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You’re always looking for ways to generate new revenue when you’re in business. That’s because your company’s sales growth contributes directly to the growth of your business. Incremental sales are an essential part of that process as they allow you to expand your customer base by focusing on the performance of your marketing efforts and leveraging it for success. In this blog, we will examine the impact of measuring and increasing incremental sales on your business.
Incremental Sales Defined
Incremental sales are a sales metric or Key Performance Indicator (KPI) that measures the success of your marketing campaigns. It looks at the added value of your products or services during the period of the marketing campaign compared to what you might typically sell without those efforts in place.
How to Measure Incremental Sales
To effectively measure incremental sales, you first need to decide the type of marketing you want to assess and the metrics you will make use of. The meaning of an incremental sale may vary depending on what you want to measure. You must also analyze and review your sales history and levels to determine your baseline. This will tell you the value of your products or services without marketing efforts. You can calculate incremental sales using the incremental sales formula.
Total Sales – Baseline Sales
The incremental sales formula is: incremental sales = total sales – baseline sales
Baseline sales refer to the average revenue made without a running campaign, and total sales refer to the total additional revenue your business earned during the marketing campaign period. To get the value of your incremental sales, you must subtract the total sales from the baseline sales during that period.
For example, let’s say your company expects to sell $60,000 worth of products in a month without any marketing efforts. Then you launch a campaign that helps you sell products worth $90,000. This would mean that incremental sales are $30,000.
Why Should You Care About Incremental Sales?
Incremental sales provide you with a clear picture of how much you gained from a specific product or service. It can be used to judge the success of your marketing efforts, the effectiveness of your sales team as well as your conversion rate.
It also shows you the opposite end of the spectrum. If your marketing efforts do not result in your desired ROI, incremental sales give you insight into the shortcomings of your marketing which allows you to make the necessary changes to improve them.
Calculating incremental sales can affect the following:
- Sales and marketing managers: Incremental sales allow you to accurately determine the performance of specific marketing efforts and their impact on revenue growth. This helps you decide on where to increase or decrease your ad budget.
- Sales team: Incremental sales help you determine your sales team’s ability to effectively convert leads into buying customers.
- Your business: Incremental sales help you ascertain whether or not your financial and overall business goals are being met.
How to Increase Incremental Sales
Incremental sales are what you can expect to see if you make a small change to your marketing, sales, or product. An increase in incremental sales means an increase in the profitability of your business, and that is the ultimate goal. Here are a few ways for you to increase incremental sales:
Add-on sales are a great way to increase incremental sales. Add-ons are products that customers can add to their current purchase (such as an extended warranty or a free gift). They are generally less expensive than the main product and help you sell more of the product you already have. There are many different ways that you can use add-ons to drive incremental sales:
- Create an add-on that’s only available as part of a package deal. For example, if you’re selling a piece of software, offer it with a one-year support plan.
- Create an add-on that customers can get at no charge if they order by a certain date or at a certain time of day. For example, if you sell flowers online and want more orders during the holiday season, offer a discount on all orders made between 8 AM and 6 PM on December 23rd.
- Offer free shipping on all purchases over $50 to encourage customers who need more items to reach the $50 threshold and also give them the incentive to spend more.
It’s not uncommon for companies to do one or two things and then stop because they think they’ve “done enough.” If you really want to increase incremental sales, you have to be consistent in your marketing efforts.
A consistent marketing presence can require a lot of work, especially when you’re just starting. There are ways to make your marketing more enjoyable and efficient so that it only takes up some of your time.
The first step is knowing what kind of marketing is right for your business. You can be marketing for visibility and exposure, more leads, or more customers. All three are great goals to have, but each requires different tactics and strategies, so knowing which matters most will help guide your decisions moving forward. For example, suppose visibility and exposure currently matter most for your business. Then, social media platforms like Facebook, Instagram and Twitter will be great places to start building an audience and following through consistently.
Improve Customer Engagement
Customer engagement is a key component of any business’s success. The more engaged your customers are, the more likely they are to buy from you. Ensuring that customers are engaged starts with understanding what they want and need from your brand, so you can provide them with products and services that meet those needs. Then you need to work hard to make sure that their experience with your brand is enjoyable—that way, when they need the product or service again, they will choose your brand over another company. You can improve customer engagement if you:
- Get personal: Use emails and texts to send personalized messages to your customers. You should tailor these messages specifically for them and what they need at that moment so they’ll feel like they’re getting something extra special from you.
- Be helpful: Be ready and available when they need you by setting up customer service staff shifts around the clock; this will ensure that they always have someone who can help them out with a problem or answer their questions about how to use your product or service correctly. You can also produce relevant content, such as blogs and social media posts across all channels, so customers have all the information they need about your business and products readily available to them.
- Give back: Offer discounts or free product samples to loyal customers every once in a while as a way to show them how much you value their business. Free benefits can also attract new customers.
- Leverage social media: Platforms like Instagram, Facebook and Twitter give you access to your customers’ thoughts and feelings about your brand and products. You can nurture your relationships with your customers by responding to comments, cementing your brand’s values and offering helpful resources.
Incremental sales help you understand how your business is growing and what the market thinks about your product. You can use incremental sales to decide where to invest your resources in marketing, research, or development. Increased incremental sales are a good indicator that your product is being received well by customers and that you’re on track to achieve your business goals.
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