The DriveSales™ | How to calculate sales volume variance and why it’s important?
If you are well-acquainted with the sales business, you might have an idea about the fact that the sales business is amongst the most unsteady ones. Here, you do not have the one size fits all approach. You have to strategize and plan according to the needs of every client of yours.
As a business, you want to top the market and undoubtedly have tried every method to do so. Yet, the graph is still unsteady. The fault might not lie in the strategy but other components and stages of your sales process.
Every company wants to exceed its sales expectations. No business enjoys seeing a dip in their sales chart. Thus, it is absolutely imperative for each and every company to diligently look after its forecasting methods and proactively ensure that each stage of the business is working at the optimal level.
What you need to know is how o understand which sales methodology at which stage is underperforming and to figure out the degree of its lag. Then, all you need is to devise a simple and effective way to solve this lag and improve your methodology. Sounds easy, right!!!
To help you with this knowledge, you can use the metric of sales volume variance.
Sales volume variance and its importance
Calculating sales variance is a fairly easy task. All you need to gather is some data and you’re good to go. You need to know the number of units that you projected to actively sell, the number of units that you actually sold, and of course, the cost per unit.
Thus, sales variance is the product of the difference of the sold units and the projected units with the cost per unit sold.
Sales volume variance = (Total sold units — Projected units sold) * Cost per unit
Now, another question that might come up in your mind is what you will gain by doing all of these calculations. Well, sales volume variance is a definite metric that will probably offer you all the necessary insights to shape your strategies more efficiently.
If your sales volume variance is in a favourable direction, it specifically indicates that your business is doing great. However, if the stats are unfavorable, you might want to look into various stages of your strategy along with other factors such as market ranking, competition, prices, product scope, etc.
Hence, by using this metric, you can effectively figure out if your business is on the right track or not. You can keep a check on your expectations and the corresponding output with respect to your business and plan accordingly. This will help you in taking your business to new heights and leaving a distinct mark in your domain.
Now, as an effective SALESPERSON! We can do three things from here.
1. Not ignoring the opportunity and blaming the situation for revenue loss.
2. Taking important notes and going back to revisit your sales strategy with the growth mindset.
3. Reaching out to The DriveSales™ if you need any specialized help for sales.
To conclude, what you choose to think also provides some idea of your development as a consultative salesperson. It is something like Jeffrey Gitomer quotes “Great salespersons are relationship builders who provide value and help their customers win.”