Sales and Marketing Metrics

1. Vital Sales & Marketing Metrics

2. Read me..
Today, we have abundant data, better information, fair knowledge and
poor insight. Encountering wisdom is a rare occurrence!
The data is out there on our spreadsheets, databases and hard disks.
Here are 20 simple effective metrics for a Sales /Brand manager.
It is not all these metrics, probably an ideal combination of one or two of
these metrics for a given business problem can show a direction - The
right direction.
The wisdom is finding out the combination. I leave the choice to you.
Lastly, as some one aptly puts it,
A collection of data is not information.
A collection of information is not knowledge.
A collection of knowledge is not wisdom.
A collection of wisdom is not truth.

3. Metric
 A metric is a system of related measures that
facilitates the quantification of some particular
characteristic
 Remember ,
 What gets measured , gets done.
 If you cannot measure it, You cannot manage it

4. Few definitions in brief
Segment and Category makes a Market
 Segment : People with similar needs
 Made up of people or organizations sharing one or
more characteristics that cause them to demand
similar product and/or services
 Category : Inter changeable brands or service
A category is a group or set of things that have similar
characteristics. Similar and competing products (or
services) all fall into the same brand category.

5. Metrics at a glance
Target achievement
Incremental and Growth
CAGR Market Share
Per capita per month Relative Market share
Contribution percent Evolution Index
Incremental contribution Market capitalization Index
Contribution Index Rate of Cannibalization
YTD COGS
MAT Gross Margin and Profit
Simple Moving Average ROI
Performance Spread
Performance Span

6. 1.Target achievement Back
Achievement vs. the Target
This can be measured at a specific time interval like Month, Quarter,
Half-Yearly, Yearly, YTD (Year to date) etc.
Use: To measure sales success
Total sales for the period
Target achievement =
Total Target for the period

7. 2.Incremental and Growth Back
Incremental: Absolute incremental in revenue compared to last
period ( Month, Qtr. , Year etc.)
Growth : Incremental as a percent to last period’s revenue is growth.
Use: Measure the health of a brand or a organization Vs. Market
competition
This year sales – Last year sales
Growth =
Last year sales

8. 3.CAGR (Compounded Annual Growth Rate) Back
 CAGR the year-over-year average growth rate over a specified
period of time.
 It is best explained if you understand what is not CAGR!
 Suppose you have started your sales with Rs.100 in 1st year and ended up with Rs.364.65 in
4th year. You have grown at 70%,50%,30% and 10% respectively in 4 Years. If some one
asks you on an average what is the growth per year, it is not the average of 70+50+30+10
divided by 4 = 40%.
 This is where CAGR is used. You will find it as ~ 38.1876%.
1
No. Yrs*
End Sales
CAGR = - 1
Start Sales
* No of years In between Start year and End year

9. 4.Per Capita Per Month Back
 This is to measure average sales by each sales man per month
 Use: This gives a quantum of sales contribution per salesman. Can be
used to compare productivity
Average sales per month
PCPM =
Number of Salesmen

10. 5.Contribution Percent Back
 This is to measure the percent of contribution from each entity like
salesman / Territory/ Brand to the total sale.
 Use: To measure the degree of dependence on a brand / Territory
/Salesman to the total sales
Sale of the identified entity
Contribution % =
Total sales of all entities

11. 6.Incremental Contribution Back
 This is to measure the percent of contribution from each salesman /
Territory/ Brand to the total Incremental sale.
 Use: To measure the degree of dependence on a brand / Territory
/Salesman to the total Incremental sales / Revenue
Incremental Sale of entity
Incremental
=
Contribution Total Incremental sales of all entities

12. 7.Contribution Index Back
 Is a number that denotes the number of times the average
contribution of each entity like territory / Salesman and Brand sales
 Use: To measure the relative contribution of each entity to the
average. If it is more than 1, the Contribution is above the average of
all, if equal it is on par else it is less than the average of all.
Sale of the entity
Contribution Index =
Average sales of all entities

13. 8.YTD Back
 YTD : Year to Date (Similarly QTD and MTD)
 Revenue/Sales form the beginning of the year
 E.g. On 31st March 2010 YTD sales means,
sales from 1st Jan 2010 to 31st Mar 2010
 Use : Measure the sales quantum at a specific point of time
YTD Apr 2010 = Jan -10 + Feb-10 + Mar-10 + Apr-10 (sales)
MTD – 4/Jun/2010 = 1-Jun + 2-Jun + 3-Jun + 4-Jun (sales)

14. 9.MAT Back
 MAT : Moving Annual Total
 Last 12 months Revenue/sales
 E.g.: Feb 2009 to Jan 2010 sales are called MAT Jan 2010 Sales
 Use: As it data is for the past 12 months, comparing two points of MAT
data evens out the fluctuations
MAT Jan-10 = Feb-09 + Mar-09 +……+ Dec-09 + Jan-10
MAT Jun-10 = Jul-09 + Aug-09 +……+ May-10 + Jun-10

15. 10.Simple Moving Average Back
 Also called as rolling/running average, is a series of numbers
 Commonly used with time series data to smooth out short-term
fluctuations and highlight longer-term trends.
 E.g.: Take the sales of the last 20 days, add them and divide the total by 20.
 Next day, take last 20 days average, next day again last 20 days average.
 The resultant series is a simple 20 day moving average.
SMA of sales 1 day to 20 day sales average , 2 day to 21 day
= sales average , 3 day to 22 day sales average , 4
(20 Days) day to 23 day sales average,………

16. 11.Market share of a brand Back
 Expressed in percentage
 Can be in Units and also in Revenue
 Market Refers to ‘defined market’ for the brand
Total sales of the brand
Market Share % =
Total sales of the market

17. 12.Relative Market share Index Back
 Expressed as a number
 Comparing brand market share with the biggest competitor’s market
share
 Can be measured for units as well as revenue
Brand Market Share
Relative Market Share Index =
Brand leader’s Market share

18. 13.Evolution Index Back
 Evolution Index is a number that denotes the rate of brand growth vs.
the market Growth in a given geography
 If the resultant index is more than 1,the brand is growing faster than
the market. if equal it is on par with the market
 Use: To determine the growth of a brand relative to market
100 + ((Brand Growth%) X 100)
Evolution Index =
100 + (Market Growth%) X 100)

19. 14.Market Capitalization Index Back
 Market Capitalization Index (MCI) is a number that denotes the
degree of market captured by the brand in a given geography
 Use: This measure can give indication of opportunity realized and
opportunity in waiting in a given geography
Brand Contribution% of a geography
MCI =
Market Contribution% of a geography

20. 15.Rate of Cannibalization Back
 Cannibalization is a process where the new introduction (say the line
extension of a brand) eats in to sales of the existing brand(say the
Mother brand) from the same organization.
 Use: To measure to assess the impact of new introduction on the
existing brand
Rate of Sales loss (Actual or Expected ) from Existing brand
=
Cannibalization Sales of new Introduction

21. 16.COGS – Cost of Goods Sold Back
 The total of direct expenses incurred in producing goods. Includes
the actual cost of materials, direct labor costs in making the goods in
saleable condition.

 COGS does not include indirect expenses such as advertising and
promotion , sales force costs, office or administrative , accounting
expenses, royalties, rent etc.
COGS = Actual Manufacturing Cost + Packing Costs + Transport Costs
Inventory Costs are also taken by some organization as a part of COGS

22. 17.Gross Margin % ; Gross profit Back
 Gross Margin is the difference between revenue and COGS
 Gross profit is the difference between revenue and the COGS, before
deducting payroll costs ,overhead costs, interest and taxation.
Revenue - COGS
Gross Margin % =
Revenue
Gross profit = Net sales – Cost of goods sold (COGS)

23. 18.ROI Back
 ROI measures the
 Gains / Profits earned for costs involved / investments done.
 To be Simple, The Incremental Gains and Incremental Costs need to
be taken for computations to measure the ROI of an Activity/ Costs
involved or investments done Vs. the Gains achieved because of the
activity or investment.
 Usually Measured as% , Hence Multiplication by 100
Gains – Costs Involved
ROI % = X 100
Costs Involved

24. 19.Performance Spread Back
 Spread is measure how many entities* have performed on or above
the benchmark ?
* Entities can be salesman, brands, SKUs, territories, areas etc.
Spread is often measured at a specific point of time like Month ,Qtr.,
Year etc.
 Use: to measure dispersion of Success among entities
Spread* = No of entities above benchmark : Total No. of entities
* Spread is best expressed as Ratio than a percent for a better understanding.
* Spread is at a specific point of time. Hence , showing the point of time is essential .eg.YTD-Jan’12

25. 20.Performance Span Back
 Measure of how often the performance is on or above benchmark in
a given time frame is Span.
 Measured for a time frame like Jan-Dec,Day1-Day31 etc.
 Use: To measure dispersion of success across time frame and also
predictability of success and risk.
Span* = No of months above bench mark : Total no. of months
* Span is best expressed as Ratio than a percent for a better understanding.
* Span for a given time interval, hence showing the time interval is essential ( Jan 2010
to Dec 2010)