CPG KPIs: A Guide For Measuring Success.

Understanding what to track for a brand and product in the consumer packaged goods isn’t just nice to know; it’s a must-have. CPG KPIs help dictate your future brand strategy as you can identify areas where a brand is strong and weak. 

CPG key performance indicators provide CPG companies with valuable insights into their marketing campaigns and supply chain management to ensure maximum profitability, customer loyalty, and an understanding of where and how to grow. 

In this comprehensive guide, we will explore the secrets of CPG KPIs and understand their role in marketing, supply chain, and inventory management.

What are CPG KPIs?

 The first and most important thing is to understand what CPG KPIs are. These are a group of key performance indicators that provide helpful information about marketing and supply chain. 

When you work with a CPG brand strategy agency, they will rely heavily on these indicators to enhance the performance of its marketing strategies and increase the overall revenue generated for the consumer packaged goods company. 

Performance indicators help in marketing and supply chain management by tracking the total sales volume of products.

Read More: CPG vs. FMCG.

Why are CPG KPIs important?

CPG KPIs are extremely helpful for brand development and increasing a company’s overall revenue. It allows brands to monitor various elements, from branding and marketing to supply chain management, for real-time, weekly, monthly, quarterly, and annual reporting. 

Performance Evaluation: Performance indicators yield necessary data for a CPG brand development agency to track its campaigns. Real-time data analysis helps in optimizing the CPG brand strategies. KPIs can help track the effectiveness of packaging designs. Thus, CPG packaging design agencies make their designs stand out. 

Data-Driven Decision Making: Assessing CPG branding and marketing campaigns through real-time data helps companies to gain valuable insights into product demands and CPG market trends. CPG KPIs insights help make better decisions for launching product and branding campaigns that resonate with the target audience. 

Goal Alignment: Performance indicators are vital in goal alignment and achieving objectives. It helps CPG companies to study the current market behavior and find deficiencies within their strategies to gain a competitive edge. 

Types of CPG KPIs

We divide CPG KPIs into several types based on their characteristics. Let’s look at these indicators and understand their significance.

Sales and Revenue Metrics

Sales and revenue metrics allow a CPG agency to get insights into incremental sales performance, profitability, and market position.

Gross Sales: It is the company’s overall sales without subtracting costs related to generating those sales. It helps companies explore the sales volume and measure the sales performance of a particular product.

Net Sales: Companies can understand consumer preferences and profitability within a product line by calculating gross margin from net sales after deducting marketing and production costs.

Market Share: The percentage of total sales in a specific market that the company holds. It helps CPG companies track and view their market position and competitors.  

Marketing Metrics

In contrast to sales and revenue, the following CPG KPIs allow CPG marketers to assess their marketing campaigns and adjust their CPG marketing tactics according to the latest trends.

Customer Acquisition Cost (CAC): Measures the total amount spent on marketing and acquiring new customers. This key performance indicator allows CPG companies to execute data-driven strategies. For instance, an ecommerce store can use the Google Analytics dashboard to track the total traffic gained.  

Return on Advertising Spend (ROAS): It helps a CPG branding agency understand its marketing campaigns’ effectiveness. Unlike CAC, ROAS focuses on ad spend and provides valuable insights for the marketing team. 

Brand Awareness: Brand awareness KPIs measure consumers’ engagement with a CPG brand through marketing and advertisements; it gives valuable insight into a brand’s reach to its target audience. 

Trade Spend Efficiency: It measures a CPG manufacturer’s investment to increase demand. It involves trade promotions of various forms, such as coupons and deals. 

Supply Chain Metrics

Supply chain metrics help understand the trends in sales and allow a CPG manufacturer to optimize production according to the market behavior. 

On-Time Delivery (OTD): It measures the supply chain efficiency of CPG companies. It tracks the delivery date versus the expected or committed delivery time to ensure customer satisfaction. 

Inventory Turnover: calculates how often a company sells and replaces its inventory in a given period. A higher rate indicates efficient inventory management and strong sales. 

Perfect Order Fulfillment: It allows CPG companies to measure how well they deliver customer orders. It analyzes several aspects of the order fulfillment process, including delivery location, product condition, packaging, and documentation.

Distribution: Tracking the number of products delivered to retailers and the speed of delivery. A high distribution rate indicates effective supply chain management and strong relationships with retailers.

Retailer adherence: Tracking planogram compliance, promotional activities, and pricing strategies. A high retailer adherence rate indicates effective collaboration between CPG companies and their retail partners.

Product Quality: Product quality is one of the most robust metrics for consumer retention. Product quality tracks the performance of products after sale through consumer reviews and complaints. 

Customer Metrics

Customer metrics help to determine the success of a brand’s product in consumer retention. A CPG manufacturer can easily align its production with customer needs by analyzing these metrics. 

Customer Satisfaction (CSAT): It measures customer feedback through surveys and feedback within the CPG industry. A high CSAT score indicates customers’ satisfaction with the company’s products and services.

Customer Lifetime Value (CLTV): It considers the customer’s purchasing habits, loyalty, and the cost of acquiring and retaining them. A high CLTV indicates effectively achieving and retaining valuable customers.

Customer Loyalty: It tracks customer behavior, such as repeat purchases, referrals, and advocacy. A high level of customer loyalty indicates that customers are satisfied with the company’s products and services.

Net Promoter Score (NPS): NPS measures the likelihood of customers recommending a company or its products to others. It is a valuable indicator of customer loyalty and advocacy, helping companies gauge their brand’s reputation and identify promoters and detractors.

Setting CPG KPIs

Setting key performance indicators for consumer goods based on CPG data involves the following steps. 

Define your Objectives

Having clear objectives is essential for obtaining actionable insight. A CPG company should establish specific and achievable targets to enhance sales, streamline the supply chain, or enhance customer satisfaction.

Identify Relevant Metrics

Once the goals and objectives are defined, the next step is to identify metrics that are relevant to the goals. Depending on the company’s goals, these can be sales and revenue, supply chain, customer, or marketing metrics. 

Set Realistic Targets

Setting realistic targets allows companies to enhance their performance continuously and achieve their desired goals within a specified time frame. For instance, a CPG packaging design agency can divide its main goal into several challenging yet achievable targets.

Monitoring And Analyzing CPG KPIs

Setting CPG KPIs is only one part of the story. These KPIs require constant monitoring and analysis to extract actionable insights from the data obtained. Here’s how to track and analyze them:

Utilizing Data Analytics Tools

There are several data analytics tools available for monitoring and analyzing CPG KPIs. For example, Google Analytics allows ecommerce for CPG brands to track their performance. It provides clear insights into the demographics, interests, and other valuable metrics. 

Regularly Review And Update Metrics

Companies must regularly track and review various KPIs to analyze the market trends and consumer behavior. It helps to find gaps in the marketing and retail strategies. Regaruly updating metrics helps companies align goals and stay relevant in the market. 

Benchmark Against Industry Standards

After getting valuable data from various KPIs, it is essential to check the company’s performance against industry standards and competitors. It allows CPG marketers to find new opportunities for improvement.  

Challenges In Measuring CPG KPIs

There are several challenges when measuring CPG KPIs and obtaining meaningful data. Some of these challenges are as follows:

Data Accuracy and Availability

Key performance indicators are all about data. Only accurate or complete data can provide actionable insights. Therefore, check data from various sources for integrity and completeness. 

Multiple Data Sources

While larger datasets help obtain accurate results, data from multiple sources can be challenging. For example, supply chain, marketing, and sales data can take more resources and be time-consuming. 

Complexity Of The CPG Value Chain

Measuring CPG KPIs across the value chain can be cumbersome. Delays in communication and data sharing between each stakeholder can cause disruptions and inaccuracies in datasets. Similarly, implementing a uniform channel among all stakeholders may require additional resources. 

Conclusion

In the fast-paced and competitive consumer packaged goods world, tracking and measuring key performance indicators (KPIs) is vital for success. CPG KPIs provide valuable insights into various aspects of a business, enabling data-driven decision-making and continuous improvement. By setting relevant metrics, monitoring performance, and addressing challenges, CPG companies can optimize their operations, drive growth, and stay ahead in the market.

Data-Driven Brand Development for CPG Brands

SmashBrand is a brand development agency for FMCG and CPG companies. From brand strategy to packaging design testing, our Path To Performance™ process guarantees a retail performance lift. Book a time to discuss your project with our team.

Frequently Asked Questions

What is the most important CPG KPI?

The most important CPG KPI varies depending on the company’s objectives. However, metrics like net sales, market share, and customer satisfaction (CSAT) are often considered crucial overall success indicators.

How often should CPG KPIs be reviewed?

CPG KPIs should need regular reviews, ideally monthly or quarterly. It allows businesses to track progress, make timely adjustments, and ensure continuous improvement.

Can CPG KPIs vary across different companies and products?

Yes, CPG KPIs can vary across companies and products. Each business has unique goals and objectives, and the KPIs should align with those specific objectives to provide meaningful insights into performance and success.