Discover the top metrics that enable CPG companies to evaluate their performance across key business areas, including sales, marketing, and supply chain. Tracking the right KPIs is key to making informed decisions and driving growth in a highly competitive industry.
Top 9 CPG Metrics
Sales and Profitability Metrics
Gross Sales
Gross sales represent the total revenue generated from sales before deducting any discounts, returns, or allowances.
Why it's important: This metric helps you understand your overall sales performance and make informed decisions about product offerings and market expansion. Plus, by comparing gross sales across different categories, channels, or regions, you can identify top-performing products and areas for growth.
How to use it: Monitor gross sales regularly and analyze trends to identify growth opportunities and areas for improvement. Use this data to optimize product mix, pricing strategies, and resource allocation.
Market Share
Market share represents a company's sales relative to the total sales in their market or industry.
Why it's important: Tracking market share shows how you are performing compared to competitors and helps you identify opportunities to capture more of the market.
How to use it: Monitor market share over time and compare it to key competitors. Use this data to inform marketing strategies, product development, and pricing decisions aimed at increasing market share.
Gross Margin
Gross margin is the difference between net sales and the cost of goods sold (COGS), expressed as a percentage of net sales.
Why it's important: This metric helps you assess the profitability of your products and identify areas for cost optimization. A higher gross margin indicates that a company is generating more profit per unit sold, while a lower gross margin may suggest a need to reduce costs or adjust pricing.
How to use it: Monitor gross margin regularly and analyze trends to identify products or categories with high profitability. Use this data to make informed decisions about pricing, cross-selling and upselling initiatives, and product bundles.
Marketing Metrics
Customer Acquisition Cost (CAC)
CAC is the total cost of acquiring a new customer, including expenses related to advertising, marketing, and sales.
Why it's important: CAC says a lot about the efficiency of your customer acquisition strategies. A lower CAC indicates that a company is acquiring customers more cost-effectively, while a higher CAC may suggest a need to optimize marketing strategies.
How to use it: Track CAC over time and across channels to decide which channels and campaign types to invest in.
Return on Advertising Spend (ROAS)
ROAS is a measure of the revenue generated for each dollar spent on advertising.
Why it's important: This metric enables you to evaluate the effectiveness of your advertising campaigns and allocate their marketing budget more effectively. A higher ROAS indicates a strong return on investment.
How to use it: Monitor ROAS at the campaign and ad level, then use this data to optimize ad targeting, messaging, and placements.
Brand Awareness
Brand awareness measures the extent to which consumers recognize and recall a brand.
Why it's important: Customers buy from brands they know and love. By tracking brand awareness, you can gauge the effectiveness of your branding and marketing efforts, and identify opportunities to improve visibility and recognition.
How to use it: Conduct regular brand awareness surveys and track metrics such as brand recall, brand recognition, and brand associations. Use this data to inform branding strategies, marketing campaigns, and product positioning.
Supply Chain Metrics
Stockout Rate
Stockout rate measures the frequency of stockouts, which occur when a product is unavailable for purchase.
Why it's important: This metric helps flag issues in your supply chain and inventory management. High out of stock percentages can lead to significant lost sales and disappointed customers.
How to use it: Monitor stockout rates regularly and identify products or locations with high stockout rates. Use this data to optimize inventory levels, improve demand forecasting, and streamline supply chain processes.
Weeks of Supply
Weeks of supply (WoS) estimates how long your inventory will last based on your current or estimated sales rate.
Why it's important: It helps you monitor inventory levels and ensure you have enough inventory until the next purchase order arrives. This is crucial to meet demand and avoid stockouts while minimizing holding costs and avoiding excess inventory. A healthy WoS is typically around 6 weeks.
How to use it: If your WoS is too high, consider reducing your order quantities or increasing sales efforts. If it's too low, consider increasing your order quantities or expediting shipments to avoid stockouts.
Inventory-to-Sales Ratio
The inventory to sales ratio (or I/S ratio) represents your inventory as a percentage of total sales. It indicates how much of your inventory converts to sales.
Why it's important: This metric helps you maintain appropriate inventory levels relative to sales volume. A healthy inventory to sales ratio is less than one. The lower the ratio, the more money you make on sales per item. However, too little inventory may result in products being out of stock and missed sales.
How to use it: Just as a majority of your revenue comes from a small number of high value customers, you may find that a small % of your products make up a high % of your sales. Use this information to prioritize restocking and optimize your inventory levels for these high-performing products.
Tracking Metrics and More with Daasity
At Daasity, we empower CPG brands to consolidate their retail data and track key metrics to drive deeper insights. Get a handle on your data with out-of-the-box reports, advanced analytics, and customizable dashboards.
To learn more about how Daasity can help your CPG brand thrive, request a demo or chat with our team.
