Key performance indicators (KPIs) are the backbone of any business strategy. KPIs are quantifiable measures of performance over time relating to specific objectives. They give teams a target to work towards and provide a cause for celebration when they hit the goal.
KPIs can be used to measure almost anything in the world of business, such as product sales, productivity, and customer satisfaction. For CPG brands, KPIs are a fantastic way to measure how well the business is performing, how individual products are performing, and can even be used to improve workflow processes.
KPIs are often confused with metrics. While metrics can also be used to measure the performance of a business, they do very little to promote growth. KPIs turn your metrics into goals that further your business. Each KPI that is hit is an improvement in that area of your business. Setting these targets helps your team stay focused on growth and performance. 
How to fulfill your CPG KPIs
As much as we would like things to be easy, fulfilling your KPIs requires a strategic effort across the board. Let’s look at the steps you need to take as a CPG brand looking to hit your major KPIs.
Select relevant KPIs
In order to hit your targets, you first need to decide what those targets will be.
Most direct-to-consumer CPG businesses will need to focus on key KPIs such as:
- Marketing spend
- Click through rate
- Conversion rate
- Average order value
- Cost per click
- Cost per visitor
- Cost per order
- Cart abandon rate
if your CPG brand is selling to retailers, there are different KPIs you should look at:
- Units sold per retailer
- Year-on-year sales
- Remaining inventory on hand
- Remaining inventory the retailer has
- Value of outstanding purchase orders
- Product returns
- Retailer ROI
- Out of stock percentage
- Logistics costs (to be compared to revenue)
There is an almost endless list of potential KPIs that your CPG brand could follow. Of course, trying to hit all of them will likely end in failure. You should carefully assess potential KPIs and identify which will be most beneficial for your business.
It can be difficult to identify which KPIs to use. Many businesses will get trapped by vanity metrics that look great on paper, but do little to grow the business. Vanity metrics can include social media followers, mailing list subscribers, and website view counts. Thankfully, there aren’t many vanity metrics for CPG brands, so this is easy to avoid.
A good KPI for CPG companies should be aligned with the overall business strategy and outcomes. For example, a sales team’s KPI may be to increase sales by 50% by the next quarter. This is a challenge for the sales team, but it will improve the overall company by increasing revenue.
The KPIs you choose should also be actionable and realistic. There’s little use shooting for the moon with no plan. Try to make your KPIs small tasks that incrementally build towards the overall business objective. Each KPI should have a defined set of steps the teams need to take to achieve them. Creating a plan will set your team up for success when it comes to hitting KPIs, which in turn boosts the company as a whole.
Most importantly, KPIs should be measurable. When you’re choosing a KPI to chase, you should ensure there is a simple and definitive way to measure your progress. The measurements will also provide you with a way to track your KPIs throughout your chosen time frame, letting you know if you’re on track or heading for failure. 
Assign DRIs
A directly responsible individual (DRI) is a member of the team that will bear the brunt of the responsibility for reaching KPIs. A DRI is normally someone who is already responsible for other employees such as a member of management, or a team leader. With smaller businesses, the DRI may also be the sole person working on that particular KPI and its relevant actions.
The DRI needs to communicate and collaborate with all teams and stakeholders who are working towards the KPI. They need to provide clarity between all parties by offering context, dividing actionable tasks amongst those involved, and gathering feedback. This ensures that everyone is aligned with the same goal and is focused on the KPI in question.
Set deadlines
Procrastination is one of the most dangerous activities in business. While KPIs give you something to work towards, it shouldn’t be an ongoing process. Setting deadlines helps to improve focus and ensures targets are actually hit.
Timeframes also help to plan future strategy. It gives boundaries to your data sets so you can measure your results across time and compare the results against previous efforts. Year-on-year reports are a common way of comparing performance using timeboxed data sets.
Track progress
The whole point of KPIs is to give you a measure of how well the business, product, or strategy is performing. Yet there’s not much use in waiting until the deadline has hit to check your progress. You should be regularly checking the progress you’re making to see if your trajectory is on track. Tracking your trajectory throughout the assigned time frame can help you make quick pivots to get you back on track.
How you track your KPI progress depends on the KPI you have chosen. Some, such as year-on-year sales, are simple to track. With year-on-year reports, you just have to look at the current and historical sales data. Through that data, you can see where you were, where you are now, and where you need to be. Say you’re a third of the way through the year and your figures are looking a little low. This can be an early indicator that something is not quite right, and if you stay on this path you’ll fail to achieve your KPI.
There are also a range of KPI tracking platforms that will automate your tracking efforts and create reports that are simple to understand. This will save your team plenty of time as they won’t need to worry about manually tracking their KPIs. 
Learn from success/failure
While we would love to be successful in everything we do, life doesn’t quite work that way. Sometimes we have to deal with failure, and that’s perfectly fine. Failing to hit your KPI is disappointing, but it shouldn’t be seen as a setback. It should be seen as an opportunity to learn and improve.
Much like we come away from success thinking about the actions we should repeat in the future, failure shows us exactly what not to do. You can look back on the data and identify processes that could be improved, or replaced completely. This will help to improve your processes in the future and ensure you hit your next KPI.
Work with a technologically advanced distributor
As we briefly mentioned earlier, there is a great range of KPI tracking software available for CPG brands. Buffalo Market’s cutting-edge approach to food and beverage distribution uses AI to collect and analyze your sales data, which helps your brand track your KPIs and gives you critical insights into who your customers are, where they’re shopping, and when.
Contact us today to see how we can help your CPG consistently hit your KPIs!
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