A Guide to Calculating Sales Growth Rate+How to Deal When You’re Having a Bad Sales Month

While sales metrics might not be the flashiest aspect of the sales profession, understanding how your closed deals impact your company’s bottom line and future growth is pivotal. One key metric that sheds light on this is the sales growth rate. This rate signifies how efficiently a business can boost its revenue from sales within a defined timeframe, providing invaluable insights for data-driven decision-making. In this guide, we’ll delve into the importance of the sales growth rate, the formula for calculating it, and factors influencing what can be considered a “good” sales growth rate.

Sales Growth Rate Formula:

The sales growth rate is determined by comparing the net sales value of two periods, typically the current and previous fiscal years. The formula is straightforward:

Sales Growth Rate=(Net Sales Value Current Period−Net Sales Value Previous PeriodNet Sales Value Previous Period)×100Sales Growth Rate=(Net Sales Value Previous PeriodNet Sales Value Current Period−Net Sales Value Previous Period​)×100

Example: Consider Serial Juice Co., a startup in the custom-pressed juice delivery business. In the fiscal year ending April 30, 2021, they reported $750,000 in sales, which increased to $1,000,000 in the fiscal year ending April 30, 2022. Applying the formula:

Sales Growth Rate=($1,000,000−$750,000$750,000)×100=33%Sales Growth Rate=($750,000$1,000,000−$750,000​)×100=33%

Serial Juice Co. achieved a commendable sales growth rate of 33% during this period.

Average Annual Sales Growth Rate

To gauge growth over multiple years, companies often calculate the average annual sales growth rate. After determining the annual growth rate for each year, the average is computed using the following formula:

Average Annual Sales Growth Rate=Sum of Annual Growth RatesNumber of YearsAverage Annual Sales Growth Rate=Number of YearsSum of Annual Growth Rates​

Example: Let’s take GSD Company, which wants to assess its average annual sales growth rate over the past four years. Assuming the annual growth rates are 5.26%, 12.5%, 6.67%, and 16.7%, respectively:

Average Annual Sales Growth Rate=5.26%+12.5%+6.67%+16.7%4=10.28%Average Annual Sales Growth Rate=45.26%+12.5%+6.67%+16.7%​=10.28%

From 2018 to 2022, GSD Company maintained an average annual sales growth rate of 10.28%.

Determining a Good Sales Growth Rate:

There is no one-size-fits-all criterion for a “good” sales growth rate, as it varies based on several factors:

1. Company Size:
   • Smaller businesses may experience higher growth rates due to working with smaller dollar values, making an impact with fewer sales.
   • Larger companies may have lower percentage growth rates, but the absolute revenue increase can be substantial.
2. Competitive Landscape:
   • Sales growth success is relative to industry performance and how well competitors are faring.
   • Industries experiencing overall growth, like U.S. e-commerce, may provide more opportunities for individual companies to achieve higher growth rates.
3. Sales Goals:
   • Success depends on the alignment of sales growth with the company’s unique goals, strategies, and leadership vision.
   • Tailoring expectations based on internal factors, stakeholder objectives, and the capacity of the sales team is crucial.

Strategies for Overcoming a Challenging Sales Month

Experiencing a challenging sales month is a shared reality for every sales professional. When calls go unanswered, emails seem to vanish into the void, and prospects become elusive, it’s easy to find yourself in a sales slump. In these moments, with just days left in the month and your quota at 67%, frustration sets in. However, the key lies not in the slump itself but in the actions taken to address it.

Understanding a Bad Sales Month:

Before delving into strategies, it’s crucial to identify the factors contributing to a bad sales month. Sales experts point to seven common culprits:

1. Inadequate Pipeline Management:
   • A thin or poorly managed sales pipeline can hinder conversions, failing to move prospects efficiently toward a sale.
2. Poor Customer Experience:
   • HubSpot’s research highlights that poor customer service can drive away potential sales, emphasizing the need for high service standards.
3. Ineffective Sales Processes:
   • Neglecting critical activities like prospect research can lead to a lack of understanding of prospects’ needs, affecting the sales process.
4. Economic Factors:
   • External economic downturns, increased competition, or changes in consumer behavior can impact sales figures.
5. Inaccurate Sales Forecasting:
   • Misaligned sales forecasting can create a gap between expectations and reality, leading to a challenging month if targets are not met.
6. Marketing and Sales Misalignment:
   • A disconnect between marketing efforts and sales goals can result in poor lead quality, insufficient lead volume, or unclear messaging.
7. Seasonality:
   • Sales may naturally fluctuate due to seasonal trends or industry cycles.

Impacts of a Bad Sales Month:

• Plumets morale within the sales team.
• Highlights ineffective sales strategies and underscores issues with sales data quality and management.

Leading a Team Through Challenges:

Effectively guiding your team during a tough sales month involves fostering a positive attitude and a sense of humor. Emphasize the opportunity for improvement and learning. Instill support and trust to combat self-doubt among team members.

Expert Insights:

1. Communicate Normalcy in Fluctuations:
   • Todd Caponi, author of “The Transparency Sale and The Transparent Sales Leader,” advises acknowledging that fluctuations are typical in business operations. Encourage adaptability and reassure the team that challenges are temporary.
2. Embrace Discomfort and Cultivate Resilience:
   • David Priemer, Founder of Cerebral Selling, advocates building resilience to navigate losses and uncertainties. Acknowledge that setbacks are part of the profession, and sometimes, you must move forward without fully understanding the reasons behind challenges.
3. Disassociate Personal Identity from Outcomes:
   • Marcus Chan, President and founder of Venli Consulting Group, suggests focusing on the actions taken rather than dwelling on external factors. Dissociate personal identity from outcomes and concentrate on the efforts made to achieve better results.
4. Prioritize Team Well-being and Confidence Regain:
   • Brian Hicks, VP of Sales at Belkins Agency, shares a real-world example of dealing with unexpected external challenges. Prioritize team well-being, mobilize resources, and uphold commitments to clients, fostering confidence and resilience.

Rebounding from a Bad Sales Month:

Recovery from a challenging sales month requires proactive measures, reflection, and maintaining discipline.

Strategies:

1. Control What You Can:
   • Ryan McDonald, Sales Manager at HubSpot, emphasizes differentiating between controllable and uncontrollable factors. Focus on controllable aspects, such as daily calls and demonstrating value, to maintain effectiveness.
2. Reflect on Sales Data:
   • Marcus Chan advises examining sales data to identify the root cause of challenges. Listen to sales calls, evaluate every part of the funnel, and embrace self-awareness to improve performance.
3. Discipline for Consistent Efforts:
   • Sabri Suby, Founder of King Kong, emphasizes the importance of discipline in persistently doing the right things, even when immediate results are elusive.
4. Be Proactive, Not Reactive:
   • Ryan McDonald encourages proactive measures during challenging times. Take extra calls, reconnect with old prospects, and actively seek referrals. Position yourself to navigate the situation rather than waiting for external changes.
5. Focus on Morale-Boosting Activities:
   • Dave Lorenzo, CEO of the International Association of Business Advisors, advises focusing on what top performers did right during successful periods. Highlight their strengths, check activities, and keep them focused on fundamentals to pull them out of a slump.
6. Empower Through Sharing Success Stories:
   • Brian Hicks shares the importance of sharing success stories after rebounding from a bad month. Empower colleagues by acknowledging shared wins and losses, emphasizing that setbacks are part of the journey.

Key Takeaways for Sales Growth and Resilience:

Understanding Sales Growth:

1. Continuous Tracking is Crucial:
   • Sales growth is a dynamic journey requiring consistent tracking of metrics. Regularly monitor net sales values and utilize tools for accurate and real-time insights into your company’s performance.
2. Adjustments in a Competitive Landscape:
   • The business environment is competitive and ever-changing. Sales growth necessitates adaptability, where continuous adjustments to strategies based on performance data become essential.
3. Competitor Monitoring is Vital:
   • Keeping a vigilant eye on competitor growth provides valuable context. Analyzing how others in the industry are performing can offer insights into potential areas for improvement and new opportunities.
4. Realistic Goal Setting Matters:
   • Set achievable and realistic sales goals. Understanding your company’s size, industry dynamics, and market conditions helps in establishing benchmarks that align with your growth trajectory.
5. Tools like HubSpot Enhance Accuracy:
   • Leveraging tools like HubSpot streamlines the tracking process, ensuring accurate and comprehensive data. Informed decisions, backed by precise metrics, contribute to sustained growth.

Navigating Challenges:

6. A Bad Sales Month is an Opportunity:

• Viewing a challenging sales month as an opportunity for growth and improvement is essential. Rather than seeing it as a setback, consider it a chance to refine strategies and identify areas for enhancement.

7. Understanding Factors at Play:
   • Identifying the factors contributing to a challenging month, such as inadequate pipeline management or economic downturns, is the first step. This understanding provides a foundation for targeted improvements.
8. Leading with Resilience is Key:
   • Sales leaders must lead with resilience, acknowledging that setbacks are part of the journey. Communicate to the team that challenges are temporary, fostering a positive mindset and maintaining morale.
9. Adopt Proactive Strategies:
   • Proactivity is crucial during tough times. Focus on controllable aspects, reflect on sales data, and make adjustments to persistently pursue the right strategies. Waiting for external changes is less effective than taking proactive measures.
10. Emphasize Controllable Aspects:

• Fostering a positive team culture involves emphasizing controllable aspects of the sales process. Highlighting individual and team strengths, coupled with a focus on fundamentals, aids in pulling through challenging periods.

Conclusion:

In the ever-evolving landscape of sales, understanding growth dynamics, and effectively navigating challenges are pivotal. Continuous tracking, informed decision-making, resilience, and proactive strategies collectively contribute to long-term success. Embracing tools enhances accuracy, while a positive team culture ensures that setbacks are viewed as stepping stones toward improvement. Ultimately, the journey to successful sales growth requires a dynamic approach, a keen eye on industry trends, and a commitment to continuous improvement.