How can brands win in the CPG industry by utilizing Data Analytics?
As with many industries in the 21st Century, the CPG market is facing significant change. Factors ranging from slow to negative retail growth, increased competition from e-commerce platforms, and rapidly changing demographics have left the CPG industry open for disruption. Organizations are also turning to data analytics to increase productivity and efficiency.
In this blog post, we will go through everything you need to know about using CPG data analytics to get more out of your team’s efforts and improve the returns you get from your investments in sales and marketing.
We will discuss what CPG data analytics are, why collecting and evaluating them is essential, and how data analysis can propel your team forward.
What is CPG Data Analytics?
CPG data analytics refers to collecting and analyzing data points resulting from any sales marketing actions a team is taking in the domain. Focusing on data assists CPG brands take the data they are collating and turn it into valuable information by analyzing it and spotting latest trends.
Therefore, in CPG data analytics, there are 3 primary sources of data brands should pay attention to:
By Observational Data, we refer to in-store conditions your reps observe and report from the field. This paints a picture of your execution in the store, and the opportunities your agents uncover during their visit. Sample metrics involves stock levels, number of facings, competitive activity, promotional compliance, and more.
Next is Activity Data. By Activity Data, we refer to your team’s specific actions in the field. How well they are capable of covering their territory, how often are they visiting accounts, and which measures are they taking frequently in the store? Activity Data depicts a picture of the specific actions your team is taking to improve and enhance execution in the store. Tracking and measuring these actions is key to understanding which have the highest impact on sales.
That brings us to the third essential data type — Sales Data. Sales Data is how much of each product is sold over a certain period at specific store locations. This one is clear and is likely that every brand is tracking it. But it takes on new meaning when collaborated with team’s Activity and Observational Data- giving brands a sense of which store conditions and activities lead to the climbing sales.
What are some essential CPG data analytics KPIs?
Key performance metrics are the milestone of data analysis. Otherwise, knowing whether a specific dataset is good or bad is impossible.
Look at some high-performance KPIs that your business should focus on when conducting analytics.
Product promotions can be an impeccable way to accelerate sales. who doesn’t love inclusive discount? However, you are required to know how to evaluate trade promotion effectiveness. Promotional datasets are referred to as incremental and non-incremental volumes. Sales attributed to the promotion are cumulative, while those that aren’t part of the promotion are non-incremental.
To pinpoint the problem, the best way to determine if a retailer isn’t delivering on promotion is to filter your data down to a specific market or region. You can find out a solution and reach out to the retailers. Else, you could take a hit even though your promotion techniques are sound.
Approximating these datasets allows you to determine the promotion effectiveness, and they can illustrate where you can make specific changes.
Share of Category
While it would be tremendous if you could be the only company selling out a specific product line, the fact is — there are numerous competitors out there. Share category data can help you see where you fit into the broader market and whether there’s room for aggressive expansion.
When looking at your share of the category, it’s essential to know that each can be broken down into numerous characteristics. For instance, if you sell energy drinks, you can look at features like can size and look how that influences sales outputs. From that, you can come up with more informed decisions to determine how to increase your share of the category.
If you’re a small CPG brand, you quickly get discouraged when you see significant brands outpacing you every then and now. However, by seeing unique characteristics and the driving forces behind sales growth, you can analyze how to capitalize on them. Utilizing an energy drink instance: say 16-ounce cans are the most sold out product, and you presently sell 12 ounce cans. You could increase the size of your can or add that size to your portfolio of products and see if that boosts sales.
Loyalty means a lot in the CPG industry. While you will likely get a bunch of one-timers, loyal shoppers will help boost your business in two ways. Firstly, the consumers will keep buying your product again and again. Secondly, they will likely become a brand ambassador and excite your products to people they know, which is free advertising.
When evaluating this KPI, you want to break down the number of one-time shoppers vs. brand loyalists vs. switchers. If a company has tons of loyalty, what are the core driving factors? What do you do to encourage dedication to your organization?
If a product category has numerous switchers, there is more opportunity to breed loyalty. From there, as you understand your audience well enough, you can ask the switchers and hopefully get them to start buying your products exclusively.
Successful companies consider data and analytics as critical to business strategy. With the help of analytical models, tools, and processes, consumer goods companies can quickly generate meaningful insights that can assist in decision-making. Our retail analytics solutions are designed to help you optimize sales performance and identify products that resonate well with the customers.