Incremental Sales

Category: Marketing KPIs.

When it comes to marketing campaigns, sales are the most important things to consider. The more you sell, the more profitable the business becomes. This is why you have to keep a close eye on your marketing strategy.
If the incremented sales aren’t changing or improving all that much, then it might mean that you have to make some improvements on your marketing campaign. If the sales are low, then it means a strategy is not living up to the expectations.

Defining Incremental Sales

The incremental sales formula will measure your marketing efforts, along with the contribution that they bring. It will provide you with a clear image of the relationship the company has with the marketing agency, comparing the recent sales with the previous ones.

In order to find out the incremental sales, you need to subtract the baseline sales from the total revenue. As a result, the formula for incremental sales goes like this:

Incremental Sales
Total Sales – Baseline Sales

Good marketing should attract good leads, and the sales convert will transform those leads into paying customers. The hope is that they will become an advocate for the brand – further fueling the marketing efforts.
It is recommended that instead of looking at how many products your customer bought, you should look at the sales after a particular change in your marketing strategy. This way, you will know whether or not your marketing attempts are paying off.

Key Terms to Consider

Incremental sales – and finances ratios as a whole – can be fairly difficult to understand, considering their complexity. To make things easier, here are a few terms you might want to familiarize yourself with.

  • Lead: A person that has shown interest in your service and product, therefore completing a goal.
  • Baseline Sales: Your sales expectancy for a specific amount of time, without considering the marketing strategies.
  • Campaign: A marketing strategy created to attract the attention of a particular target audience.
    Once you have cleared the terms and the formula, it should become easier for you to calculate your incremental sales.

Best Practices for Incremental Sales

Want to improve incremental sales? Well, here are some practices that you may want to try out.
Identify the goals of your business, as well as your performance metrics. You may want to experiment with various other media channels, to see which one works the best for your purpose. You may want to choose the one that appeals the most to your audience.

Make sure that the question you ask is cleared and focused. For example, if you are trying to make a connection between your offline purchases to your online campaign, you should ensure that your media buy is directly reflective of that. As a small business, for example, you might want to go for ads that include local promotions.

Incremental sales can give you a fairly good idea of your company’s progress. This is exactly why you need to keep a close eye on it. If you see the numbers going down, then you might want to make some changes to your marketing strategy.

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