CPG Data Analytics – everything you need to know (and why)

Data is an incredible tool for any company — but for CPG brands, it’s their lifeblood. After all, data is how you get to know your customers and their needs. It's how you create products that are relevant to them, and it's how you measure the success of those products once they hit the shelves.

You can't afford to ignore your data — it's the fuel that drives your business engine. But if you don’t know where to start, or how to make sense of it, this guide is here to get you started on the right path. You'll discover:

• What CPG analytics actually means
• The types of data that are most important for your business
• The challenges you face when collecting data
• How to put together the right stack for collecting and storing your data
• The KPIs to track to make sense of your data
• How to use the information you manage to make better business decisions.

Let's get started!

What's CPG Analytics?

CPG analytics refers to the process of collecting, analyzing, and reporting data about your products and customers. It's a way to understand how products are performing in the marketplace so that you can make informed decisions about future product development, marketing campaigns, supply chain operations, and more.

CPG analytics might rely on multiple data sources, including:

Retailer data: This includes scan data, which is the information that retailers collect from shoppers' purchases at the point of sale. It also includes sales data, which gives a sense of the volume of sales at each store location. The data is essential in understanding how products perform in the marketplace, what stores sell the most, and their location. It's also a powerful tool for analyzing advertising and promotion effectiveness and the impact of price changes. Retailer data might also include inventory information, including stock rates at warehouses and individual store locations.

Distributor data: Data provided by distributors typically contains shipment information from distributors to retailers, and does not contain any sell-through data, meaning actual scan or sales information at retail stores. Distributor data likely also includes inventory data for the distributor’s distribution centers (DC’s). Distributor data can also help you understand where your product is ultimately sold and how much product goes to each retailer. 

Panel/Syndicated data: Syndicated data is aggregated sales and consumer insights collected by market research companies. It compares a product’s performance with the industry at large and at the category, item, and retail level. Syndicated data also helps companies understand the patterns of their target audience.

Syndicated data is organized into two categories: retail and panel data. Retail data includes competitive analyses, pricing and distribution stats, promotions and sales information, and more. Panel data is collected through customer surveys, POS scanners and apps; it includes demographics, brand and store affinity.

How brands can use CPG data

CPG brands can use retail data to drive overall sales and operational strategies for their brand. To help you get started, we've broken down the different ways you can use CPG data into two buckets: tracking performance and planning for the future.

Tracking performance

There are a few key areas that you should focus on to track the performance of your CPG products:

• Sales velocity — This metric refers to how quickly your product sells in stores. You can use this information to understand how new products are gaining traction in the market and whether existing products are losing popularity or staying steady over time.
• Promotion evaluation — How effective are your marketing campaigns at driving sales? Use this information to understand what promotions are and aren't generating sales, so that you can alter your approach accordingly.
• In-stock performance — This is a crucial metric for CPG businesses, as it indicates how well you're meeting demand. A low in-stock performance means there are too many orders and not enough inventory to fulfill them. When this happens, look for ways to improve your supply chain operations or increase production levels.
• Broker management — Brokers can be an essential part of your CPG sales strategy, but they also cost you money and cause confusion if not managed correctly. Use retail data to track sales at your brokers’ accounts, identify opportunities, and be proactive in setting their priorities.

Planning for the future

CPG data is also a valuable tool to plan for the future of your CPG business. Here are some examples:

Product development: If you're launching a new product, data from existing products (yours or competitors’) can help you figure out whether or not that new product is going to be a hit with your customers. You can also use it to optimize your product's formula, packaging, and price to ensure that you're getting the most out of every dollar, and plan your distribution strategy to make sure your product gets in front of the target market.

Order fulfillment: You can use CPG data to help you plan your shipments and ensure that all orders arrive on time and in full. This helps reduce customer complaints, penalty fees, and lost sales.

Inventory planning: You can use CPG data to optimize your supply chain, saving you time and money. Granular, timely, and accurate data can help you ensure you’re meeting demand without over-stocking, which can lead to higher carrying costs and waste.

Demand planning: You might know what you need to do to fulfill today’s orders, but what about next year, or three years down the line? Retail data can inform demand planning for a particular product or category, allowing you to plan future operations and staffing needs.

Distribution growth: If you're looking to expand distribution, CPG data can help you figure out which regions, chains, and store formats have the highest demand for your products. 

Common pain points

A company's ability to leverage data and analytics is a huge differentiator in a highly competitive retail market. But most companies need help to utilize its power correctly. Here are some common pain points and challenges that CPG businesses face with retail data:

Data analysis takes time: CPG businesses generate massive amounts of data every day, and aggregating it all can be very time-consuming. The typical CPG manager has tons of competing responsibilities and may be unable to dig in at this level. You may also be dealing with multiple data sources, which makes the analysis even more challenging. Automation solutions can help cut down the manual report-pulling while making it easy to find the insights you need to make better decisions.

It takes skill to join, clean, and analyze data: It takes serious skill to manipulate raw data into meaningful insights. If you don’t already have an analyst or trained data scientist who can do this today, you will have to spend time and money on hiring and training, which is not always possible. Tools that automatically clean and analyze retail data can help you get analysis that is easier, faster, and more accurate.

Technological limitation: CPG businesses have ever-growing datasets that need to be analyzed, stored, and secured. Tools such as Excel can no longer handle the massive amounts of data businesses generate, so brands need to upgrade to data warehouses that can handle the increasing volume. It also means that brands need to upgrade their data processing tools that can quickly query large amounts of data. 

DIY data pipelines are expensive to develop and maintain: As the amount of data that businesses generate continues to grow, brands must invest heavily in building and maintaining their DIY data pipelines. But many companies lack both the technical expertise and resources necessary to build and maintain their data ingestion engine. Building a fully-featured data pipeline can cost millions of dollars and require teams of highly skilled engineers and data scientists to continually maintain them as vendor portals are updated, incorporate new data, or suffer outages.

Top KPIs

While you may encounter plenty of challenges leveraging data as a CPG, there are also plenty of opportunities. One of the most important is that you can measure your performance against a wide range of KPIs and use those insights to inform your sales, operations, and marketing strategies.

Here are some top metrics to track:

Sales

Sales are the primary KPI that most retailers use to measure their success. Sales can be divided into categories based on sales volume or revenue and further defined by product or brand performance. For example, you might break down your sales into revenue per product line, brand, or customer type (such as new vs. returning customers).

Velocity

Velocity refers to how quickly a product sells out at a given location in a select time period. You can measure velocity by taking the number of units sold and dividing it by the number of days it took for those units to sell out. 

Velocity is most commonly measured in units per store per week. For example, if you sold 100 units in 2 weeks, your velocity would be 50 units per week.

Voids

Voids are gaps in sales caused by products going out of stock, being misplaced, or somehow falling off of your retailer’s radar. Voids can eat away at your hard-won distribution gains and impact your overall sales. If you’re seeing regular disruptions in sales, it's crucial to figure out why this is happening, and then follow up with your distributor, retailer, or broker to fix the issue.

Distribution

Distribution data shines a spotlight on everything you need to know about where your products are being sold. It helps you track where your product is carried from week to week, and can be broken down into geographic regions, retailer locations, and more. Being able to take a granular look at a product’s distribution strategy and channels gives CPG brands the ability to identify opportunities to improve logistics.

Supply chain

Supply chain data helps you measure the efficiency with which all of your products are getting where they need to go - from your warehouse to distribution centers to retail stores. Supply chain metrics come in handy when planning and forecasting inventory needs, as well as for streamlining operations.

Chargebacks

Chargebacks occur when retailers and distributors make a cut out of your invoice to cover the cost of trade spend or other costs. If your business is new in the market, promotions are one of the best ways to get your products into consumers' hands. However, if you're not careful, these promotions can cost you more in chargebacks than they're worth. A clear view of the number of chargebacks per promotion and tracking the results from these campaigns will help you make more informed decisions about future promotions.

Store and retailer retention

Retailers can be a significant source of traffic for your brand. The more retailers you have, the more people you can reach. But your work isn’t done once you’ve secured new distribution — you need to continually monitor and drive performance at those stores. Keeping track of all your retailer accounts and monitoring their performance will help you identify issues before they become problems. It's not just about getting your products into stores — it's about keeping them there.

CPG analytics tools and software

Let's get one thing straight: Data analytics is not a magic bullet. It is a tool that can help you make more informed decisions, but it will not make your business grow on its own. It's up to you to use it effectively and strategically.

The first step is getting access to the data you need. There are several channels through which you can access data, including:

Retailer portals: CPGs can access data through the retailer's portal. This is often the easiest way to get started with data analytics because it doesn't require any additional software or hardware purchases on behalf of the brand itself. You only need to identify the credential holders on your team and ask them to give you access. You may have to purchase the data from specific retailers, but it’s an investment worth making. That said, retailer portals are notoriously difficult to use and time-consuming to export data from.

Excel spreadsheets: Since most retailers provide access to the data in a spreadsheet format, many CPG brands still use Excel to extract this information, store it, and analyze it. The downside to this approach is that it is limited to the amount of data you can extract in one download. If there are too many columns and rows for Excel to handle, this approach may not be as effective as you hope.

Advanced methods: For teams that want to automate the extraction, cleaning, or analysis of data, tools can help you collect your retailer data from various sources and combine it into one place. These tools vary in complexity, but all follow the same principle: extract, transform, and load (ETL). The ETL process helps you move data from one source system into another for storage or analysis. You can use data warehouses, or lakes, to store your extracted data for later analysis by BI tools like Tableau or PowerBI.

Ready to get started? Try Crisp today

Your approach for CPG analytics will vary depending on your business size, current distribution, and internal resources. The first step to building a robust analytics strategy is finding the right data tool that provides relevant information (both current and historical) in an accessible format for easy analysis. Smaller brands may be able to get by with Excel, but may still appreciate the benefits of automation and tools that can help analyze and visualize their data. Medium-sized or larger brands will need a pipeline that provides visibility into important metrics at the scale of hundreds of products and thousands of retail locations. 

Crisp’s open-data platform automatically ingests, analyzes, and exports your data from all retailer and distributor partners, helping you leverage data daily to make better decisions about your business.

Ready to start your analytics journey? Contact Crisp today to book a demo.