional sales. In particular, sellers should be trained to work with customer objections.

It is important to properly organize the salary and remuneration of salespeople, as well as the staff motivation system. The Torgsoft program has special modes that allow you to calculate various types of salaries, bonuses based on performance, set sales plans for any group of goods, create a schedule for sellers, etc.

Increase the frequency of purchases

To increase sales, encourage regular purchases in every possible way. To do this, introduce discount cards with cumulative discounts, bonuses, and discount coupons that can "burn out" if not used on time. Organize promotions such as "Every fourth purchase with a discount" (with a gift, with free delivery), enter gift certificates. Send reminders about new products or sales via SMS or email.

Do not forget to set the validity period of promotional offers. In the Torgsoft program, you can set up a discount card so that the accumulated discount is canceled or reduced if no purchases are made during the specified period.

Each store has its own indicators

Each store has its own combinations and choice of methods to increase sales. They depend on the type of product (expensive or cheap), the direction of trade, the ambitions of the owner, market trends, and independent objective circumstances (decline/increase in demand).

Some focus on increasing the frequency (volume) of sales. These can be grocery stores, pharmacies, and children's stores. Another type of business - stores in resort towns or with a narrow profile (for example, selling wedding dresses) - should focus on increasing the number of customers and increasing the average check.

Програма обліку товару для інтернет-магазинів, крамниць, торгових точок, складів та виробництва

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