Distribution and Sales KPIs

Good morning friends...

South Asia, south-east Asia and African subcontinents’ marketplaces are primarily dominated by innumerable small, traditional and fragmented shopkeepers (e.g. grocers, kiranas, mom & pop stores, kiosks, convenience stores etc.). FMCGs, in these geographies, do their businesses mostly through 3rd party intermediaries (e.g. distributors, stockists, wholesalers etc.).

Often I find the distributors, sales executives and sales managers are worried about how to achieve their monthly sales targets, both volume and value. Especially during the last few days of any calendar month they all spend sleepless nights! They sweat dawn to dusk to sale anywhere and everywhere and try to fetch the targeted sales value from wherever possible. Sometimes they achieve and sometimes they don’t, but the situation doesn’t change. Again next month, the saga continues...

To come out of this vicious cycle or convert it to a virtuous one, we need to understand the basics of distribution business. First, as the name suggests, it is ‘distribution’ not ‘sales’. Distribution is not equal to selling... Distribution targets are not equal to sales targets. But distribution targets, if achieved, will result in sales targets achievement. To achieve distribution targets one needs to be clear on distribution KPIs.

What are distribution KPIs? These are primarily three: CUSTOMERS, CALLS and SKUs. The attached chart is self-explanatory.

Remember one very important point here. As a distributor, sales executive or sales manager only the distribution KPIs are under your control. That means you can identify the distribution gaps and work as a team to minimize the gaps by using selling skills and other relevant actions. As ‘sales’ is the derived output of ‘distribution’, you have no direct control on your sales KPIs. The more you can reduce the following gaps of your distribution KPIs, the better the chance of achieving your sales KPIs.

CUSTOMER GAPS: customer universe (e.g. 10K) vs. present coverage (e.g. 5k) vs. actual customers selling your products (e.g. 3K)

CALL GAPS: Number of planned calls/day (e.g. 50) vs. actually visited calls/day (e.g. 40) vs. productive calls/day (e.g. 25, shops where you got sales or orders)

SKU GAPS: Total SKUs available for selling (e.g. 30) vs. potential SKUs/call (e.g. 5) vs. actually sold SKUs/call (e.g. 3)

Distribution, unlike sales, is not a one time event, it is not a quick win either. From day one of the month, if a distributor or sales executive can religiously focus on the above three distribution KPIs and be able to bridge the gaps, it will certainly bring a disciplined approach to their sales operations system, and result in consistent achievement of sales targets... and hopefully will reduce the numbers of sleepless nights during the monthends!!!

Leave your thoughts… for deeper understanding of distribution and sales KPIs, knock us @ boilingpoint212.com

Happy Selling..