Sales Volume: How to Calculate and Increase It

For alcohol brands that sell beer, wine and spirits, measuring CPG sales performance is key to growth. Fortunately, alcohol producers have access to more of this data than ever before. Metrics such as sales volume, sales lift and sales revenue can be utilized along the entire decision-making, marketing, and sales processes. In this article, we’ll look specifically at how sales volume can be used to improve business and work towards meaningful growth.  

Sales Volume vs. Sales Revenue

Sales volume is not to be confused with sales revenue. Sales volume refers to the number of items sold over a certain period of time, often quarterly or yearly. On the other hand, sales revenue measures the amount of money a company earns during a set time. These two measurements are closely related because you have to multiply sales volume by unit price to calculate sales revenue. 

The Importance of Sales Volume Analysis

The only way to understand how well an alcohol brand is performing is by using certain sales metrics and KPIs. All too often, businesses rely solely on sales revenue to track performance. While this metric is certainly important, it doesn’t provide a full picture.

It is easy to look at sales revenue, see a profit and come to the conclusion that everything looks good. However, you may be earning most of your money from a handful of alcohol products while there are others that simply aren’t selling. A sales volume analysis can provide valuable information about sales according to retail location, sales territory, customer demographics and much more. Understanding the volume of sales for each product is essential data that should inform marketing and decision-making while also driving growth. 

Calculating Required Sales Volume

This calculation is used to determine what sales volume is necessary to earn a certain amount of targeted income. First, you have to add the targeted income amount to fixed costs. This total is then divided by the contribution margin per ratio, which provides the required sales in units. Just in case you didn’t catch all that, here is a visual that might help.

Required Sales in Units = Fixed Costs + Targeted Income / Contribution Margin Per Unit

Tips for Increasing Sales

Ultimately, the goal for most alcohol brands is to increase sales volume for all products. This is key to enjoying healthy profits and growing the brand. With that in mind, here are some tips on what you can do to experience high sales volume.

  1. Understand what makes your product unique. When you want to move products off the shelf, you have to have a clear vision of what sets your beer, wine, or liquor apart from the competition. If a customer sees your product next to similar options, what are you offering that the others don’t? You can also think about it in terms of an elevator pitch. If you had 60 seconds to sell someone on your product, what would you focus on?
  2. Verify your target customers. If you notice that your sales volume numbers are decreasing, there is a chance that you are selling to the wrong customers. You need to make sure that you have identified the right demographics so that you aren’t wasting time trying to push your products on the wrong people. For more help with the customer qualification process, check out this post
  3. Keep customer benefits at the forefront. Ultimately, any product should offer the customer some benefits. Whether the product addresses a pain point or saves them time or money, this benefit should be clear. Customers want to know exactly what they are getting for their money. This also allows you to speak more directly to the customer and further make the case for your product.
  4. Utilize your marketing team. Once you have established why your product is unique, what benefits it offers to customers and who your target customer is, you need to make sure that all marketing efforts align well with this information. Also, it is important to communicate with the marketing team about sales volume numbers and goals so that they know where to focus their efforts.
  5. Work on increasing sales velocity. As the cliche goes: time is money. The faster you can move customers along the sales pipeline and get products off the shelf, the better. This will improve sales volume and allow you to reach more customers.
  6. Start a customer rewards program. This is a great strategy for building customer loyalty while also increasing sales volume. You can offer discounts for customers who purchase a certain number of products at one or have a frequent flyer-type program where they can earn points and discounts. No matter what model you follow, customers appreciate rewards and you will be able to sell more beer, wine, or spirits.
  7. Examine your sales territories. Shifting around your field sales team may help increase sales volume. Consider assigning your top talent to areas that have the most potential.
  8. Provide your sales team with incentives. A motivated and inspired sales team can be an invaluable asset. Monetary incentives can get them to move more product. Even a little friendly competition can boost morale.
  9. Pay attention to top buyers. Top accounts that buy at a higher volume and provide repeat business should be a priority. Sales reps should work on retaining these clients and driving depletions.

Sales volume certainly isn’t the only metric that alcohol brands should look at when tracking performance, but it can provide revealing information about which products are doing well and which are collecting dust on store shelves. This data can be used to focus on better selling products and develop new products that speak more effectively to the needs and wants of customers. 

FAQs

Is sales volume the same as revenue? 

No, sales volume refers to the units of products sold over a period of time. Sales revenue is the amount of revenue earned through the sale of products over time.

Why is sales volume important? 

Sales volume is an important tracking of how well products are performing with customers. 

What is sales volume analysis? 

This type of analysis can be used to better understand sales volume numbers according to age, location, customer type, etc. 

How do you calculate the required sales volume? 

First, start with a targeted income or how much you want the company to earn. Next, add any fixed costs to your targeted income number and divide this total by the contribution margin per unit amount to calculate the required sales volume.

How do you increase sales volume?

Improve sales velocity, assign top salespeople to important regions, motivate the sales team with incentives, understand customer pain points, implement customer rewards programs, identify why your product is different than the competitors, make customer benefits the main focus, and be sure to pay attention to your top buyers.

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