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Sales Measures
Sales Revenue
Sales revenue at a high level means money received from the sale.
Here are come complexities which present different faces of sales
revenue
Different lines within Sales Revenue:
This measure can be further divided into different kind of revenue
lines like base revenue, taxes, fixed charges (like installation)…
Multi-Currency
You can also have the revenue shared in multi-currencies for a
cross-country product/company.
Annualized v/s Real
Lets say you have bought a life Insurance Policy with quarterly
premium of USD 1000. Revenue can be the “Written Premium”,
which USD 1000 and “Annualized Premium”, which is equal
to USD4000.
Accrued or Receivables
For post-paid services, one may accrue the revenue, and in some
cases the accounts receivables are taken as revenue.
Sales Transactions
The number of Sales Transactions. The number can be expressed in
various units for example individual units, cartons, crates.
For certain products, the transaction numbers can also be in multiple
levels. For example you may count primary and secondary credit cards
as one or two transaction depending upon the purpose of measure.
Similarly, a life insurance policy can be one sale transaction or
three transactions if policy as two riders on the base policy coverage.
Number of leads
This measure gives the number of leads generated, and is used
for all sales linked analysis. For example if you want to find out
the high value leads where the first contact has happened for more
then 10 days and still waiting for intention to purchase by the
customer, you would look at dimensions “lead Category”
(High Value leads), “Lead Status” (first contact), “Aging
Band for sales work-step” (>10 days), and use the measure
“Number of leads”.
Cost of Sales Campaign
This measure is used in “Campaign Management”. This
is sub-set of overall “Cost of Sales” measure. When
a company is running a campaign, the same could be focusing on a
channel, product, location, Customer Segment or could be more broad
based. If you want to analyze the campaign business case across
products, channels and locations, you have to build a “Campaign
Cost Model” where you can allocate the campaign cost across
products, channels and customer segments.
As a simplistic example if you have a mailing campaign, you can
allocate the campaign cost depending upon how many mails have been
sent to which customer segment and locations. Typical cost of campaign
will include the “additional” cost and “discounts”
over and above the business and usual expenses.
For example if one want to find out on how much has been the campaign
cost for double door refrigerator product launch for high value
customer segments in New-York, one has to look at dimensions “Product”
(Double Door Refrigerator), “Location” (New York), “Customer”
(High value)
Cost of Product Discounts
This can be sometimes a part of campaign cost, but it may be a
separate head when the product discounts run for extended period.
This is typically one to one linked with the sale transaction and
easy to track and measure.
Customer Revenue
The value should be taken as the top-line contribution of the
customer. This measure is used in “customer segment and profiling”,
“customer satisfaction and retention”, and “customer
cost and profitability” and this is a difficult measure to
model and assign. There can be hundred different definition of customer
value. It’s always advised to start with a very simplistic
mode and evolve it.
Cost of Sales
Cost of sales include the following elements:
- “Cost of lead generation/referral”
- “Sales Compensation”
- “Operational cost of Sales Infrastructure”
- Operational expenses of running sales office,
- Customer contact and servicing cost during the sale process
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