Stop overlooking sales velocity when building a case for your brand. Why? Because it helps you tell a story – way deeper than just sharing sales growth over time. Make no mistake about it: knowing your sales growth is essential to assess your business/brand health, but it doesn’t necessarily detail performance at a market level.
And that’s why sales velocity matters. But let’s break down this topic into key points to walk you through the importance of sales velocity and how to squeeze its full value to win more business for your brand.
What is Sales Velocity?
Sales velocity measures the effectiveness of your brand when it enters the market. It showcases how quickly your product flies off the shelves and generates revenue, making it a vital metric in understanding your brand’s success.
By accurately calculating this measure, you gain a valuable understanding of your retail sales performance, which can then inform your overall sales strategy. Sales velocity also enables retailers to curate an optimal product mix for each category, striking the perfect balance between slow-moving items and top performers on display.
What’s the Sales Velocity Formula?
You can determine your sales velocity by applying the following formula:
Make sure you plug the right numbers into the right components.
- Velocity: how well your brand sells when it hits the shelves
- Sales: total revenue from sales over a given period of time
- Distribution: how widely available is your brand in a specific market
Why is it So Important to Track Sales Velocity?
Sales velocity plays a material role in your ability to target the right market and grow. The faster your brand sells, the more appealing it becomes in the eyes of your buyers. Simply put, a higher sales velocity is an indicator of growth and healthy profits, while a lower velocity indicates your brand might be collecting dust on the shelf and you need to find out the cause.
Monitoring sales velocity also helps evaluate how your brand performs against key rivals, how it ties to your growth, and what impact it makes in your market. In a simple scenario, if your brand has a higher velocity than its competitors, you have a solid reason to advocate for better shelf spaces in your market.
How Does Sales Velocity Help You Craft a Better-Selling Story?
Sales velocity is a key factor in conveying your brand’s worth, addressing tough sales inquiries, and fostering stronger connections with your buyers. According to a recent study, 90% of sales reps on top-performing teams claimed that leaders are now prioritizing long-lasting relationships over short-term gains, adding more strength to the use of metrics – like sales velocity – to craft more compelling stories.
With that in mind, here is a quick example of how to power your selling story with sales velocity at the center.
Say two brands are trying to conquer Market Z. Dollar sales for Brand A and Brand B amount to $700,000 and $680,000, respectively. However, distribution for Brand A is 3x higher than Brand B’s. Based on sales velocity, we can observe that Brand B has a solid case to advocate for better shelf space in Market Z, as the speed at which the brand sells further exceeds its counterpart.
So, what is next? As you try to improve your reach, the way you approach your buyer determines your future. Using the example above, we have already established that Brand B has a solid case to win more business in Market Z as the product is not only popular among consumers, but also moving faster than its competitor. For Brand A, it makes more sense to dig deeper into the data to analyze what is affecting its velocity – the perfect time to conduct style, package, or pricing analysis; or assess any other competing factor sapping its overall performance.
Wrapping Up…
Sales velocity is a powerful metric that helps you see the full picture of your brand’s performance. With retailers now prioritizing consumer-centric journeys, the path toward better shelf placements relies largely on value and authenticity. Using dollar sales as your go-to metric is helpful, but not enough to wow your buyers. That said, it provides more insight into how your brand impacts your market, making your selling story even more compelling.
Ready to Include Sales Velocity in Your Selling Story?
Winning prime shelf space in bev alc is no easy feat. You need to compile the right data to communicate your brand’s worth, as well as its value in the market, which is the reason why sales velocity matters. Are you tracking sales velocity and using it to craft better-selling stories? If not, let us help you track velocity, craft powerful selling stories, and accelerate your growth with competitive market data.
Built in exclusive alliance with Circana, formerly IRI, our competitive market analytics (CMA) delivers off-premise retail chain scan data to help you extract actionable insights, maximize your shelf placements, and ultimately, propel your growth to new heights.
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