Sales volume doesn’t sound fascinating, but it is — especially when it can tell you exactly what your business is doing right (or wrong).
The truth is, the number of units you sell is just as important as the amount of revenue you generate. Why? Because knowing your sales volume can help you identify under-performing products and lead you to improve your sales process across all product lines.
Here, we'll cover sales volume basics, why it matters, and 12 ways to increase it.
What is sales volume?
Sales volume measures how many units of a product your company sells during a specific reporting period. While it doesn’t take revenue into account, sales volume can give you a useful picture of your most and least successful product lines.
Why is sales volume important?
Picture this: your company just launched a brand new product that’s supposed to be a game-changer for your business. Not only is the product innovative, but it answers a direct need your customers have. Additionally, your company is planning for it to be a hit with buyers and stakeholders.
But how do you know how well your product is performing? Chances are, you have a set of sales metrics and KPIs that you review on a regular basis to track business performance. However, just looking at dollars coming in from sales revenue may not tell you the whole story about how your products are truly performing in the market.
That’s where measuring sales volume comes in. On its own, sales volume doesn’t break down how much revenue your company brings in from product sales. However, understanding your sales volume can tell you what products are and aren’t selling, which is valuable information for business growth.
Measuring sales volume can have a major impact on the success of your company. From gauging the performance of your team, getting deeper insights on your sales funnel, or figuring out which salespeople bring in the most revenue, tracking these metrics can have a positive impact on operations.
Let’s discuss how to calculate this metric.
How to Calculate Sales Volume
As I said earlier, sales volume doesn’t account for the monetary value sales brings into the company. It’s solely a measure of how many units your company was able to move during a given period. You can use the sales volume formula to calculate this — either the unit formula or percentage formula.
The unit formula is simple in that all it requires is multiplying the number of units by the time period (e.g. 1 month, 1 quarter, 1 year, and so forth). For example, if you work for a supplement company that sells 1,000 units of multivitamins during Q2, your sales volume of multivitamins for that period would be 1,000.
If during Q3 your company sells 1,250 units of multivitamins, you could then report a sales volume increase of 25% for this product.
The percentage formula is used to calculate the percentage of units sold of a particular item. The formula is:
(Units of individual products sold x 100) / Total units of all products sold = Total sales volume percent
Continuing this example, if your company’s total sales volume for all products during Q2 was 5,000 total units, then your multivitamins would account for 20% of your overall sales volume because multivitamin sales account for 1,000 out of the total 5,000 units sold.
If during Q3 your company experienced slightly lower sales and only moved 4,500 total units across product lines, your multivitamins would account for 28% of your total sales volume. This information is beneficial because it shows buyers are interested in purchasing your multivitamins even when other product sales are down — which could help drive your future sales strategy.
Your company can choose to measure sales volume by individual product units, or by entire cases of product. The time period can vary as well, and can be measured on a weekly, monthly, quarterly, or annual basis.
Sales Volume Variance
Now that you know your sales volume, how can you tell if you're underperforming? One way to do this is by looking at your sales volume variance.
This metric helps you calculate the favorable — or unfavorable— impact of selling fewer or greater units than anticipated.
Continuing with the example of your supplement company, you sold 1,000 and 1,250 units of multivitamins in Q2 and Q3, respectively. Now, the 25% sales volume increase seems excellent, but is it? Should your company actually be selling closer to 2,000 units a quarter?
If your sales volume variance is favorable, it means your business is on the right track. If it's unfavorable, you may want to look into your competition, price, or whether you've saturated the market with too many similar products.
To calculate your sales volume variance, use the following formula:
Let's take a look at another example. Suppose your supplement company sells 10,000 units of multivitamins but budgeted for 8,000.
Actual sales: 10,000 units
Budgeted sales: 8,000 units
This means you have a 2,000 difference in sales. Next, you calculate the standard contribution per unit. Figuring in labor, materials, and overhead, you discover the standard contribution is $20 per unit.
Standard contribution per unit: $20
Finally, you multiply the difference in sales (2,000) by the standard contribution per unit ($20). Your sales volume variance is $40,000. In this instance, the variance is favorable — meaning your company and its product exceed expectations.
Sales volume variance helps answer whether a product is underperforming, to what degree it's lagging, and how to fix the problem. It is calculated by multiplying the difference between the actual sales quantities and the budgeted sales quantities by average profit, contribution, or revenue per unit. Sales volume variance measures the financial impact associated with surpassing or falling short of your budgeted sales. With this insight, you can shape the strategies you use to determine price points and how to market and distribute your products.
Now that you understand what sales volume is and why it matters, let’s discuss strategies to increase sales volume for your business.
How to Increase Sales Volume
- Know the key qualities and differentiators of your product.
- Keep customer benefits front-and-center.
- Thoroughly qualify your prospects.
- Understand your customer’s pain points.
- Work closely with your marketing team.
- Focus on improving sales velocity.
- Re-assign your sales territories.
- Motivate and incentivize your sales reps.
- Implement customer rewards.
- Focus on top buyers.
- Identify roadblocks and avoid risks.
- Set standards and expectations.
1. Know the key qualities and differentiators of your product.
When you’re looking to increase sales volume, you’re essentially looking to move more units of your product off your shelf. To do this, you need to have a rock-solid understanding of your product’s key features and differentiating properties.
Questions to consider:
- What separates your product from the competition?
- If a customer sees your product on a shelf next to several others that serve a similar purpose, what does your product provide that the others don’t?
- If you only had 60 seconds to convince someone to buy your product, what would you say? What main features would you highlight?
Let the answers to those questions guide how you describe your product to prospective customers.
2. Keep customer benefits front-and-center.
Anyone in the buyer’s seat of a transaction has one main question — "What’s in it for me?" When someone is looking to make a purchase, they want to know what they’re receiving in exchange for their time and money.
Above, we broke down why you need to understand the key qualities and differentiators of your product. Once that’s done, identify ways you can present those qualities to speak to how the customer will directly benefit. Ultimately, customers want to make purchases that will save them time or improve their quality of life somehow. When you present your products from this perspective, you can provide a more compelling case to the customer as to why they need to buy them.
3. Thoroughly qualify your prospects.
Are you sure you’re selling to the right prospects to begin with? If you notice your sales volume is declining or seems sluggish, it could be a good indication that you need to refresh key aspects of your sales process — and ensuring you’re selling to the right people is a good place to start.
When qualifying prospects, you want to reach those who are the best fit for your product and are most likely to make a purchase. Pushing for the sale from the wrong people can be a frustrating endeavor that can hurt your sales efforts.
As you go through the qualification process, ask insightful, pointed questions to determine if that particular prospect is a good fit. Check out this post for top-notch sales qualification questions.
4. Understand your customer’s pain points.
When you’re working towards the sale, you’re ultimately looking to pair your customers with products that can act as a solution to a problem they’re experiencing.
However, to be successful at this, you have to know what problem the customer is experiencing. Once you understand those pain points, you can draw parallels between their challenges and why your product is the right solution.
5. Work closely with your marketing team.
In addition to thoroughly qualifying your prospects and making sure you understand their pain points, it's also essential to maintain alignment with your marketing team to ensure the right leads are in the pipeline.
Additionally, if you have specific sales volume goals, make sure you share them with your marketing team. When your marketing team knows what products you want to focus on selling and why, they can create content and relevant material to support your goals.
6. Focus on improving sales velocity.
Insert cringeworthy-but-true phrase here: time is money. I know, I cringe every time I hear it. But in sales, this phrase rings true.
Sales velocity is the measurement of how fast you can move prospects through your sales pipeline to generate revenue. The faster you’re able to do this, the more potential customers you can reach. By increasing sales velocity, you can reach more customers, which can positively impact your sales volume.
7. Re-assign your sales territories.
If your sales team relies on territory management as part of your strategy, you may want to look at how your territories are assigned. Your business can benefit from reallocating your strongest sellers to territories or accounts with the most sales potential.
8. Motivate and incentivize your sales reps.
Depending on your organization’s compensation structure, providing monetary incentives to sales reps can inspire them to move more product. If revising your compensation structure isn’t an option at the moment, you can consider other ways to boost sales rep morale, such as creating a sales volume leaderboard and recognizing top-performers through friendly competition.
9. Implement customer rewards.
While we’re on the topic of incentives, seeking ways to incentivize your customers can also be worthwhile. Whether you offer discounts for customers who purchase multiple products at once, or reward customers who refer other buyers with affiliate commission or other incentives, your existing customers can be a fantastic resource for driving sales volume.
10. Focus on top buyers.
When it comes to driving sales, prioritization is everything. Take a look at how you and your reps are spending their time. Are the top accounts — those that are likely to buy in greater amounts or on a repeated basis — being made a priority?
Identify those who are more likely to make larger or repeat purchases and keep efforts to convert and retain them a priority for your team.
11. Identify roadblocks and avoid risks.
Sales volume doesn’t just tell you what’s working best, it also helps you identify your shortcomings. For example, suppose you’re deciding how to allocate your budget and you see a pattern of insufficient sales in a certain region or demographic. In that case, you can use that data to adjust your sales strategy.
By identifying what isn’t working, you can minimize the number of risks your business may face and improve your strategy as needed.
12. Set standards and expectations.
Especially important for younger companies — and still important for the well-established — tracking sales volume can help set a new precedent for your sales strategy. Tracking and identifying averages on a monthly to yearly basis can let your team know what metrics are meant to be a standard to strive for and exceed.
Having those metrics to share with your company can set great expectations for the future of your business and motivate every sales rep in your team to put their best foot forward.
Apply these Metrics to Your Business
Understanding how your products are performing can provide valuable insight that can ultimately create more sales for your company. Now that we’ve gone through how measuring sales volume can impact business, start using these metrics to measure the health of yours today.
Editor's note: This post was originally published in February 2020 and has been updated for comprehensiveness.