How to calculate sales trends

Updated March 23, 2017

A sales trend represents a measurement or metric and is used to provide a benchmark on revenue performance by a business team or section. This type of measurement represents a critical factor for profit-driven businesses, especially those closely watching the margin between gross profits and operating costs.

Historical data

A trend construction starts with historical data. The analysis isolates a section, product, service or team from the majority of sales, unless total sales are being analysed. The historical revenue data are then collected for this target group and separated from all other data.

Trend building

Using the historical data, an analyst maps the information over a certain and definite time period and then labels the data in terms of units, so that the information displays the same performance metric for each time period. An example is the number of sales of a product per month. Sequential time periods may then be compared against each other.

Interpreting trends

Once a sales trend appears, you can interpret this data for future assumptions. For example, if the number of specific product sales per month seems to drop over a number of months, then management can take this as a sign that actions to improve sales are required. Such interpretations are frequently used to measure the performance of sales employees or teams.

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About the Author

Since 2009 Tom Lutzenberger has written for various websites, covering topics ranging from finance to automotive history. Lutzenberger works in public finance and policy and consults on a variety of analytical services. His education includes a Bachelor of Arts in English and political science from Saint Mary's College and a Master of Business Administration in finance and marketing from California State University, Sacramento.