What is trade to sales ratio in SAP CRM-MKT - Marketing?

SAP Term: trade to sales ratio

• Component: CRM-MKT

• Component Name: Marketing

• Description: A key performance indicator KPI obtained by dividing the total expected costs for a trade promotion by the total expected revenues.

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• Key Concepts:
  Trade to sales ratio is a metric used to measure the effectiveness of a company’s sales and marketing efforts. It is calculated by dividing the total amount of sales generated by a company’s marketing activities by the total amount of trade (or investment) spent on those activities. This ratio helps companies understand how much they are getting in return for their marketing investments.
  
  How to use it:
  The trade to sales ratio can be used to measure the effectiveness of a company’s marketing efforts over time. Companies can use this metric to compare their performance against competitors and identify areas where they can improve their marketing strategies. Additionally, companies can use this metric to track the success of specific campaigns and determine which ones are most effective.
  
  Tips & Tricks:
  When calculating the trade to sales ratio, it is important to include all costs associated with marketing activities, such as advertising, promotions, and other expenses. Additionally, it is important to consider the long-term effects of marketing investments, as some campaigns may take longer to generate returns than others.
  
  Related Information:
  The trade to sales ratio is closely related to other metrics such as return on investment (ROI) and customer lifetime value (CLV). These metrics can be used in conjunction with the trade to sales ratio to gain a more comprehensive understanding of a company’s marketing performance.