100 Marketing & Sales Ratios 24 100
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24
100
100 Marketing & Sales Ratios
www.cometis-publishing.deAuthors’ Preface
Dear Readers
Successful management of a company requires information which shows whether
decisions have brought about the intended results. Therefore, target planning has
to include corresponding performance indicators with which success becomes
measurable.
This applies to every functional section of a business, including marketing and
sales. It may well be emphasized that great importance can be attached to this
function in particular, as defined by market-oriented corporate management, as it
involves coordination of all operational functions and thus has a substantial share
in corporate success. A company’s marketing or sales managers therefore need
performance indicators which support this work and facilitate effective manage-
ment of this section.
During the past years scientific literature and articles by practitioners too, have
produced a multitude of performance indicators for marketing and sales in diffe-
rent sectors and for different business types. With this reference book we have
attempted to extract from the multitude, those 100 performance indicators, which
are particularly recommendable for a practitioner’s daily work. Thus the selection
is subjective. Due to our own practical experience and based on discussions with
practitioners, we are nevertheless convinced that we have made a selection which
allows for the effective management of marketing and sales.
We devised a format which shows the most commonly used calculation formula
and also a calculation example. This is followed by explaining the performance
indicator and its application. A critical appraisal with possible advantages and dis-
advantages completes the presentation of each performance indicator.
In conclusion, it is important to note that the performance indicators at hand should
not be considered in isolation. Their informative value, and with it the confidence
of decision when applied, increases in combination with other performance indi-
cators and relevant comparative figures from the sector and/or direct competitors.
Special thanks go to Dipl.-Kffr. Dipl.-Bibl. Sabine Pillath-Günthner from ISM for her
critical revision of the manuscript.
Your Team of Authors
www.cometis-publishing.deContents
Preface
List of abbreviations
Advertising budget ratio
Advertising costs per customer
Advertising success
Average age of staff
Average number of items
Average price of commodity group
Average price of sale
Average sales slip
Break-even point
Business assessment of contribution margin
Calculated sales price (trade)
Centrality
Change in sales
Contribution margin of items (or commodity group)
Conversion rate
Cost per click
Customer complaint rate
Customer coverage
Customer demographics: new/long-standing customers
Customer demographics: non-payment/all customers
Customer demographics: paying by card
Customer desertion rate
Customer loyalty
Customer profitability
Degree of branch expansion
Degree of internationality
Degree of sales (sales density)
Depth of product mix
Development of sales revenues
www.cometis-publishing.deContents
Direct product profitability
Discount rate
Export quota
Global or total purchasing power per inhabitant
Gross profit per unit
Gross profitability
Initial purchase rate
Labor costs per standardized full-time employee
Level of familiarity
Limit
Logistics costs ratio
Market growth of items
Market share
Minimum price level
Minimum sales revenue/necessary sales revenue
Net-net cost price
Number of sales
Out of stock rate
Penetration of a campaign
Penetration rate
Planned quantity per item
Price elasticity of demand (cross price elasticity)
Price elasticity of demand
Proportion of administrative costs
Proportion of food/non-food
Proportion of rental charges
Proportion of sales floor
Purchasing power index
Purchasing power relevant to the retail trade
Purchasing power retention rate
Range of coverage
Rate of absenteeism due to illness
www.cometis-publishing.deContents
Rate of complaints
Rate of inventory difference
Rate of purchasing method
Rate of return debit notes
Rate of returns
Rate of Trans-Fair foods
Rate of transmission failures
Reacquisition of customers
Relation between gross profit and number of items
Reorder point
Repeat rate
Response rate
Sales plan (number of items)
Sales revenue per floor area
Sales revenue performance of items
Sales revenue ratio: item or commodity group
Sales revenue target figures
Saturation level
Scope of orders
Sell-off quota
Share of labor costs in sales revenue
Shopping frequency per customer
Simple price index
Size of target group (number of potential customers)
Staff performance
Stock of items
Stock turnover ratio
Storage performance of items
Storage productivity of items
Structure of stock receipts
Thousand-contact price
Total cost per customer
www.cometis-publishing.deContents
Total sales revenue per area (specific to commodity group)
Trading margin
Units per purchase
Variable costs (especially margin development)
Width of product mix
Write-off quota
Appendix
www.cometis-publishing.dePenetration of a campaign
Formula
Number of people reached
x 100
Potential number of people to be reached
Example
300,000
x 100 = 33.33%
900,000
A retailer’s sales campaign, which used a coupon as an incentive, is to be evalu-
ated. The coupon and advertising leaflet were sent to 900,000 people; 300,000
recipients redeemed the coupon. Thus the campaign’s coverage was 33.33%.
Explanation
The Penetration of a campaign performance indicator shows the number of
people in a target group who can potentially be reached by the means emplo-
yed in relation to the number of people in the target group who were actually
reached. It is desirable to avoid wasted reach, which means that advertising
measures should not simply “evaporate”. Therefore it is important to choose
adequate media to suit the target groups. It has been noted, for example, that a
combination of online and TV advertising doubles the recollection effect, signi-
ficantly increases the disposition to buy and boosts brand popularity. Coverage
of a cross-media campaign rose e.g. from 41% (TV only) to 61%. If advertising
recipients are addressed online and via the print media the recollection effect
also increases and campaign content is more intensely absorbed so that co-
verage increases as well.
Advantages Disadvantages
» Wasted reach shows » Valid figures can only be obtained
» Suitable media are identified by through thorough market research
using different media » Information value only refers to re-
achability of target group
» Should be combined with other per-
formance indicators, such as quality
of impression, rate of first-time bu-
yers, etc.
www.cometis-publishing.de
.................................................................................................................................................. 61Purchasing power index
Formula
Average purchasing power of an area per inhabitant
x 100
Average total purchasing power per inhabitant
Example
€23,000
x 100 = 126.82 (index)
€18,136
A luxury car dealer plans to open a branch in another city. As this city’s purcha-
sing power index of 126 is far above the national average, the inhabitants of this
city have an average of 26% more purchasing power than the average citizen in
the country. The car dealer implements his plans.
Explanation
Purchasing power is the sum of money which inhabitants or households have
available for purposes of consumption (i.e. available income). Available income
is defined as the sum of gross income, wealth consumption and borrowing mi-
nus taxes, saving premiums and payment of debts (i.e. recurring obligations).
Purchasing power is usually expressed in relation to monthly or annual income.
The purchasing power index of an area shows the area’s level of purchasing
power per inhabitant in relation to the national average. The German average is
the standard value 100.
Advantages Disadvantages
» A performance indicator with high » High/low purchasing power does not
information value on an area’s bu- provide any information regarding
ying potential which commodity group expenses
» Easy to obtain, e.g. from global have to be ascribed (rent vs. groce-
market research company GfK ries)
(Gesellschaft für Konsumfor- » Other income (e.g. from the hidden
schung) or MARCON Marketing economy) does not get recorded
www.cometis-publishing.de
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