Sales may be one of the most important metrics of a business; however, it is often not discussed. It is the main reason why revenue is often the number one metric to predict the health of a company. And sales revenue is the most important factor that can help you grow your business.
Sales is a vital business activity, and it is essential for the growth of a business. Keeping in mind the requirement of the present business environment, a number of companies are developing strategies to increase the sales revenue of their business.
For example, heavily relying on the internet!
The internet has revolutionized the way sales are made today. Businesses today rely on the Internet to promote their products, attract customers and drive sales. However, most businesses are still using the traditional sales strategies from the 20th century to do so. And we saw such businesses collapsing because of the brutal knife of the pandemic.
That is why businesses need to adapt to the changing world, and this blog will discuss some of the ways you can do so.
Before we get any further and list down the strategies for you, let us explain the meaning of sales revenue and why keeping a watch on it is important.
What is sales revenue?
Before we explain to you the meaning of sales revenue, let us clarify for you that sales revenue and revenue are different metrics.
As per Accounting Standards Codification and International Financial Reporting Standards, sales revenue is defined as the income earned at the end of the month by selling a service or a commodity.
It is calculated by multiplying the products sold by their price.
Sales revenue formula = number of products sold x product price.
Sales revenue is a metric that covers only the total amount of money earned from sales, excluding discounts, labor charges, and free-of-charge fares. Sales revenue does not include any income earned on activities - such as interest payments for loans or investment returns, or income from side jobs - unrelated to the company’s core business.
Whereas the revenue of a company is calculated by considering all the above parameters.
Try Convin’s revenue intelligence software for free and see it in action!
Now that is clear; you must be thinking about why we should calculate and track sales revenue.
Let us answer that for you.
Why is sales revenue an important business metric?
For Measuring profitability
Businesses need sales revenue in order to measure the efficiency and profitability of their business processes and sales.
Exploring investment opportunities
Analyzing sales revenue by product and category helps businesses see how those items are performing in the marketplace. An organization can then decide which products to increase and decrease production on to meet customer demand.
Revenue and business valuation
Most fast-growing industries price their products based on the projected revenue dividend or potential future payout, assuming that increased revenue presages increased stock value.
For loans and contracts
To avail certain loans or government contracts– businesses have to show a certain amount of revenue as these loans and contacts have a revenue threshold for even applying.
For business forecasting
To understand where the business is headed – if the company is at a loss or to even calculate the number of units that the sellers need to sell to break even or gain profit, sales revenue is an important figure to track.
Now without any further delay, let us get into the strategies that you need to focus on to improve your sales revenue.
Strategies to improve sales revenue
#1. Focus on your marketing avenues
The most obvious way to increase sales is to boost your marketing. Although it might seem counterintuitive, quality doesn’t always equal quantity, so careful planning, test-marketing, and monitoring of your results will help maximize your sales.
Conduct marketplace research to learn which messages speak to your target audience because this is a crucial step in determining what message you want to relay as well as what sources you will use for its delivery.
Word-of-mouth is vital to marketing. Another idea is referrals, which are customers who recommend your products to other friends, family, or even strangers in person or online. Yet another tactic is adding features that encourage repeat business. Some customers may require more persuasive techniques like case studies, extra sessions, etc. Definitely don’t engage any negative user reviews posted publicly online.
#2. Diversify your product services and offerings
If you're running a mature enterprise and need to generate more, it might be time to add new products or services to your business in order to kickstart exponential growth.
If you feel you've saturated the marketplace and would like a way to boost your revenue without bringing in more customers - take this opportunity to survey what products or services your existing client base purchases on the regular but that you don't in stock for some reason, perhaps because they are too expensive (in which case, one strategy would be to work on ways of manufacturing them at a cheaper price instead) or simply because they did not occur to you as something you could provide at the time.
As a result, sales may take an initial dive while sales of any new additions build up over multiple months - but with this approach, profits should rise faster and higher than if there had been no changes made.
#3. Invest in AI-powered sales solutions
Artificial intelligence-powered technologies can help improve sales efficiency and performance, which ultimately increases sales revenue. Leading companies are now moving towards AI-powered technology solutions.
Many companies are already using AI and machine learning to improve their sales efficiency, and some of them have already seen a significant ROI.
For example, a study by Gartner says the Global AI software market will hit $62 billion in 2022. Furthermore, with AI, companies can now move away from reactive automation and predictive analytics to proactive automation. They can even leverage AI to uncover ad hocs and clots in sales processes and sellers’ performance.
#4. Expand distribution platforms
Selling your product on different platforms can increase your sales volume and revenue, but it's not always an all-or-nothing decision. In fact, some strategies may result in a greater increase in profits through higher pricing, while others may have you frantically working to maintain the volume of sales.
It all depends on how much flexibility you have, what channels are available, and what channels need your attention to compete with other similar products. Take the time to strategically plan out how each method affects a few specifics such as profit margins and gain valuable insight into which methods yield the best results for your product. Then act accordingly based on that information so that you don't lose sight of your target goals!
#5. Cross-functional department collaboration
Did you know sales and marketing misalignment can cost companies 1$ trillion each year?
Shocking, but true!
A study conducted by Gartner showed that the companies that have teams working in silos end up losing a lot of money as they focus on their KPIs rather than the joint company goal, which is to increase revenue.
#6. Developing customer-business relationships
The easier you make things for your customers, the happier they will be and the more willing they'll be to purchase. Work with similar companies and organizations that also offer services or products in your niche which will improve loyalty among customers and clients. Don’t put other companies down just to get your product noticed. Rather act as your customers' trusted advisors, and tell them the pros and cons of using all products and help them decide which product would suit them best.
It will take time to show these strategies' effects
In the end; we just want to say, take your time evaluating your current product and strategies before implementing its new sales revenue strategies. And once the new strategies are in effect, give it some time to reap the benefits.
There are lots of different ways to increase sales revenue, and in this blog, we took a look at a few of them and how they work. If you want to grow your business and increase sales, you will most likely want to increase your sales revenue. To do so, you might try a few of the strategies that we looked at in this article.
We hope that you enjoyed this article. If you did, please share it with your friends and family. Thanks for reading!
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