Management guru, Peter Drucker is known for the quote, “you can’t manage what you can’t measure.”
This explains why sales reports are critical to the success of every business. A sales report gives you a clear picture of your business performance and helps you gain better insight into what’s going on with your business and team.
Aside from this, the insights gotten from your sales report can help you make informed business decisions and optimize your sales strategies.
For sales managers, aside from managing the sales teams, ensuring the organization’s growth, and meeting your sales target, you also have the key responsibility of creating sales reports and presenting them to senior management and key stakeholders to provide them with a detailed understanding of the sales team activity and performance.
Although sales reports are prepared on a daily, weekly, monthly, or annual basis, our main focus here is creating annual sales reports.
In this article, we provide you with more information on everything you should know about creating annual sales reports for your top executives and stakeholders.
Table of Contents
- What is an annual sales report?
- Different types of sales reports
- Why is an annual sales report important?
- What can a sales report reveal?
- Sales metrics to include in your annual sales report
- Important questions Business Owners and Executives need to ask?
- What to include in your annual sales report?
- Guidelines/tips for creating an annual sales report
- Annual sales report templates
What is an annual sales report?
An annual sales report also known as a yearly sales report is an annual activity report made by the sales leaders or sales manager. It is the summary of all sales activities that occur during a specific year, usually the past year.
An annual sales report gives an organization a clear overview of all its activities and how it performed in the previous year and what new goals and missions should be developed for the upcoming year.
It covers everything that a business sales team does from financial statements from the company CFO to a sales and marketing report. Creating an annual sales report starts with data or information gathering about the company’s sales strengths and weaknesses, the percentage of sales goals met in the previous year, and the milestones that were achieved.
If you suddenly notice a spike or a drop in your sales performance, you should consider creating a sales report to gain a better understanding of your business sales performance and effectively create growth strategies, identify sales-worthy customers and develop ways to optimize the sales process.
An annual sales report can be formatted in different ways and styles to effectively communicate important sales data. You can design your sales report as a double or multi-page document, a presentation, or even share some of the data collected in a creative and fun infographic.
Different types of sales reports
It is important to understand that the ultimate goal of creating sales reports is to give you an insight into your business sales activities and performance. The different types of sales reports include:
1. Sales Forecasts
These sales reports predict the number of sales your sales team is expected to make within a specific period of time. They can be used to plan ahead for future business problems or seasonal disruptions.
These sales reports indicate how close a lead is to making payment for the company’s products or services. They help you understand how best to nurture your leads and convert them to paying customers.
3. Conversion reports
These sales reports provide a conversion tracking report on sales leads – providing information about the contacts, leads generated and converted as well as everything that pertains to lead conversion.
4. Opportunity score reports
These reports rank a lead on a scale of one to 99 to determine a lead’s likelihood to make a payment. A higher lead score suggests a higher likelihood of closing the sales deal and vice versa. This report helps the sales team to manage their time efficiently when pursuing leads.
5. Upsell and Cross-sell report
These reports keep track of the number and value of items upsold or cross-sold to customers. This sales report can help your sales team identify future upselling and cross-selling opportunities.
6. Sales Call reports
These reports detail all calls made by a sales rep to leads, prospects, or customers with the aim of achieving sales. This sales report gives you an insight into your sales team’s performance and the quality of your leads.
Sales reports can be combined with certain key performance indicators (KPIs) and measured to monitor your team’s performance and activity over a specific period of time.
A daily Sales report tracks a sales representative’s daily tasks and progress such as the number of calls made and leads generated.
A weekly sales report tracks the entire team’s deals closed or sales revenue earned within a week.
The monthly sales report provides a longer overview of the team’s daily and weekly performance.
The annual sales report is longer than the monthly sales report and tracks the activity and performance of the sales team in a year.
Why is an annual sales report important?
Every organization – both public and private – create annual sales reports to provide their customers, senior management, stakeholders, investors, and employees with important business and financial information necessary for their company’s success.
Here are some reasons why it’s important to create your annual reports:
1. Highlights the company’s achievement
An annual sales report provides you with an opportunity to keep track of your company’s previous year’s activities and sales performance to highlight your key achievements for the past year and effectively make plans (goals and objectives) for the next year.
2. Provides information on the Company’s financial position
An annual report is your best option if you are looking to find out how your company is performing financially. The different metrics on the report provide the management, stakeholders, employees, and investors with accurate information about the company’s financial position.
3. Introduces the key members of your business to the public
Annual sales reporting provides key information about your business to your investors and the media. Through your report, your investors can get to see the key drivers of your company and familiarize themselves with the main faces behind your company.
4. Shows the company’s preparedness for the coming year’s
An annual report shows your stakeholders, management, and employees the company’s plans and growth strategies for the coming year. From the report, you can see where your company is lagging behind and all you’ve done wrong in the previous year to prepare well for the next year.
5. A decision-making tool for managers
Decision-making is a major role of managers in your company’s growth. It determines the decisions you make for your company and how such decisions can affect your company. Annual sales report provides you with accurate and up-to-date data on your company’s performance that sales managers can use to make data-driven decisions that can help the company grow.
What can a sales report reveal?
An annual sales report can reveal important information about your business that can help you plan ahead for the future. It can reveal the following information about your business:
1. Actual sales
A sales report provides information about the company’s actual sales performance within a year. Larger organizations gather and compile information or data from a subsidiary, division, or region to create the annual sales report while smaller businesses with one location only used their general sales figures
2. New vs. repeat sales
An annual sales report provides valuable insights into your company’s new and repeat sales. This can include the percentage of sales or revenue gotten from a particular set of customers new or old within a year. This report enables sales managers to determine the performance of their new advertising campaigns or product ideas and when targeting a new market segment.
3. Product demand
One of the things that an annual sales report can reveal about your business is regarding your product demand. For example, if you notice a decline in the sales of one of your products, this could indicate a shift in sales trends – either due to a new competitor or a new product or even a change in customers’ needs. The information from your sales report can tell you whether to improve your production or discontinue the product.
Depending on the industry, an annual sales report can be used to estimate the market prices of products. The features of a particular product could determine its market value based on its price in the general market in the past few years. Based on this, you can also determine the product’s price from its raw materials, brand identity, or reputation. Check out the detailed guide about demand planning.
Sales metrics to include in your annual sales report
Sales metrics are measurable performance indicators that show you whether you are achieving your sales targets or not and give you an overview of how different aspects of your sales operations are performing. They help you determine where your strengths and weakness lie.
Here are the sales metrics that should be included in your annual sales report:
1. Number of prospects
This measures the total number of prospects that you have in various stages of your sales funnel. For sales to happen, it’s important to know how many deals are in your sales pipeline and understands the stage that your prospects are in the sales pipeline – how far they are on the sales pipeline and their likelihood to make payment.
2. Deal size
Considering that sales contracts can have very different values based on numerous factors. This metric measures the average deal size in your sales funnel to help you determine accurate and quick sales forecasts. By finding out the total worth of your sales deals, you can develop strategies that can help you close the deal a lot faster.
3. Conversion rates
The conversion rate otherwise known as close rates helps you determine the average number of cold prospects you need in your sales pipeline to convert a prospect into a paying customer, based on existing past results. It specifically asks the question – for every sales deal closed, how many open deals do you have?
4. Sales cycle time
The sales cycle time otherwise known as sales velocity is the average time period it takes for a lead to enter the sales funnel and progress to the final stage of the sales process – or ultimately make a purchase. The faster it takes them to complete the sales cycle and make a purchase, the better for the business.
Important questions Business Owners and Executives need to ask?
There are certain questions that business owners and executives need to ask the sales managers to help them understand the company’s sales and prospects report. They include:
- What is your ideal customer profile (ICP)?
- Where do your best leads come from?
- What motivates your prospects to convert into paying customers?
- What factors prevent or distract prospects from making a purchase?
- Are there bottlenecks in the sales funnel? If there are, how can they be improved?
- Are individual sales reps meeting their sales targets?
- Is your sales team on track to meet its specific goals?
- Who are your top performing sales representatives, what do they do to achieve these results and how can the rest of your sales team replicate this?
- How do sales compare to previous periods?
- What are your sales forecast for the next annual period and what strategies are in place to boost sales performance in this period?
What to include in your annual sales report?
Most annual sales reports provide executives, stakeholders, and employees with a complete overview of the business’s financial condition over the past year. An annual report usually contains an opening letter from the company chairman, a business profile, a financial analysis, and other important financial information.
1. An opening letter from the chairman/CEO
The annual report usually begins with an introduction and a letter from the chairman, business owner, or CEO of the company to the shareholders highlighting the major achievements or developments in the previous year, company initiatives, and a brief summary of the financials.
Other important elements included in this section includes:
- Challenges the business faced
- Its successes
- Key Insights into the growth of the company.
The table of contents comes after this section.
2. Business profile
This section includes
- The company’s vision and mission statement.
- Details of the directors and officers.
- Registered office locations
- Investor profile
- The company’s main products or services.
- The competitor’s profile
- The company’s risk factors.
3. The management discussion and analysis
This section provides an overview of the business performance over the past three years with key emphasis on profit margins, net sales, and incomes. It also discusses other important factors like:
- If the business launched a new product or service.
- Drastic shifts in sales and marketing efforts.
- Any new hires, if any
- Business acquisitions, if any
- Other important information for stakeholders
4. Financial statements
This section is the most important in the sales report because it shows the company’s financial condition. The financial statement included are:
- Balance sheet
- Cash Flow statement.
- Income statement
- Statement to shareholders
- Accounting policies
- Auditors comment on the company’s financials
- Disclaimers about forecasted income and expenses
Guidelines/tips for creating an annual sales report
Here are some guidelines or tips to follow when creating an annual sales report:
1. Determine the key message
An annual report is a perfect opportunity to highlight your company’s achievements and the impact of these achievements on your company’s growth. To use all this information and achievements to your advantage, determine the key message that you want to pass on with your report and work on this accordingly.
2. Decide on the structure and content
Annual reports differ by industry, hence the content of a company’s annual report can differ from another company. Aside from the structure highlighted in the previous chapter, your annual report should have a storyline, infographics, and other creative elements that can make the report easy to read and understand.
3. Use compelling designs
An annual report contains mostly figures and data that can be boring and tiring to look at, you should consider adding creative designs and elements in your report to bring life to it and make it easy for your readers to read and navigate around. Include colors, shapes, and creative fonts to bring it to life.
4. Make adequate plans in advance
Creating an annual report is a long-term process that requires an organized system to put all the information together from recording and tracking sales data to media clipping, and photographs, and compiling all the business achievements. Make adequate plans in advance to make everything go as planned without errors or disruptions.
Annuals sales report templates
An annual sales report template can give you inspiration on how to create yours and customize it to fit your business. Here are some templates to consider:
Annual sales report template 1
Annual sales report template 2
Annual sales report template 3
Creating an Annual Sales Report: The Bottom line
An annual sales report helps you eliminate the uncertainties in your business situation and helps you make better decisions about your business. By knowing where your company stands with your prospects and customers, you can create strategies that can help you improve your business sales performance. Put the time and effort into creating your sales report to show the right information to the stakeholders and external public and help you track your finances.