Calculating Sales Growth: Step-by-Step Guide for Businesses

Sales growth measures the increase or decrease in your revenue over specific time periods. Your business lacks clear visibility into its performance without tracking sales metrics.

Sales growth tracking helps you identify successful products, measure market performance, and make informed business decisions. It tells you how well your business is doing and your place in the market. Inconsistent or incorrect calculations lead to misguided decisions that affect growth.

In this blog, we’ll discuss how to calculate sales growth accurately to transform your business tracking and decision-making processes.

Formula for Calculating Sales Growth

Sales growth shows how much your revenue has increased over time. First, gather the data for the present month and the previous one. Then, subtract last month’s total from this month’s. After that, divide the result by the previous month’s figure, and you’ll get the growth rate. This formula shows how much your earnings have grown from one month to the next.

3 Key Steps to Calculate Sales Growth

To calculate sales growth, just follow these three easy steps:

1. Choose Your Time Period

First, choose the same time periods to compare. This helps you notice trends and see if things are changing. Make sure you collect all your sales data for those times and don’t leave anything out.

Set up a regular schedule to check your sales. Also, think about busy times, like holidays or special events, because they can affect how much you sell.

2. Gather Accurate Sales Data

Collect data from all your sources to get accurate sales information. This includes both online and offline channels. It helps you understand how your business is doing. While doing this, check your records. Make sure everything is correct and matches up.

If you have cross-checking procedures in place, it will help reduce errors such as incorrect data entries or missing information.

3. Apply the Growth Formula

After you’ve got your data, put your sales figures into the growth formula. Check your calculations to make sure they’re right. This helps you avoid mistakes and gives you more reliable results.

It’s a good idea to set up calculation templates for future use. This helps keep everything organised and makes sure you're doing it the same way each time.

Always double-check your results to make them accurate. Set a regular time to do these calculations so you can keep track of your sales growth.

3 Examples of Sales Growth Calculation

Real-world examples make it easier to understand how sales calculations work. Let’s see how different industries track their growth.

E-Commerce Business

The e-commerce industry is affected by online ads, sales, and how people shop. You can easily sell more by offering discounts, updating product listings, and improving the shopping experience for your customers.

It’s also important to keep track of things like how many people buy, how much they spend, and how much it costs to get new customers. This helps businesses make better decisions and grow.

B2B SaaS

In the B2B SaaS industry, sales growth mainly depends on keeping customers, getting them to buy more, and making the products better. To track growth, businesses need to watch important numbers like monthly earnings, how much a customer is worth, and how many customers leave.

For example, looking at how much money comes in each month helps businesses notice patterns, helping them predict future growth.

Knowing how much a customer is worth helps you see their value over time. Tracking how many customers leave shows if you're keeping them.

By tracking these numbers, SaaS companies can change their marketing plans, keep revenue steady, and make it grow.

Restaurant Industry

To measure sales growth in restaurants, look at things like how many customers visit, how well the menu is doing, and if prices have changed. You can compare sales at different times, like month to month or this year to last year. For example, if a restaurant adds a new dish and sees a 15% increase in sales in one month, it’s a sign of clear growth.

Understanding the spending habits of your customers is also important. A growth in average spending means sales are getting better. These numbers help you understand what’s working and show you where to make changes to boost sales.

4 Tips for Accurately Measuring Sales Growth

You won’t be able to calculate your business growth without correct measurements. Here are some tips to make your calculations better:

1. Maintain Clean Data

Keeping your data clean means ensuring it’s accurate and complete, which is key to tracking sales growth properly. Make sure the data is consistent and updated regularly. You can use simple tools like customer management systems or data apps to help avoid mistakes.

It’s also important to set clear rules for how to enter data. Check it regularly to catch any problems early and fix them.

2. Consider Market Factors

It’s important to watch what your competitors are doing. Changes in the industry or economy can affect your sales. For example, shifts in what customers want or what competitors are doing can change how much people buy. Inflation or recessions can also affect sales.

By staying aware of these things, you can adjust your plans. This helps you predict sales better and find chances to grow or avoid risks.

3. Use Multiple Time Frames

Your sales growth numbers won’t make sense if you only look at one time period. Compare your sales weekly, monthly, and yearly to spot short-term changes and long-term patterns. This helps you notice seasonal trends, track steady growth, and get a better idea of your business cycles.

Looking at different time periods helps you see where you are now and how your sales are changing over time.

4. Document Everything

Write down important details about your sales. This includes what you’re selling, any special events, and how you figure out your numbers. Set some simple rules for keeping track of sales, and use templates to make it easier.

4 Strategies to Improve Sales Growth

You can improve your sales growth by following the right strategies. Below, we've listed a few that you must try.

1. Optimise Sales Channels

Look at where you’re making the most sales — online, in-store, or on social media. Put more effort into the channels that bring in the most money. If online sales are doing well, try boosting your digital presence. If it’s the store sales, focus on making the in-store experience better.

2. Enhance Customer Analysis

Tracking customer purchase patterns systematically is important because it helps you understand what your customers want. By recording data on how often customers buy, what they buy, and how much they spend, you can spot trends, predict what’s coming, and make better choices. For example, you'll know when to offer deals or which products to focus on.

3. Use Sales Technology

You can also use sales tracking software in your business. HubSpot, Pipedrive, Salesforce, and others can help you track data easily. They handle repetitive tasks, helping you focus on key tasks like building customer relationships, improving sales, and closing big deals.

4. Develop Team Metrics

You can track several things using the right metrics. These include calls made, meetings held, and lead response times. Another key metric is the customer retention rate, showing how well your team keeps existing clients.

Setting these targets helps you closely monitor individual and team performance and make adjustments when necessary.

Improve Your Business Decision-Making with GrowthJockey

Tracking sales growth correctly is key to making good business choices. By looking at your sales trends and changes in the market, you can see whether you’re in the right direction.

Keeping your data accurate helps keep that picture clear. With a good tracking system, you can find chances to grow and improve your sales strategies.

At GrowthJockey, we help businesses grow by using data to make better decisions. We focus on understanding the market and tracking sales, which helps businesses improve their growth plans.

The right tools make it easier to track sales and grow faster. That’s where GrowthJockey comes in — we help companies make the right decisions at the right time to drive success.

FAQs Related to How to Calculate Sales Growth

1. What is the formula for sales growth?

Calculate sales growth by subtracting previous period sales from current period sales, dividing by previous period sales, and then multiplying by 100. This gives you the percentage change in sales performance.

2. How do you calculate % growth?

Find percentage growth by taking the difference between new and old values, dividing by the old value, and multiplying by 100. This universal formula works for any growth calculation.

3. How to calculate market sales growth?

Measure market sales growth by comparing total industry sales between periods. Include market share analysis and competitor performance for a comprehensive understanding.

4. How do you calculate sales growth year over year?

Compare annual sales figures by subtracting the previous year from current year sales, dividing by the previous year, and multiplying by 100 for the yearly growth percentage.