How to Calculate Incremental Sales?

How to Calculate Incremental Sales?

Deskera Content Team
Deskera Content Team
Table of Contents
Table of Contents

We all come across the word ‘marketing’ at some point or the other. But do you know what it aims at? Well, marketing aims at supporting and improving sales outcomes. But how can you find out whether your marketing or sales promotion campaign was effective or not, and how many customers were you able to convert? One method to gauge the effectiveness of a sale is incremental sales.

By keeping a track of the incremental sales, salespeople can better comprehend the success of the promotional or a marketing campaign. Depending upon the type of business you have, you would want to know the effect of initiatives such as:

  • Short- or long-term advertising campaigns that aim at getting new business
  • Upselling or cross-selling activities done by salesperson
  • Special deals or offers related to current accounts

Whatever be the case, incremental sales is an important tool to evaluate marketing-based outcomes in financial terms. To make the most out of your business, this guide will help you get answers to various questions related to incremental sales.

What Do you Mean by Incremental Sales?

Incremental sales refers to a metric or KPI that helps to measure the efficiency of a marketing campaign or a sales promotion campaign. It basically helps to determine the difference between the value of the products sold during a tracked period (usually during a promotional campaign) and the value sold normally.

Why it is Important to Calculate Incremental Sales?

The more your incremental sales are, the more profitable your business will turn out to be! Incremental sales clearly depict how effective your marketing campaigns are, and how they are affecting the conversion rate.

In case you are not getting the desired ROI, you can even track KPIs including incremental sales. It will help you identify your pitfalls so that you can work on them and increase your profit margin accordingly. Sometimes you end up paying for leads that you would have gotten easily. Such expenses you can skip when you keep a track of the KPIs. This results in increased profit margins on the same number of deals.

You can play smarter when you accurately measure incremental sales.  If you find out that your marketing efforts are bringing positive results, then you can even increase the budget for your ad. However, if the marketing efforts prove to be futile, then you can consider decreasing your ad budget. You can put sales efforts in some different direction in these cases.

Incremental sales is an important metric for the following:

Sales teams - Incremental sales helps to determine how well the sales teams are performing. Are they able to convert leads into paying customers?

Sales and marketing managers - Incremental sales helps the managers in determining how well the ad campaigns are performing? Based on the incremental sales, they can decide whether to increase or decrease ad spending.

Your organization or company - Incremental sales is a metric that helps to determine whether your company is able to meet financial goals or not.

How to Calculate Incremental Sales?

Incremental sales clearly indicates an increase in sales as a result of a marketing or promotion campaign. If you want to calculate it, you will first need to pick a specific timeframe to measure ad spend that you want to target.

Incremental sales helps to gauge the effects of the following:

Once you get the sales results for the timeframe you have chosen, you can make use of the tools such as CRM in order to get insights into the past historical sales data. You can use data from three to five years for annual spend activities.

Formula to Calculate Incremental Sales

Incremental sales = Total Sales-Baseline Sales

Now you must be wondering what do you mean by baseline sales and total sales! Baseline refers to the revenue you would have earned without a promotion or a marketing campaign. Total sales refers to the total revenue earned for a specific period when the campaign was going on.

For example, a retailer is expecting a sale worth Rs 50,000 in a month without any advertising. He then starts an influencer campaign that costs him Rs 20,000 and sells products worth Rs 80,000.

For this case, the incremental sales will be Rs 30,000.

What Practices You Can Follow to Improve Incremental Sales?

Find KPIs Relevant to your Business

Before you measure incremental sales, consider other KPIs that affect your incremental sales. Average purchase value, cost of sold goods, etc. are some of the KPIs that can be relevant to your business. They can help to improve your sales metrics.

Build Better Customer Relationships

Building solid customer relationships is quite essential for the success of your sales efforts. To fulfil this criterion, you will have to create and deliver content that meets the needs of the target audience. Make sure the content caters to the customer’s questions. You can even enhance customer engagement with the help of social media channels and send personalized thank you messages to the customers. These practices will help to deliver the best customer experience.

Try Out Different Modes

Since there are a lot of channels available these days, you need to find out what works best for you. Different target audiences can be reached through various social media platforms. Check out which platforms provide a better return on investment.

Adapt Quickly

Customer behaviour and social media trends can change in a jiffy. That is why the marketing efforts you put, need to adhere to the changes. You can even try a new marketing technique for trial purposes.

Whenever you create a new marketing strategy, you need to test it and analyze the results. You need to check incremental sales values and related metrics as well.

How Deskera Can Assist You?

When you are running your own business, there are tons of duties and responsibilities that you have to fulfill. Using the Deskera CRM system, you can manage your contacts, leads and sales team. You can use the CRM system to manage all customer data and manage your leads and deals.

Doing so will help you to save the time taken in transferring customer data between the different systems. It will also assist you with real-time updates about your business like cash flow status, customer satisfaction, inventory management, sales, purchases, purchase orders, customer tickets, customer satisfaction, managing leads, revenues, profit, and loss statements, and balance sheets.

Moreover, it would also help in integrating sales methodology across different platforms onto one system so that you have a consolidated list for email campaigns, leads management, and sales pipeline to mention a few.

It will also help you to sync between your orders, payments, taxes, refunds, product variants, sending out invoices and reminders, facilitating invoice management, and even undertaking follow-ups and advertisement campaigns.

Such a consolidated platform will help you to improve your sales through building effective sales compensation plans and also facilitate faster and well-informed decision-making. It will help you in strengthening your opportunities and being braced for the threats.

Deskera books and Deskera CRM will also be able to ensure the highest customer satisfaction and thereby an increase in net revenues and net profits.

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Key Takeaways

  • Incremental sales refers to a metric or KPI that helps to measure the efficiency of a marketing campaign or a sales promotion campaign.
  • The more your incremental sales are, the more profitable your business will turn out to be! Incremental sales clearly depict how effective your marketing campaigns are, and how they are affecting the conversion rate.
  • Incremental sales is an important metric for sales teams, sales managers, and the organization itself.
  • The formula to calculate incremental sales is: Incremental sales = Total Sales-Baseline Sales
  • Certain practices can be followed to improve incremental sales
  • Firstly, you need to find KPIs relevant to your business. Then focus on building stronger customer relationship. You can even try different modes to find out what works best for you
  • As social media trends change quickly, you need to put marketing efforts that need to adhere to these changes
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