Why Incremental Sales is Priority KPI in Marketing

The wide variety of marketing possibilities out there is immense. 

Social media marketing, content marketing, digital marketing, and email marketing are just the tip of the iceberg. 

Companies incorporate one or more of these marketing ways to promote their product. But how much do you keep track of the return on investments?

Strategy is not just about implementing innovative ways into your operations. It is also about analyzing how much you have benefited from each of these promotional activities. That is where incremental sales come into relevance. 

In this article, we will explore incremental sales, understand why exploring incremental sales is important and what are the best practices for incremental sales,

Scroll down for more

What is incremental sales?

Incremental sales refers to the increase in product sales following a sales promotion. 

Incremental sales example: the revenue made by a company in a year without any marketing promotion is $20,000. This sales revenue is called baseline sales. In the following year, the company implemented a promotion strategy and increased its sales to $25,000. Hence, the incremental sales formula is calculated as:

Total sales-baseline sales= Incremental sales

$25,000-$20,000= $5000

When the incremental sales are higher than the money invested for the promotion, it is seen as a successful marketing initiative and if the incremental sales are lower than the promotion budget then it is a failure. 

Hence, incremental sales are used as an important KPI for analyzing the effectiveness of marketing strategies and promotional activities. 

Why Measuring Incremental Sales is Important

Analyzing the effectiveness of any operation effort is important for ensuring its efficiency and return on investment. Especially in marketing activities where money is involved, the success rate must be measured. 

The primary and foremost purpose of conducting an incremental sales analysis is to evaluate the marketing activities. Additionally, it serves as a valuable tool for assessing the effectiveness of the sales team responsibilities in driving revenue growth and identifying areas for improvement.

For example, there is a lot of budget allotted for content and digital marketing initiatives. When website traffic increases, lead generation improves, and overall brand awareness is a positive sign that the marketing initiatives are seeing positive results. 

Surely, any promotional strategy is aimed at getting a return on investment. Hence, there is a necessity to analyze which promotional strategy or marketing channel helped enhance the rate of returns.   

Tracing back the most effective marketing promotional strategy helps gain valuable insights, make informed decisions and thereby plan the next step towards increasing sales. 

Hence, making incremental sales calculation a routine practice helps keep a check on effective budget usage, monitoring of marketing initiatives and thereby ensuring continuous growth in the organization. 

What are some of the Incremental Sales Best Practices

Knowing how to calculate incremental sales is not enough to check the efficiency of your marketing efforts. There needs to be regular monitoring and tracking of several related activities to ensure optimal results. Moreover, implementing well-structured sales incentive plans can further motivate the sales team and contribute to enhanced performance and revenue generation.

So here are a few incremental sales best practices that help enhance the results.

• Determine Growth Metrics

Incremental sales are calculated on a revenue basis, evaluating the profit or loss made out of a marketing campaign. In addition, companies must also determine other growth metrics that they expect to achieve out of this initiative. Furthermore, aligning these metrics with effective sales compensation models can incentivize the sales team to focus on the most critical objectives and contribute to the campaign's overall success. An increase in the number of products sold, customer base, and brand awareness are also metrics that evaluate the success of your marketing efforts. Additionally, incorporating sales OKR examples into your tracking and monitoring process provides a strategic framework for aligning sales objectives with overall business goals, fostering continuous improvement and performance enhancement.

• Evaluate Marketing Channels 

A marketing campaign runs through multiple channels and platforms. Social media, Google Ads, and email campaigns are a few of these channels. Monitoring which platform gave the best return on investments helps analyze the effectiveness of the sales campaign in different platforms. This evaluation helps decide whether to continue or discontinue the campaign and on which platform.

• Monitor Revenue Returns

Any initiative you put forward must bring in revenue returns. Hence, while a marketing campaign is running, salesforce and marketers must keep track of the leads generated, pipeline journey, number of sales closed, and the revenue generated during the period. These monitoring practices help keep track of the progress made. 

• Track Lead Generation

The primary purpose of initiating any marketing campaign is to generate more leads and close more deals. Utilizing a sales growth tool to monitor the increase in the number of leads generated before, during, and after the marketing campaign helps keep real-time track of the progress made of the initiative.

• Built Valuable Insights

Measuring the success of the marketing initiatives through an incremental sales formula helps gain valuable insights into the marketing promotion, its effectiveness, and its results. Collecting these data helps in making informed decisions that help ensure return on investment and enhance lead generation. 

A data-driven approach to operational management helps in making effective decisions and strategies that have a long-term effect in enhancing sales and achieving company objectives.   

For further reading, check OKR Marketing: The Key to Unlocking Your Business Potential

Final Thought

Incremental sales definition is the increase in products sold following a promotional activity. It measures the increase in revenue, sales, and customers to determine how effective the marketing initiatives are in growing the business.  

Keeping track of this progress and keeping close monitoring of the efforts and initiatives made helps companies have clarity in the efforts put in and the outcome generated. The insightful data it provides also enhances the operations. 

In sales and marketing, keeping track of these initiatives helps in enhancing the sales pipeline within the context of marketing vs sales funnels. This involves better lead generation, qualifying prospects, seamless customer journey, quick decision making, faster conversion rates, and more closing of deals.

The relevance tracking and monitoring have in enhancing performance and operations are clear. If a business is dependent on sales, then sales is dependent on the salesforce. Hence, keeping track of your sales performance and incentive compensation is also important to enhance sales.

Establishing a well-structured sales performance incentive fund can further align the team's efforts with the company's goals and drive improved results.

Incorporating tools live Clientvenue, into these processes can streamline operations, enhance collaboration, and contribute to overall success.

Kennect runs your sales compensation programs in cruise mode to create transparency and achieve operational efficiency. For more information, Book A Demo NOW!