Company officers use many different metrics to analyze their businesses. A key measure is sales, or revenues generated from the products or services the company provides.
Large corporations usually have many locations, or stores, that generate sales. Management will look at the sales generated by each of the stores, but will also combine the sales from many locations to see how the products are doing in total.
A company that is opening new stores (or closing older ones) will add a different measure when comparing sales from two different years (or other time periods): Stores that were open all of both years. These same store sales offer a fair comparison, year to year. The term same store comps (for comparables) is also used.
Home Depot as an Example of Sales
Home Depot is a large home improvement retail chain located primarily in the United States and Canada. As of this writing it has 2,248 stores. Each year, the company issues financial statements and other key information, so that investors can determine the financial and operational health of the business.
For Home Depot, as with most publicly traded companies, this takes the form of an annual report to shareholders, which is publicly available. Along with the financial statements, there is a letter to shareholders, where the officers of the company provide details on the year’s operations.
Companies use different fiscal year end dates, and Home Depot ends their fiscal year on January 31. For the 12 months ending 1/31/2021, total sales reported on Yahoo! Finance were $67,997 million, compared to $66,176 million in the period ending 1/31/2010, an increase of 2.8%, (incidentally, the first increase in sales in four years.)
Same Store Sales at Home Depot
In its annual report, the CEO of Home Depot reports that the increase in same store sales was 2.9%, higher than its overall sales increase of 2.8%. This is an important statistic for management and investors, it that it looks at operations of groups of stores without confusing the issue with new stores in untested locations (the company has locations in Mexico and China) or for partial years.
Looking at gross sales alone, a company could hide problems by showing great growth in sales by opening new stores, while having declining sales at individual stores. Home Depot has a minimal difference between overall sales and same store sales, which is likely the result of one of two things:
Home Depot did not open a lot of stores in the comparison period
The stores that it did open managed to do roughly the same amount of business as the stores in the same store set.
For any company, looking at same store sales provides a key measurement of how existing business units are doing, rather than how much growth a company is undergoing. A business that cannot sustain sales at existing units is going to eventually run out of markets to place new stores.
Suggestions for Maximizing Customer Data
New and inventive ways of encouraging greater spending from repeat customers is one of the most powerful keys to small business growth.
Using existing customer data is nothing short of sound business sense. A company that only focuses on attracting new customers to build sales is a company that is not equipped for long-term market competition. Savvy business owners, however, understand the many useful ways of analyzing customer habits and using them to stimulate business growth.
Customer Data Can Be Used to Boost Internet Sales
Existing customer data is also useful in developing and boosting web sales. As detailed in Dun and Bradstreet’s, being able to clearly identify current customer data, a business owner can tailor a website according to client’s tastes and needs. Understanding how shoppers arrive at making a web purchase enables web designers to then link pages together in a logical sequence that increases both first-time and repeat sales.
Creating Special Member Discounts
Another useful way of using customer data includes creating a member’s discount for repeat customers. In this business growth model, repeat customers are allowed a percentage off of their regular purchases just for regularly patronizing a business. One might also include offering a percentage off of a certain dollar amount spent. An example may be that for every $50 spent while shopping, the customer receives 15% off of their next purchase. These types of business growth incentives are known to increase customer loyalty and, at the same time, create a greater likelihood of repeat business.
Creating Preview and Preseason Sales
However, perhaps one of the best strategies for business growth is the direct offering of timely sale information to customers that have previously purchased special products. For example, by tracking customers who regularly buy garden accessories and then extending to them a personal invitation to a winter preview sale on the latest gardening gadgets, a store owner can create early sales on these items.
To further capitalize on these pre-sales, a store owner may determine that, while customers are visiting the preseason gardening sale, they may also purchase outdoor cooking utensils and other seasonal accessories offered at a preseason sale price. In short, a corporate strategy that analyzes a company’s regular customer base and is able to strongly identify customers according to their purchases, places attentive business owners in the position to best target these same customers with incentives that motivate them to spend more during each visit.
Increasing Sales by Existing Customers is Easier Than Attracting New Customers
Creating a corporate strategy around existing customers and their buying trends is a far simpler effort than merely targeting business growth by attempting to attract new customers. Over time, use of this data has proven to be quite successful and is repeatedly used by business owners because it works. Smart business owners also find that strategies aimed at stimulating greater spending from existing customers are not only more profitable, but they are far easier to sustain.