What Does It Mean?
Sales growth is a measure of the change in revenue over a fixed period of time. Comparing revenue between two fiscal periods demonstrates the rate of growth - positive or negative, of a business.
A Sales Analysis by Brand Dashboard
Why Does it Matter?
Sales growth is one of the most powerful metrics in any business; it is directly tied to revenue, profitability, and is a core metric by which you can measure the health of a sales team. If sales is the heartbeat of an organization, sales growth is the heart rate monitor - indicating whether revenue goals are on track. An understanding of this metric is key to determining and executing business strategy.
How Do you Measure Sales Growth?
Sales growth is displayed in a percentage and is calculated with this formula:
[(Sales for the current period - Sales for the previous period) / Sales for the previous period] x 100
What Data Sources Would You Use to Measure the KPI?
Companies track sales growth in the place they track revenue. Often, this means a CRM like Salesforce, SAP, or Adobe.
Give me an example…
Let’s say that you are an emerging toy start-up based out of the North Pole. You have just closed your second year of business, and it’s time to report to your investors about the state of your company. You know that out of all the sales data analytics you are reporting on, sales growth is one of the most important data points you have in demonstrating the health of your business. After a big push in December, you close year two with $150,000 in sales. To calculate your YOY sales growth you take:
150,000 - 100,000
________________ x 100
50% Growth YOY
You report to your investors a 50% year over year increase. Great Job!
What Benchmarks/Indicators Should I Use?
- A positive sales growth percentage over the specified time period
- A negative sales growth percentage over the specified time period
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