{"id":13,"date":"2021-04-21T14:25:38","date_gmt":"2021-04-21T14:25:38","guid":{"rendered":"https:\/\/microsites.nielseniq.com\/cpg-dictionary\/dictionary\/retail-kpi\/"},"modified":"2022-11-16T21:18:11","modified_gmt":"2022-11-16T21:18:11","slug":"retail-kpi","status":"publish","type":"dictionary","link":"https:\/\/microsites.nielseniq.com\/cpg-dictionary\/dictionary\/retail-kpi\/","title":{"rendered":"Retail KPI"},"content":{"rendered":"<h2><b>What is a\u00a0<\/b><b>retail KPI<\/b><b>?<\/b><\/h2>\n<p>Key performance indicators\u00a0(KPI) are valuable tools for business owners. A KPI is a metric to show how well a product or product line is doing. Typically, KPIs measure performance in sales, such as dollar amounts and units sold. However, companies can develop their own KPIs to suit unique needs and situations.<\/p>\n<h2><b>How are retail KPIs created?<\/b><\/h2>\n<p>Essentially, these KPIs can be customized to fit specific objectives to tell you where your business and products are at any given time. For example, small to medium-sized companies need to focus on their growth stage and budget. Since these brands compete against major players, they need to be strategic to build brand awareness without shrinking their bottom line too much. Two examples of SMB KPIs are Growth Stage and Budget. Here\u2019s a quick breakdown of each:<\/p>\n<ul>\n<li aria-level=\"1\">Growth Stage \u2013 This metric looks at how well your products are expanding in different markets, aka your distribution.<\/li>\n<li aria-level=\"1\">Budget \u2013 Your budget is always important, but measuring it can get tricky when doing any promotions. Larger brands can typically absorb losses, but SMBs have to be as efficient as possible. When measuring your budget KPI, you have to weigh the value of brand awareness against dollar value losses so that you don\u2019t \u201cspend yourself off the shelf\u201d because of too many promotions.<\/li>\n<\/ul>\n<h2><b>Why are KPIs important for CPG brands?<\/b><\/h2>\n<p>With so much data at your fingertips, it\u2019s easy to get overwhelmed. KPIs allow you to narrow your focus and invest in strategies that move the needle forward. As a small or mid-size business, locking down your KPIs early can help you grow faster and more efficiently. These metrics help ensure that you don\u2019t waste time or money based on irrelevant or misleading information.<\/p>\n<h2><b>Benefits of setting KPIs<\/b><\/h2>\n<p>The primary reason to set KPIs for your company is to align all the different departments toward a single goal. Without metrics, each group, from marketing to sales to production, can be disjointed and lead to wasted resources. For example, if you have laser-focused KPIs, you can create a cohesive growth strategy where:<\/p>\n<ul>\n<li aria-level=\"1\">The sales team knows where to focus their efforts on getting your products into new stores. They can target high-volume sales outlets or companies that have a broader reach.<\/li>\n<li aria-level=\"1\">The marketing team knows where to spend money on ads to reach the right people. For example, if you\u2019re trying to break into a new market, you can deliver ads to create demand and use that to make the sales team\u2019s job easier.<\/li>\n<li aria-level=\"1\">The design team knows which niche you\u2019re selling to, meaning that they can figure out how to appeal to that demographic with packaging and product features.<\/li>\n<\/ul>\n<h2><b>Examples of retail KPIs to track<\/b><\/h2>\n<p>The top three metrics for any CPG business to measure are its sales, distribution, and velocity. Here\u2019s how they operate:<\/p>\n<ul>\n<li aria-level=\"1\">Sales \u2013 The total number of units sold in a specific market.<\/li>\n<li aria-level=\"1\">Distribution \u2013 The total number of outlets where your products are sold.<\/li>\n<li aria-level=\"1\"><a href=\"https:\/\/microsites.nielseniq.com\/cpg-dictionary\/dictionary\/dollars-per-tdp-velocity\/\" target=\"_blank\" rel=\"noopener\">Velocity<\/a>\u00a0\u2013 The rate at which you sell products when they\u2019re available.<\/li>\n<\/ul>\n<p>There\u2019s an equation that can help you visualize each metric:<\/p>\n<p>Sales = Distribution x Velocity<\/p>\n<p>So, if you sell 5000 products in a month across 40 stores, you can determine that your velocity is 125 products per store. From there, you can break down your KPIs further to understand the factors that are driving your sales velocity. For example, if you added another 10 stores, that doesn\u2019t mean each one will sell 125 products. If you add those retailers and your overall sales stay even, you have to figure out why.<\/p>\n<h2><b>How to use KPIs for your brand or business<\/b><\/h2>\n<p>To put KPIs into perspective, let\u2019s look at a real-world example from a Byzzer customer,\u00a0<a href=\"https:\/\/byzzer.com\/case-studies\/rayberns\/\" target=\"_blank\" rel=\"noopener\">Raybern\u2019s Sandwiches<\/a>.<\/p>\n<ul>\n<li aria-level=\"1\">The Objective: Raybern\u2019s wanted to increase its share of the frozen sandwich market.<\/li>\n<li aria-level=\"1\">The Plan: The sales and marketing teams looked at the competition for frozen sandwiches to see how well Raybern\u2019s could stack up. They discovered that they couldn\u2019t compete on pricing, but they could deliver better taste and value for customers. The product team broke down the attributes that consumers liked most about frozen sandwiches to see how they could capitalize on those trends.<\/li>\n<li aria-level=\"1\">The Execution: With KPIs in place, all three teams could work cohesively to deliver a better product than the bigger brands. After six months, the teams got back together to see how much their KPIs improved to determine if they were on track.<\/li>\n<li aria-level=\"1\">The Result: Raybern\u2019s was able to capture a substantial piece of the market by focusing on product qualities and attributes that other companies weren\u2019t including.<\/li>\n<\/ul>\n<p style=\"text-align: center;\"><i>Byzzer is a self-serve business intelligence platform that gives small CPG manufacturers the power of NielsenIQ data.<\/i><\/p>\n<p style=\"text-align: center;\"><a href=\"https:\/\/byzzer.com\/pricing\/\"><i>Get free access today<\/i><\/a><i>.<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Performance Indicators (KPIs) help consumer packaged goods (CPG) manufacturers measure their effectiveness and progress towards achieving their growth goals.<\/p>\n","protected":false},"author":0,"featured_media":0,"template":"","meta":{"_acf_changed":false,"footnotes":""},"glossary":[3],"class_list":["post-13","dictionary","type-dictionary","status-publish","hentry","glossary-r"],"acf":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/microsites.nielseniq.com\/cpg-dictionary\/wp-json\/wp\/v2\/dictionary\/13","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/microsites.nielseniq.com\/cpg-dictionary\/wp-json\/wp\/v2\/dictionary"}],"about":[{"href":"https:\/\/microsites.nielseniq.com\/cpg-dictionary\/wp-json\/wp\/v2\/types\/dictionary"}],"version-history":[{"count":2,"href":"https:\/\/microsites.nielseniq.com\/cpg-dictionary\/wp-json\/wp\/v2\/dictionary\/13\/revisions"}],"predecessor-version":[{"id":117,"href":"https:\/\/microsites.nielseniq.com\/cpg-dictionary\/wp-json\/wp\/v2\/dictionary\/13\/revisions\/117"}],"wp:attachment":[{"href":"https:\/\/microsites.nielseniq.com\/cpg-dictionary\/wp-json\/wp\/v2\/media?parent=13"}],"wp:term":[{"taxonomy":"glossary","embeddable":true,"href":"https:\/\/microsites.nielseniq.com\/cpg-dictionary\/wp-json\/wp\/v2\/glossary?post=13"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}