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.
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.
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.
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.