As the importance of market research grows, companies can utilize sales analysis to increase profit margins, according to Industry Week. Using market research, company executives can learn more about the purchasing decisions of their customers to improve their sales volume.
For businesses to optimize their profits, they need to meet their profit goals within the whole customer base instead of only select sections. Through giving products and services prices that each customer will be willing to pay, companies can accomplish their revenue targets.
Pinpoint the most profitable customers
With the role of market research in pinpointing their most valuable customers, companies can analyze which customers will provide them with the most revenue.
"Company executives can identify the most profitable customers or products through an analysis of the company's sales. This analysis usually will find that 80% of a company's sales are driven by 20% of its customers, or what is known as the 80/20 rule," according to a representative from Crowe Horwath in Industry Week.
Using criteria, such as volume of customer sales and frequency and stability of orders, businesses can gauge what strategies they should undertake in their marketing to best influence their ideal customers. These can include designing effective content marketing, as CMS Wire suggests. Content strategy involves finding out the best way to deliver information to the individuals who need it. For example, advertising a price cut on a product will signal to customers who are willing to pay less than full cost that now it is the best time to buy.
Discontinue underperforming products
Before businesses can strategize for their marketing or analysis processes, CMS Wire stated the first step is setting goals that will match up with content strategy. If the marketing message does not fit with the company's strategy, it can readjust its communication efforts or eliminate it altogether and create a new one. Using the same type of thinking, companies can also determine whether products and customers are not helping to meet their goals using analysis and decide whether they should cut out those under-performing elements.
"In addition to being relevant regarding customers, this analysis can be applied to a company's products or services. For example, a product's sales volume may be high but its profit margins low, and unless these margins can be improved, executives may choose to discontinue the product or sell the product line," Crowe Horwath staff said.