The stark limitations of hindsight

Driving while looking into your rearview mirror isn’t just dangerous but woefully ineffective. Don’t make the same mistake when measuring your wine & spirits sales. 

What measurements can be seen in your rearview mirror?

• Shipments

• Depletions

• Accounts Sold

• Points of Distribution

• Lost Accounts

• Gained Accounts

These numbers are certainly nice to know. They can tell you a lot about what is happening (or what has recently happened) with your business. But, they tell you absolutely nothing about the QUALITY of your distribution.

For that, you need more forward-looking information or, as we like to call it, “leading indicators” of sales success.

Follow the crowd, risk falling off a cliff

It is rare to find a wine or spirits company reaching beyond our industry's tried and true metrics. Habits are hard things to break. 

To have a breakout sales performance, brands need to redefine the success metrics. This means looking at the sales data through a new lens that includes:

• Where does the greatest potential for volume growth lay?

• Where and how can “leverage” be applied to improve return on investment?

• How can we achieve sales results more efficiently (with fewer or better use of existing resources)?

• How can we better align our brand team’s efforts with distribution partners? 

• How can we improve the “stickiness” of our hard-earned placements?

• What is the payoff of shifting from a competitive-oriented market share to a market-potential share mindset?

If you are not achieving your desired goals for revenue and profitability, the answer is not more people, effort, and investment. The solution lies in what you are measuring.  

A fulcrum to move the world 

Archimedes taught us a great advantage can be achieved by trading distance for force. In the wine and spirits game, attempting to gain more accounts and more PODs in totality is far less impactful than using the same time, energy, and investment within a more strategically defined account base. 

This goes beyond working smarter, not harder. It’s about understanding how to visualize the data to improve sales results dramatically. It’s about fishing where the fish are. 

We now live in an age where rapid advancements in technology and capturing the right data points hold the keys to improving sales performance. 

Key account target lists provide the leverage for sales success. 

The key to achieving dramatic, accelerated growth in sales is to narrow the focus of activity and investment to only the most attractive and responsive accounts. It’s a less-is-more approach that can only be executed with the right tools, the right data, and the right strategy.

And it all starts with what your goals are:

• Meet volume objectives to provide top-line revenue and leverage economies of scale

• Put the right products in the right places to leverage your brand’s unique value proposition and strengthen brand equity

• Improve profitability by improving efficiencies in the cost of sales (payroll, T&E, trade spending)

• Improve customer satisfaction and customer retention 

Understanding the importance of account segmentation is the secret weapon of brands looking for a competitive advantage. 

Salespeople do not naturally allocate their efforts in the company’s best interest. These forces must be applied through external forces (sales leadership). 

The key is an agnostic, objective approach to defining the best accounts to target driven by research and data. 

Growing your sales requires aiming precisely

Because the 80/20 Rule is real and not all accounts hold the same potential, the key to accelerating sales is to be very intentional about WHERE to aim your resources (time, money, people power). 

If twenty percent of the accounts drive eighty percent of the volume (an indisputable fact), knowing exactly which accounts are included in that 20% is critical. 

A common question is, “Where can I get the data to identify the most attractive account targets and market segments?” The answer is there are multiple sources of information, including:

• Your own sales data - Look closely at your largest volume accounts. What attributes to this outsized volume? 

• Using “surrogate” data - Segment accounts based on certain attributes that correlate to volume (i.e., high foot traffic)

• Syndicated data 

• Category management data

• Good old-fashioned research (Yelp, Open Table, Cvent, etc. for on-premise)

Not all accounts hold equal potential, and identifying the most attractive accounts is essential for consistent and profitable growth in sales. Taking the time to research and develop key account target lists objectively is well worth the investment! 

Key Metric #1: POD against target accounts

It’s not enough to know how many points of distribution you have (or have gained). The bigger, more important issue is, do you have PODs in the right accounts? 

When you isolate your POD reporting to only the most important accounts, it better indicates future sales success. The sales execution software you use must be able to segment accounts in a customized, actionable way.

If your PODs are “up” 20% year-to-date in the general market but only slightly above flat within your universe of key account targets, then it becomes easy to see you will fall well short of your volume goals. 

Leveraging this metric can have a dramatic impact on your sales! This need not be a time-consuming or elaborate process. With the right tool, it can be achieved using only a few mouse clicks. 

The ability to see your PODs only within your key account targets is a game-changer. You will never return to the “old” way of measuring PODs!

Key Metric #2: Sales per POD (velocity)

A clear line of sight into which PODs are the most productive in volume is critical in accelerating your sales growth.

Many brand owners often overlook this metric because it presents reality in too bright a light.  Once you start measuring velocity, you will quickly see that most of your distribution is “hollow,” meaning it’s there but not producing anything. 

The POD growth you’ve been congratulating yourself on quickly becomes less meaningful.

Velocity is the “truth serum” of sales. There’s no way to hide from the Sales per POD metric! 

Measuring total PODs or growth in PODs isn’t nearly enough. Not if you want to enjoy accelerated growth in your sales!

Key Metric #3: Churn 

Speaking of shining bright lights on the “truth,” nothing will sober up a sales organization faster than identifying the one-and-done placements. 

If an account purchases a product one time and then never again, what benefit was that to the brand? To the organization?

One-and-done placements are the natural result of too many brands chasing too few shelf placements. 

New distribution incentives can often result in churn if not closely monitored. 

Take, for example, the typical “crew drive” or “blitz.” A concentrated effort is launched to gain new points of distribution. This short-term, intense focus can be very effective. But it can also be a waste of time and money if many of the new PODs achieved don’t “stick.” 

To achieve more sustainable results, brand owners must be able to quickly and easily spot instances of churn.

Key Metric #4: Retention

Retention measures how long a particular account has been purchasing a  product. For example, in a 12-month period, how many times did the account purchase the product? 

Like velocity, the retention metric is a clear indicator of the quality of your distribution. 

Under the brilliant illumination of the retention metric, “accounts sold” is a woefully feeble measurement. 

The cost of acquiring a new customer or placement is 5Xs higher than retaining existing customers or placements. In light of this, it’s shocking to see how few suppliers have reports in place to measure and identify the most valuable accounts.

The issue of retention takes on a much deeper meaning when you factor in the costs of marketing and advertising. The key to optimizing customer acquisition costs is to take extra special care of your best existing customers. And you can’t know who they are without measuring retention!

Key Metric #5: Penetration

In the 1980’s Neutron Jack Welch took the reins of General Electric. He earned his nickname by annually firing the bottom 10% of employees. But, a lesser-known strategy he employed was continually redefining how they measured their market share so they had no more than 10% of any market or category. This set them up for exponential growth.

Wine & spirits companies can leverage this same metric today by closely monitoring their “market penetration” in various ways, such as:

• Percentage of BTG placements of $50+ per bottle wines in accounts using wine preservation systems to sell expensive wines by the ounce.

• Percentage of accounts sold in restaurants with outdoor seating and private dining spaces (extremely reliable indicators of high volume).

• Percentage of sparkling wine placements or bloody mary cocktail mentions in the top 250 highest volume brunch accounts.

• Percentage of accounts sold in accounts that sell wine in cans

• Percentage of accounts sold in accounts that only sell their wine in cans   

• Percentage of accounts sold in venues famous for their bourbon selection

Leveraging the penetration metric takes the right product/right-place concept to unprecedented heights!

When measuring the QUALITY of your distribution, there’s no better way to fly than measuring penetration!

Break new sales barriers by measuring what matters

Embracing the conventional approach is a sure path to mediocrity when assessing crucial aspects of the wine & spirits industry.

Consider venturing beyond the overused, outdated lagging sales data metrics and elevate your performance and visibility to the next level?

Discover innovative methods to empower yourself in gathering field level data points and attain better clarity through cutting-edge technology, systems, and strategies.

Let's talk if this article piqued your interest and you’d like to learn more about how Andavi Solutions can help your brand accelerate. We will assemble a customized plan just for you! 

Learn more about the beverage alcohol technology solutions at http://www.andavisolutions.com