March 7, 2021

Let’s double our sales! Implications, calculations and doing the numbers

Dr Peter Mowforth

When we discuss goals and objectives with our ecommerce clients, probably their most common requirement is to ‘double sales’. It’s a simple and straightforward statement but let’s take a deeper look at what it actually means.The following graph assumes straight line growth over the year with different levels of growth depicted by different coloured triangles. Blue shows lower growth, blue and yellow combined shows intermediate growth whilst green, yellow and blue combined shows the highest level of growth:

Because growth is a progressive step-by-step process, it obviously starts where the previous level of sales ended and then improves from there. Over the financial year and with linear growth, the average monthly sales figure will be that achieved after six months - i.e. half the final sales level.If the client means that they want their annual sales to be double what they were in the current year then they must appreciate that if they compare the end of year individual monthly figure with the previous year then it needs to be four times the level.If the client means that they want to see a doubling in the end of year monthly figure compared to a year ago then the annual sales will only have increased by 50% - assuming linear growth.There are two other points worth considering. Firstly, sales are rarely anything like linear. If the year is from the start of January through to the end of December then, particularly with consumer-led retail, most of the sales take place towards the end of the year.The other factor concerns the progressive nature of growth. Growth starts and then progresses to where it ends up. If your objective is to double sales for the year then you cannot start the process by saying that every month has to have double the sales of the same month in the previous year. The month-by-month doubling only applies to the last month. Assuming linear growth, the first month will only see one twelfth of that. Month two will show two twelfths and so on so that by month twelve you have twelve twelfths of growth - i.e. double.Once the objectives are set, the next task is one of implementation. Theoretically, you can double sales by simply doubling the conversion ratio across all channels, or, by doubling the number of customers or by some mix of these two factors. Importantly, the total sales result from the aggregated sales across all marketing channels. While some channels may more than double, others may perform less well. As always, the key to success will be to focus resources in proportion to the potential growth for each and every channel individually.To start your ‘Let’s Double our Sales’ plan, look at each individual marketing channel (marketplaces, SEO, PPC, affiliate marketing, email marketing etc) and work out a doubling plan for each. Because some channels will be harder to double than others, make sure that some channels have a growth potential that is more than double.If anything can be done to improve the website conversion ratios then site improvements will reduce the effort needed to get new customers. Common examples might be to undertake user-testing and then action the results, move to a higher converting payment service provider or simply speed up your hosting.The last thing to say here is to recognise that doubling (however you define it) gets harder the bigger you get. If a company says they grew 300% last year then you might reasonably expect that they are tiny. As businesses grow then doubling gets harder and harder to achieve. Channels saturate, margins tighten and scaling just gets harder and harder. When this happens, it may be time to move into new markets by either selling a broader range of products or progressively internationalising the business.

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