When it comes to measuring and tracking the right things in the wine & spirits game (KPI’s to those of you pulling on the oars in the belly of corporate slave ships), there are far more options than there used to be. Oh, sure, you still have the old Reagan-era metrics like depletions and accounts sold. No doubt important but not very insightful if you’re looking for deeper understanding into the quality of your distribution. It’s nearly impossible to tell from these rudimentary dimensions if you’ve got the right products in the right places. In fact, for those of you given to impatience, “right places” is very much where I’m headed in this article.
And what about top ten and bottom ten? There are all kinds of ways to apply these whiffle balls (accounts, territories, distributors, states, etc.). But while this is certainly something that’s good to know the best it can do is indicate where YOU’RE doing or (not doing) business. It will never tell you where you SHOULD or should not be doing business. If it was me, I’d much rather learn about the most valuable “white space” accounts, the 20-percenters, the honey holes, the big tunas. Well, who wouldn’t, you might say? Good luck with that, some might say.
Given the unprecedented level of the competition today, it’s a fatal error to assume something can’t be quantified. I encourage all of you reading this to immediately start questioning everything- starting with what you measure and why. Sometimes you’ve got to be like Yoda and unlearn what you have learned. In case you haven’t noticed, we live in a very flat world. Literally everything can be optimized. Now I do think optimization as a concept has been overdone in certain applications (Fitbit comes to mind) but the wine & spirits business can never be accused of going overboard with it.
Which brings me to what I regard as the single most important metric: sales per point of distribution aka velocity. I know for a fact that not all accounts are equal so what I want to know is precisely which accounts are the most unequal – especially on the biggest-bang-for-the-buck end of the spectrum. “Wide and thin” used to be a popular and noble strategy for distribution but with so many more SKU’s chasing much fewer square feet of shelf space, it just isn’t a practical pursuit any longer. Fewer accounts but the RIGHT accounts -now that’s using your noodle.
And with less total points of distribution available, we must pay close attention to the retention and longevity of each placement as well. “Churn” is the mortal enemy of modern distribution and if YOU don’t pay super-close attention to it, you’ll be among its many victims. Churn is the most insidious byproduct of the too many brands / too few distributors dilemma we find ourselves in nowadays and God help you if you’re not monitoring it DAILY. Like cancer cells feed on sugar, so does the distribution machinery feast on churn. And guess where you won’t notice churn? By measuring depletions and account sold, of course.
Once you commit to relentlessly measuring velocity, like proverbial scales falling from your eyes, you’ll notice opportunities everywhere. You’ll begin to see crystal clear correlations like the one between foot traffic and velocity. You’ll see with Clark Kent clarity that certain “attributes” of one high volume account can easily be extrapolated to twenty more just like it. Look, we’ve been so used to relying on distributors for so long now, we’ve forgot how to think (and research) for ourselves. Remember when we used to set goals for “HT and MT” accounts (high traffic and medium traffic)? Maybe people still do, I don’t know. But nowadays you can apply “High Traffic” to just about everything – and you’d be very wise to do so.
Foot traffic is KEY when it comes to high velocity placements. And the data is staring you right in the face. Take on premise accounts, as an example. Restaurants with lots of private dining space and/or outdoor seating have far more foot traffic than an average restaurant. I’m not talking one or two times the traffic. I’m talking factors of ten and twenty times. Have you identified these accounts? Are you tracking them? If you were, you’d already know that these are among the highest sales per point of distribution (velocity) accounts in every market. Why do you think hotels do such high volume? You guessed it: foot traffic. Lots of people. A hotel with 1,000 or more guest rooms and 100,000 or more square feet of meeting space is typically the highest volume account in the city. Hint: they can usually be found near city centers and convention centers. Starting to see the correlation?
A quick side note: to those who say, “That’s great, Ben, but those hotels are all ‘corporate.’” To you I say don’t buy that malarkey for one minute. I spent 17 years as a VP of On-Premise chains for the US. I know from firsthand experience only about 40% of any given hotel’s volume is from the “mandates.” The other 60% is up for grabs, locally. Not only do your distributors know this, they leverage it to the hilt.
I could go on and on with many more examples of high-volume account types driven by high foot traffic (both on and off-premise). The point is if you start paying close attention to velocity, you’ll deepen your appreciation for how powerful this metric is. From there, it won’t be long before you start asking yourself, “Where are the other high traffic accounts where we’re NOT doing business?” Not only is it possible to do more with less, in today’s brutal environment, it’s mandatory.