In the world of consumer products, there are few things as exhilarating as getting the “big order” from your most important customers.
There’s nothing that creates excitement and effusive pronouncements of positivity up and down the spine of your enterprise than when a massive sales order gets placed. Of course, behind the P.O. – and the pallets of merchandise that flow by the truckload to that big box retailer – is a more rational reality that sometimes gets overlooked: actual retail consumption, and the tale that it foretells about the future health of your business.
I had the opportunity to visit with a client still basking in the effects of several strong months of large shipments. As he crowed about his sales figures, I asked him if I could dig into his data.
As I waded beyond the rosy glare of dollar signs, I noticed a troubling truth that seemed to escape the CEO and the sales organization that was still touting its great successes in securing so many large orders. Although quite a bit of inventory had been shipped to these retailers, what was being sold at retail was lower – and a year after the initial launch, retail consumption trends highlighted the true health of the business: Sales were flattening out.
The supply being held by retailers in distribution warehouses and at stores – once stable at a healthy four to six weeks -- was now at about 10 to 12 weeks, and climbing.
Even more troubling – this client was forecasting 20 percent year over year shipment growth based upon their manufacturing volume of $500 million – which would elevate revenues to $600 million – rather than on actual retail consumption of $375 million. This lower retail consumption data -- and associated trends -- are truly what should have been used as a starting place for planning the next year.
It became painfully evident to me that this client was missing out on key indicators that would help them to better understand the true health of their brand. Turning such a blind eye to what was happening beyond their own shipments is not only ill-advised, but could ultimately strike a fatal blow to future forecasted revenues.
The good news is thus: It’s easy for any CEO to get a better handle on brand health – it doesn’t take the war chest of the big boys, like Unilever and P&G, and you don’t need the insights of a Big 6 accounting firm.
In fact, there are five critical questions that any CEO can ask, on a rolling basis, to ensure they are properly gauging the fiscal fitness of their products and services. It doesn’t take a spy camera in the warehouse, or a passel of secret shoppers – simply, a bit of attention to the right facts is all you’ll need to stay ahead of the curve.
Let’s dive a bit deeper, and learn more about the five questions:
Though the answer to these questions may, at first, seem concerning, it could help you to grasp a more realistic picture of your brand’s health. In my marketing “toolbag” is a formula that will help you assess your particular brand health situation – a “ship share model” that has helped other manufacturers get a better handle on consumption while planning future activities in support of what is truly happening in the business. If I can be of service to you in this manner, please click here to reach out.