What Is Sales Volume? How to Increase Sales Effectively

Vũ Khôi

Author at Wotech Electronics Blog

Sales volume is an important metric for evaluating a company's business performance. However, increasing sales is no easy task. Managers must truly understand what this metric means and investigate the causes, as well as the methods for boosting sales. Let's explore this further with SimERP in the article below.

What Is Sales Volume? Distinguishing Sales Volume from Sales Revenue

The concept of sales volume

Sales volume is the total amount of money generated by business operations over a given period, including money already collected and money not yet collected, such as debts from goods on consignment. Sales volume can include both revenue and gross sales.

This metric is determined based on the total quantity of products the company sells on the market. The sales volume formula is quite simple:

Sales volume = Unit price * quantity of goods sold

The concept of sales revenue

Sales revenue is the total flow of economic benefits over a given period, arising from business and production activities that increase owner's equity. Simply put, revenue is the amount the company obtains from selling its products after deducting the costs incurred during the sales process, such as markdowns, discounts and returned goods.

Distinguishing sales volume from sales revenue

Today, many businesses still confuse revenue with sales volume. Therefore, before digging deeper into sales volume, we must distinguish between these two metrics.

Sales volume reflects sales performance. Revenue, on the other hand, not only reflects the company's business capability but also demonstrates other factors, such as payment and pricing policies relative to sales volume, and financial capacity over a specific period.

The importance of the sales volume metric

It indicates the company's business performance

Sales volume reflects business results for each period, helping managers evaluate the effectiveness of sales activities. It also gives the business some insight into customer satisfaction and consumer trends.

For example, take two types of irons: sales of steam irons are higher than sales of dry irons. From this, the company understands that steam irons are more popular, and can plan its business accordingly for the next period.

It helps set goals for the next period

After evaluating business results, managers use that insight to set goals for the next period. This helps the company stay on top of its monthly plans and avoid setting expectations that are too lofty, unrealistic and hard to achieve.

It proves that the choice of products and services is correct

High sales volume means the product is loved by many customers and fits market demand. Many businesses use market testing before launching a new product, by selling a small quantity of goods and observing buyer reactions. If sales are high, it shows the product matches consumer tastes.

It motivates the sales team

If the sales team increases monthly sales, revenue grows. Employees' bonuses rise accordingly, motivating them to work more effectively. This is also a reason why new talent is attracted to the sales department.

How to increase sales both online and offline

Why do sales decline?

Declining sales is something no business wants, because it directly affects the company's income. Yet it is something companies can hardly avoid altogether.

The main causes of declining sales fall into external and internal categories. External causes driven by the environment and society are nearly impossible for you to change — for example, epidemics, inflation, or shifts in consumer behavior. Internal causes, however, are entirely within the company's power to fix in order to improve sales. The main causes include:

• Poor sales skills among employees

• Products that fail to satisfy consumer needs

• Marketing campaigns that are not a good fit

• Promoting to the wrong target customers

Methods to increase sales volume

Price reductions

Discounts and markdowns are a technique many businesses use to stimulate consumption. However, this is not a long-term solution, because it directly affects the company's profits. Moreover, discounting also reduces the product's perceived value in customers' eyes. When prices go back up, buyers will readily abandon you for a new brand.

Offering free products

Customers always love free products — some are even willing to buy "buy 2 get 1 free" items they don't actually need. Businesses often release products with free gifts, or run buy-1-get-1 and buy-2-get-1 bundles to stimulate consumers. Service companies, meanwhile, often offer several free trial months, or add maintenance packages for a certain period after purchase.

Cross-selling and upselling

Cross-selling and upselling are widely used in both online and offline stores. Cross-selling is when the seller suggests related products to the customer — for example, a customer buys a plant and you suggest adding a pot. Upselling is the technique of suggesting a similar but higher-value product — typically, the seller recommends a laptop with better specifications and a higher price than the one the customer originally picked.

Both methods can be applied to online and offline platforms alike. In face-to-face business, salespeople do this themselves with their own tactics tailored to each customer. If you sell online, you can apply it directly on your website by suggesting related products on product pages or offering combo packages.

Creating scarcity

The scarcer a product is, the more easily it attracts buyers. That is why many brands sell limited-quantity items. This gives the product a special appeal, because users hate owning the same thing as everyone else and always want to own something few people have. Remember, however, that the product must be high quality and come in eye-catching, attractive packaging for this strategy to succeed. You should also create a sense of urgency to push customers to buy as soon as possible — for example, selling only for a limited time.

Adding extra value to purchases

Instead of discounting, you can provide buyers with additional new value — gifts, upgraded service, free delivery, or even a discount code for the next purchase. This approach not only encourages purchases but also increases customer satisfaction and goodwill toward the business.

Effective Sales Management Software

SimERP

SimERP can be called the all-in-one solution for every business, helping you manage orders, inventory, projects and customer information. With this software, the company can track the entire sales process and results completely and accurately, then analyze and devise suitable solutions for its business operations.

In addition, revenue-related figures are updated regularly, helping the business evaluate its performance accurately. SimERP aggregates these metrics, generates reports, and supports managers in analyzing the business situation.

If you are looking for software to help monitor and track sales activities on both online and offline platforms, SimERP is certainly a perfect choice. We are currently offering a free 30-day SimCRM trial for all businesses. Sign up to experience one of the best sales management systems available today!

Nhanh.vn

Nhanh.vn has become a fairly well-known name among retail businesses. It serves various companies such as Captot.vn, Torano and more. This software's strengths are its ease of use and the many management functions it offers: inventory checks, employee monitoring, business performance reports, revenue summaries and more. However, Nhanh.vn's management system is still rather slow and its interface is not very user-friendly.

MShopKeeper

To help small and medium-sized businesses and shops manage their operations better, MISA developed the MShopKeeper software. This system suits retail store chains better than multi-platform companies. Its main features include chain store management, barcode scanning, SMS marketing and more. It can also integrate with accounting software, and its price is quite reasonable. The drawback, however, is that it is underdeveloped for online business management and focuses only on retail stores.

Sapo

Sapo is a management platform for sales channels, suitable for all types of businesses in the retail industry. Sapo's standout strengths are its user-friendliness, ease of use and abundance of features. Its notable functions include fast checkout, invoice creation, product and inventory management, and customer information management.

However, Sapo is limited in managing online channels because the software connects only through Facebook. Channels such as Zalo, Shopee and Lazada are not yet supported. Moreover, the mobile app is geared mainly toward retail stores and does not integrate with Facebook.

KiotViet

Rated as one of the best sales management software programs available today, KiotViet makes a strong first impression with its simple, user-friendly interface. It offers two product packages for customers to choose from: one for small businesses and one for medium or large enterprises. KiotViet's main features include invoicing, employee management, returns and exchanges management, business reporting, and order and inventory management.

Nevertheless, KiotViet has weaknesses — some features are not optimized or missing, such as customer management, online chat, and controlling customer information from Facebook, Instagram, Shopee and other channels. The software is therefore better suited to businesses that need in-store management rather than online selling.

POS365

POS365 helps you store and check product information, reducing the risk of lost goods and giving you visibility into the status of each item. It also manages metrics related to sales, revenue and finances for each store, giving you a clear picture of the company's financial situation.

However, it is not the right tool for medium and large businesses, or those with omnichannel business models, because POS365 focuses on small retail shops.

Suno

Suno is one of the sales management software programs chosen by many businesses, especially those running retail stores. Besides creating online orders, integrating with shipping providers, and managing order and customer information, Suno also updates, stores and aggregates figures related to revenue and sales. However, for large-scale businesses, Suno is not the optimal choice, as the software still lacks certain features such as project management and marketing campaign control.

Building a Sales Plan

Analyze the previous period's sales

The first step in building a sales plan for the next period is for the company to analyze the previous period's figures to form accurate assessments and conclusions. Then, investigate the causes of any problems that arose and devise suitable solutions. You can use tools and software such as SimERP to support this work.

Forecast sales

Using reports and market data, together with business metrics such as the previous period's sales, managers can forecast future sales. This helps you avoid setting unrealistic, overly ambitious goals that are difficult to achieve.

Draw up the sales plan

The sales plan should be concise and simple, and built on the company's overall goals. You can structure your sales plan by customer segment or by product. For customer segments, the plan should target two goals: attracting new customers and growing business with existing ones. For products, the company sets separate plans for different categories, depending on the product's characteristics and target customers. For example, if you sell electronics and appliances, you would build different sales plans for office equipment and home appliances.

In addition, managers must grasp the key elements:

• Sales quota: the target set for each business unit by quarter, month or week.

• Sales territory: information about the markets and geographic areas where the company conducts business.

• Product catalog: all the products and services you offer. You can group and break them down to make planning and management easier.

Monitor and check

Once the plan is drawn up and executed, managers must track and supervise business metrics and sales on a regular basis — weekly, monthly and yearly. Careful checking helps you detect and resolve future risks and dangers early. It also enables the business to build a suitable plan that supports the company's long-term growth.

Conclusion

Above are SimERP's insights into the concept of sales volume and effective methods for increasing sales. We hope these insights help you better understand this metric, so you can put the right plans in place to improve your business.

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