In today’s fragmented 3-tier alcohol distribution system, intuition alone does not help you quantify performance at a retail level.
Peter Drucker once said: “You can’t measure what you can’t manage.” Yet we like to think of it more as “you can’t measure what you don’t track”.
Using the right metrics to track success is a no-brainer for any business, but it’s extremely vital for alcohol suppliers. But what are alcohol supplier performance metrics and how do you know which ones to prioritize?
What are alcohol supplier performance metrics?
Alcohol supplier performance metrics are data indicators that provide a broader view of how your brand is doing in the market.
They help you track and determine how well your business is driving towards your desired objective.
Successful data-driven alcohol suppliers pay vigilant attention to these metrics because they help them:
- Monitor progress
- Future-proof their business
- Adjust strategy
- Overcome outdated assumptions
- Identify strategic issues
The more meaningful data you collect about your performance, the easier it gets to:
- Draw accurate conclusions
- Make more informed decisions
- Get your team to adopt the new strategy
But what kind of performance metrics should your business prioritize?
Here are 3 performance metrics alcohol suppliers can’t afford to ignore
#1 Dollar sales CH YA
Dollars sales CH YA is a frequently used metric that tells whether your brand is growing, remaining static, or underperforming.
Unlike standalone monthly indicators, this metric gives you a better sense of your product’s performance. Being able to gauge how your business performs with comparative, long-term data helps you see the bigger picture and keep you focused on the long-term objectives.
Here’s an example:
- Let’s say your reports highlight a 30% increase in dollar sales for your IPA brand in Washington state during the last month.
- Yet, using a 12-month measurement, your brand faces a 20% decrease in dollar sales, which means your brand is seemingly underperforming.
It might not be clear at a first glance. And you might even need to use other metrics to gain more clarity. But here’s the benefit:
- Dollars sales CH YA helps your team stay away from false indications derived from seasonal effects, monthly volatility, and more.
#2 Category weighted distribution (CWD)
CWD is an IRI-native metric that assigns weight to each store, based solely on sales of a single alcohol category.
It takes into account the total revenue of a particular category (either beer, wine, or spirits) to assign a category weight to the various stores in a specific location.
Simply put, CWD helps answer the following question:
How available is your product to the customers who are shopping in a specific region?
We like to think there are two rules when it comes to targeting a specific geography in your market:
- 1 is to “fish where the fish are”
- 2 is “don’t forget about rule No. 1”
Of course, this accepted wisdom applies to everything in life, but the principle plays a greater role as a performance metric.
Here’s an example:
- Imagine your IPA product is targeting the Washington state geography (comprised of 10 stores, all of which generated a total of $10 million in revenue for a specific time frame, but not evenly).
- And assuming your brand is selling in 2 of these stores, but those 2 stores collectively amount to $5 million in revenue.
Your CWD amounts to 50%
So, going back to the “fishing principle,” here’s the question:
Are you placing your products in the stores where consumers generate the most bulk of revenue in your category?
#3 Dollar sales per point of CWD
Dollar sales per point of CWD measures how fast your product is selling regardless of its availability.
Have you noticed that CWD speaks volumes about your availability? If so, that’s a great start because this time we are taking one step further.
Because being largely available to consumers in the right places does not always mean your product sells rapidly.
Dollar sales per point of CWD measures how fast your product is selling regardless of its availability. You take your total dollar sales and divide it by your CWD%. The value you get describes your velocity.
Here’s an example:
- Assuming you obtain a total revenue of $1M for your IPA brand in Washington state. And your CWD amounts to 19%.
- By dividing those two values, you get a velocity rate that amounts to $52,631.
So, despite holding lower availability (19%), your brand might be selling faster than others with more shelf/store visibility or exposure in the region.
With that opportunity in mind, here’s the question:
Wouldn’t your buyer find more value in prioritizing your brand over any other heavily exposed competitor with lower velocity?
Wrapping up…
It’s critical to track performance at a retail level to ensure your brand meets the needs of your buyers.
So, by relying on the right performance metrics, you ensure your business moves in the right direction and gets one step closer to a successful data-driven future.
Let data accelerate your business growth
Built in exclusive alliance with IRI, our Competitive Market Analysis (CMA) delivers off-premise retail chain scan data to help you derive actionable insights, explore new business possibilities, and ultimately, propel your growth to new heights.
If this has you excited to learn more, our CMA page is a great place to start.
Want to skip a step and talk to a rep? Contact us.
It’s time to start driving your brand towards data-driven growth.
