The document outlines key performance indicators (KPIs) for sales analysis. It discusses steps for setting KPIs, including understanding business goals, segmenting the sales process, and identifying relevant metrics. Examples are provided for setting KPIs for a supermarket and life insurance sales process. The document also provides an example of setting KPIs for an FMCG distribution business to increase market share within a year.

1. SALES
ANALYSIS
PART-3
Wai Lin – Learn Business Intelligence

2. COURSE OUTLINE
2
Introductio
n
1
Data Collection
and
Management
2
Key
Performance
Indicators
(KPIs) for Sales
Analysis
3
SalesTrend
Analysis
4
Customer
Segmentation
and Analysis
5
Product
Performance
Analysis
6
Sales Channel
Analysis
7
Pricing and
Promotion
Analysis
8
Competitor
Analysis
9
Sales
Forecasting and
Planning
1
0

3. 3
PART-3 UNDERSTANDING KEY PERFORMANCE INDICATOR
Key Performance Indicators (KPIs) are essential metrics used to evaluate the performance and success of a business or specific
activities within a business. In sales analysis for distribution and retail settings, various KPIs play a crucial role in measuring and
understanding the effectiveness of sales strategies.
¡ Indicator
¡ Result Indicator
¡ Performance Indicator
¡ CSF, KRI, KPI

4. 4
STEPS OF SETTING KPI
1. Understand Business Goals and Objectives
2. Segment Your Sales Process
3. Engage Stakeholders
4. Identify Pain Points and Opportunities
5. Data Availability and Quality
6. SMART Criteria (Specific, Measurable, Achievable, Relevant, Time-bound)
7. Balance Lagging and Leading Indicators
8. Customize KPIs
9. Regular Review and Adjustment

5. 5
STEPS OF SETTING KPI
1. Segment Your Sales Process: Break down your sales process into key stages, from lead generation to closing deals to after-sales
support. Each stage may have different objectives and challenges, requiring specific KPIs to measure and monitor performance.
Let's break down the sales process for a supermarket into key stages and identify potential KPIs for each stage:
Customer
Awareness
and
Attraction
Product
Exploration
and
Shopping
Checkout
and
Purchase
Post-
Purchase
Experience
Customer
Engagement
and Loyalty

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SALES PROCESS STAGES FOR A SUPERMARKET
1. Customer Awareness and Attraction:
This stage involves creating awareness about the supermarket and attracting potential customers to visit.
Potential KPIs:
1. Foot Traffic: Number of customers entering the store.
2. Marketing Reach: Measure of the effectiveness of advertising efforts.
3. New Customer Acquisition Rate: Percentage of first-time shoppers.
2. Product Exploration and Shopping:
Customers explore the store, select products, and make purchasing decisions.
Potential KPIs:
1. Average Basket Size: Average value of a customer's purchase.
2. Conversion Rate: Percentage of visitors who make a purchase.
3. Product Affinity: Measure of products commonly purchased together.

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SALES PROCESS STAGES FOR A SUPERMARKET
3. Checkout and Purchase:
Customers proceed to checkout and make their purchases.
Potential KPIs:
1. POS Transaction Value: Total revenue generated at the point of sale.
2. Transaction Frequency: How often a customer makes a purchase.
3. Checkout Abandonment Rate: Percentage of customers who abandon their carts.
4. Post-Purchase Experience:
After customers make a purchase, their experience can influence their likelihood to return.
Potential KPIs:
1. Customer Satisfaction (CSAT) Score: Measures overall customer satisfaction.
2. Customer Loyalty: Measure of repeat purchases and retention.
3. Return Rate: Percentage of items returned by customers.

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SALES PROCESS STAGES FOR A SUPERMARKET
5. Customer Engagement and Loyalty
Keeping customers engaged and encouraging repeat visits.
Potential KPIs:
1. Loyalty Program Participation: Number of customers enrolled in loyalty programs.
2. Repeat Purchase Rate: Percentage of customers who make multiple purchases.
3. Net Promoter Score (NPS): Measures customer willingness to recommend the store.
By segmenting the sales process for a supermarket into these stages and identifying relevant KPIs, the supermarket can
gain insights into the effectiveness of various aspects of its operations and customer interactions. This allows the
supermarket to make data-driven decisions for improvement and growth.

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DEVELOP SALES PROCESS (WHISKY PRODUCTS)
1) Prospecting
Number of new leads generated
Conversion rate from lead to initial contact
2) Initial Contact:
Number of successful initial contacts made
Response rate (percentage of leads who respond)
3) Needs Assessment:
Average time spent on needs assessment per prospect
Percentage of prospects who progress to the next stage
4) Product Presentation:
Number of successful product presentations/demonstrations
Engagement rate during product presentations
5) Negotiation:
Number of negotiation discussions held
Percentage of successful negotiations
6) Purchase Order:
Number of purchase orders received
Accuracy of purchase orders
7) Order Processing:
Order processing time (from receipt of order to initiation of
shipping)
Order accuracy rate
8) Shipping and Logistics:
On-time delivery rate
Percentage of orders with no shipping issues

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DEVELOP SALES PROCESS (LIFE INSURANCE)
1) Lead Generation:
• This involves identifying potential customers who might be
interested in purchasing life insurance.
• KPI: Number of leads generated, Conversion rate from lead to
prospect.
2) Prospect Qualification:
• Assess the leads to determine if they meet the basic criteria for
purchasing life insurance.
• KPI: Percentage of qualified prospects.
3) Needs Analysis:
• Understand the prospect's financial situation, family needs,
and coverage requirements.
• KPI: Average time spent on needs analysis, Percentage of
prospects with completed needs analysis.
4) Product Presentation:
• Present suitable life insurance options based on the prospect's
needs.
• KPI: Average number of products presented per prospect,
Percentage of prospects who request more information.
5) Addressing Concerns:
• Address any questions or concerns the prospect has about the
life insurance products.
• KPI: Average number of objections per prospect, Percentage
of objections successfully addressed.
6) Quoting and Proposal:
• Provide a detailed quote and proposal based on the chosen
life insurance plan.
• KPI: Turnaround time for providing quotes, Percentage of
prospects who receive a proposal.

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DEVELOP SALES PROCESS (LIFE INSURANCE)
7) Decision Making:
• Assist the prospect in making a decision and selecting a life
insurance plan.
• KPI: Average time from proposal to decision, Conversion rate
from prospect to customer.
8) Application Submission:
• Help the customer complete and submit the application for the
chosen life insurance plan.
• KPI: Application submission accuracy rate, Percentage of
applications submitted within a certain timeframe.
9). Underwriting and Approval:
• Coordinate with underwriting to ensure the application is
reviewed and approved.
• KPI: Average time for underwriting decision, Percentage of
applications approved.
10) Closing the Sale:
• Finalize the sale by collecting necessary documents and
payments.
• KPI: Percentage of approved applications successfully closed,
Average time from approval to closure.
11) Follow-up and Customer Onboarding:
• Provide post-sale support, answer questions, and ensure the
customer understands their policy.
• KPI: Customer satisfaction score for onboarding process.
12) Cross-Selling and Up-Selling:
• Identify opportunities to offer additional insurance or financial
products.
• KPI: Percentage of customers who purchase additional
products, Average revenue per customer.

12. 12
DEVELOP SALES PROCESS (LIFE INSURANCE)
13) Customer Retention and Renewals:
• Maintain a strong relationship with the customer to encourage policy renewals.
• KPI: Policy renewal rate, Percentage of policies retained over time.
14) Referrals:
• Encourage satisfied customers to refer friends and family to your services.
• KPI: Number of referrals received, Conversion rate of referrals to leads.
Keep in mind that these KPIs can vary based on the specific goals and strategies of your insurance company. Regularly monitoring and
analyzing these KPIs can help you refine your sales process and improve overall performance.

13. 13
EXAMPLE FOR FMCG SALES
Let's apply the steps of setting KPI mentioned to an example case of an FMCG (Fast Moving Consumer Goods) distribution business.
¡ Business Case: FMCG Distribution Business
1. Understand Business Goals and Objectives: The business wants to increase its market share by 15% within the next fiscal year.
This would involve expanding their distribution network and improving their reach to retailers and customers.
2. Segment Your Sales Process: Segment the sales process into stages like lead generation, order placement, order fulfillment, and
post-sales support. This helps in tracking progress and identifying bottlenecks.
3. Engage Stakeholders: Involve sales teams, distribution partners, retailers, and end customers in discussions to gather insights into
market trends, customer preferences, and challenges faced.
4. Identify Pain Points and Opportunities: Through discussions and data analysis, identify pain points such as delivery delays,
stockouts, or ineffective communication between teams. Opportunities could involve leveraging new distribution channels or optimizing
routes for better efficiency.
5. Data Availability and Quality: Ensure you have access to data about sales, inventory, delivery times, and customer feedback. Verify
its accuracy and completeness to make informed decisions.

14. 14
EXAMPLE FOR FMCG SALES
6. SMART Criteria: Define Key Performance Indicators (KPIs) using SMART criteria:
• Specific: Increase market share by 15%.
• Measurable: Track market share percentage.
• Achievable: With expanded distribution and improved processes.
• Relevant: Aligns with the business goal of growth.
• Time-bound: Achieve within the next fiscal year.
7. Balance Lagging and Leading Indicators: Lagging indicator: Market share percentage (result-oriented). Leading indicator: Number of
new retailers onboarded per month (predictive of future market share growth).
8. Customize KPIs: Tailor KPIs to the FMCG distribution context:
• Order Fulfillment Rate: Percentage of orders fulfilled on time.
• Inventory Turnover Ratio: How quickly inventory is sold and replaced.
• Retailer Satisfaction Score: Measured through regular surveys.
• Delivery Time Variance: Compare promised vs. actual delivery times.

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EXAMPLE FOR FMCG SALES
9. Regular Review and Adjustment: Regularly review KPIs and adjust strategies as needed. For instance, if the order fulfillment rate
drops, analyze the reasons and make necessary improvements.
Example KPIs and Scenarios: Let's say that after implementing the above steps, the FMCG distribution business has achieved an
increase in its market share by 10% halfway through the fiscal year. However, there's a decline in the order fulfillment rate due to
increased demand and supply chain disruptions.
Action Taken:
• Engage with distribution partners to address supply chain disruptions.
• Optimize inventory management to meet increased demand.
• Provide additional training to the sales team to handle higher order volumes efficiently.
By following these steps and continuously adapting to market dynamics, the FMCG distribution business can enhance its performance,
achieve its growth goals, and provide better services to its retailers and customers.

16. 16
VISUALIZING KPIS FOR EFFECTIVE COMMUNICATION
Importance of Data Visualization in Conveying KPI Insights
¡ Data visualization is a powerful way to present complex data in a visually engaging and easy-to-understand manner. It enables us to quickly
identify trends, outliers, and patterns that might be hidden in raw data. When it comes to KPIs, well-designed visuals can help stakeholders
grasp the performance of your sales efforts at a glance.
Choosing the Right Types of Charts and Graphs for Different KPIs
Different KPIs require different types of charts and graphs to effectively communicate their insights. For example:
¡ Line charts are great for showing trends over time, such as sales revenue growth.
¡ Bar charts are ideal for comparing values across different categories, like sales by product.
¡ Pie charts work well for illustrating the composition of a whole, like the distribution of sales by region.
¡ Selecting the right visualization type ensures that your audience can quickly interpret the information you're presenting.
Tools and Software for Creating Impactful KPI Dashboards
There's a wide range of tools and software available for creating interactive and visually appealing KPI dashboards. Some popular options
include: Excel, Power BI

17. 17
VARIANCE ANALYSIS FOR UNMET KPI TARGETS
Variance analysis is a crucial technique used to understand the differences between actual performance and expected or target
performance. When Key Performance Indicators (KPIs) do not meet their predefined targets, variance analysis helps identify the reasons
behind the variance and provides insights into potential corrective actions. Here's how you can conduct variance analysis for unmet KPI
targets:
1. Calculate the Variance: Calculate the variance by subtracting the actual performance value from the target value. The result can be
either positive (favorable) or negative (unfavorable) depending on whether the actual performance is higher or lower than the target.
2. Understand the Factors: Examine the factors that might have contributed to the variance. These factors can be internal or external.
Internal factors might include changes in processes, employee performance, or resource allocation. External factors could be market
trends, economic conditions, or competitor actions.
3. Breakdown of Variance: Break down the variance into its components. For example, if a sales revenue KPI missed the target, break
down the variance into components like quantity sold, price per unit, and customer segments. This provides a deeper understanding of
which aspects contributed most to the variance.
4. Root Cause Analysis: Perform a root cause analysis to identify the underlying reasons for the variance. Ask questions like: What went
wrong? Were there any unforeseen challenges? Did a specific process break down? Was there a lack of resources or support?

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VARIANCE ANALYSIS FOR UNMET KPI TARGETS
6. Actionable Insights: Based on the identified root causes, generate actionable insights. Determine what corrective actions need to be
taken to address the issues and improve performance. These actions could involve process adjustments, resource reallocation, training,
or strategic shifts.
7. Prioritize Corrective Actions: Not all variances require the same level of attention. Prioritize corrective actions based on their potential
impact and feasibility. Focus on addressing issues that have the most significant influence on the KPI performance.
8. Implement Changes: Implement the corrective actions and monitor their impact on KPI performance. Track the changes over time to
ensure that the adjustments are producing the desired outcomes.
9. Review and Learn: Regularly review the effects of the implemented changes. If the performance starts to improve and move closer to
the target, it indicates that the corrective actions are effective. If not, reassess the situation and adjust the approach as needed.
10. Continuous Improvement: Variance analysis is not a one-time process. It's an ongoing cycle of analysis, action, and improvement.
Continuously monitor KPIs, compare them to targets, and refine your strategies based on the insights gained.
Remember, variance analysis is a valuable tool for learning and growth. It helps organizations adapt to changing circumstances, make
informed decisions, and ultimately improve their overall performance.

19. 19
KEY OF (KPIS) FOR SALES ANALYSIS
¡ Backorder Rate
¡ Supplier Performance
Metrics
¡ Return Rate
¡ Route Optimization
¡ Customer Turnover
Rate
Distribution Business
¡ Fill Rate
¡ Order Accuracy
¡ On-Time Delivery
¡ Distribution Costs
¡ Inventory Holding
Costs
¡ Lead Time
¡ Inventory Turnover
¡ Customer Retention
Rate
¡ Inventory Turnover
¡ Sell-Through Rate
¡ Average Shelf Life of
Inventory
¡ Return on Investment
(ROI)
¡ Online Sales Metrics
(for omnichannel
retailers)
Retails Business
¡ Sales Revenue
¡ Sales Growth
¡ Gross Profit Margin
¡ Average Transaction
Value (ATV)
¡ Conversion Rate
¡ Customer Footfall
¡ Inventory Turnover

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PRACTICE WITH EXCEL
¡ Sample KPI Report Dashboard

21. 21
HOME WORK
Assignment 1: KPI Selection and Justification
¡ Choose a real or hypothetical business scenario (e.g., e-commerce store, restaurant, software company).
¡ Identify three key performance indicators (KPIs) that are crucial for analyzing the sales performance of the chosen business.
¡ Justify your selection of each KPI, explaining how it aligns with the business's goals and why it's important for sales analysis.
Assignment 4: Variance Analysis and Strategy
¡ Imagine that one of the KPIs on your dashboard did not meet its target for a specific month.
¡ Perform a variance analysis to identify the reasons behind the shortfall.
¡ Propose at least two strategies or actions that the business could take to address the issue and improve that KPI in the following
month.