Features of combined ABC and XYZ analysis

[subornaakter24]

ABC and XYZ analysis of customers in the context of sales optimization allows you to determine the contribution of specific customers to the company's profit. The method includes ranking by several indicators: the cost of products, their quantity and the stability of demand.

Based on the analysis results, the customer base is divided into two vectors :

ABC categories - depending on sales fronk oil email list volumes;

XYZ categories - depending on the frequency of transactions.

ABCXYZ analysis is carried out according to one of two schemes: classical or modern. In the first case, the ABC component in the classification fully complies with the Pareto principle.

The customer base is divided into three categories depending on sales volumes, following the rule “20% of efforts give 80% of results”:

A - clients who provide 80% of sales due to large volumes of purchases.

B - clients providing 15% of sales due to average purchase volumes.

C - clients with small purchase volumes, providing only 5% of sales.

Case: VT-metall
Find out how we reduced the cost of attracting an application by 13 times for a metalworking company in Moscow
Find out how
The modern scheme, unlike the classical one, involves dividing category A into two for more detailed study. This results in 4 groups for comparison:

A - 50% of total sales;

B - 30% of total sales;

C - 15% of sales volume;

D - clients that account for only 5% of total sales.

The last category of clients is most often removed from the comparison. This includes those who no longer make purchases. If a client has gone to a competitor, it makes sense to classify them as “new” when resuming cooperation in 6–12 months.

The following distribution of clients by categories within the framework of ABC analysis is considered standard:

Category % of total % of income received
A 20 80
B 16 15
C 64 5
Conclusion 100 100
This distribution is considered the most balanced. Deviations in one direction or another will indicate how exactly the sales scheme should be adjusted to improve results.

The point is that any deviations from the standard scheme indicate shortcomings in the sales department. Managers do not take into account the potential of the product or pay little attention to customers.

Features of combined ABC and XYZ analysis

Source: Andrii Yalanskyi / shutterstock.com

If the percentage of the total number of clients in a category is overstated, consider that some of these customers may already move to the next group. If the indicator is understated, look for the problem in low segment coverage and a shortage of buyers.

Based on the analysis results, it is possible to understand whether it makes sense to allocate a separate employee to work with VIP clients. This subgroup is allocated from category A if the profit from their orders is more than 10 times higher than the same indicator for the top of category B.

The key tasks of ABCXYZ analysis are, in addition to ranking customers by sales volumes, to identify patterns of demand depending on the area. The XYZ component is responsible for forecasting purchases, on the basis of which the calculation of sales regularity is made.

Based on ABCXYZ analysis, a portrait of priority clients is created. Knowing such customers by sight, you can provide them with a USP that fully covers their needs. It is important for sales managers to understand which segments they should work with first and foremost and how to do it most effectively.

Based on the results of the ABCXYZ analysis, the following conclusions can be drawn:

On the current state of the customer base . It is important to identify deviations from the reference values. If they exist, these are markers of problems with the organization of the sales process.

On the strategy of maintaining key clients . We define the top categories of buyers who make 80% of the company's profit, and then analyze the approach applied to them. It is important to try to transfer existing developments to category B in order to increase sales and bring a number of customers to the top list.

On the effectiveness of sales methods . Analysis helps to see the strengths and weaknesses of the sales strategy.

About mistakes in working with clients . A decrease in the share of clients in one or two categories can indicate ineffective work methods. It is important to correct the sagging points in time and avoid repeating such situations in the future.

The findings of the ABCXYZ analysis serve as the basis for full-scale optimization of the sales department.