What is Sales Velocity in CPG?

Thursday, February 10, 2022

Written by: Ashley Randall

Dr. James Richardson cites in his book, Ramping up Your Brand, that “roughly 80 percent of premium food/beverage brands fail to make it past $1 million in retail sales.” It goes without saying that most emerging CPG brands are having a more difficult time with sales velocity than their more established competitors. That may seem like a no brainer, but there are many factors that contribute to this. Lack of awareness, a marketing strategy, and not knowing how to measure their sales velocity in retail stores. 

What is a CPG Brand?

A CPG brand (Consumer Packaged Goods) is a company that manufactures and sells products in retail stores. Those include food and beverages, toiletries, and beauty products that consumers will see on retail shelves. The number one goal of a CPG brand is to sell as many products to their consumers as possible. 

The more products being purchased, the higher your sales velocity will be. Retailers love when products are quickly moved on and off the shelves. Not only does that help your brand’s sales quota, it helps the retailer’s bottomline as well. 

Sampoll is being used by a wide range of CPG brands, from edible cookie dough brands seen on shark tank, to frozen vegan brands. Our goal is to connect consumers and brands through product sampling experiences, rewards, and insights, that will also increase your sales velocity. 

What is Sales Velocity?

Sales velocity is one of the top 3 metrics your brand should consistently measure to see the overall success of your products. It shows you how fast your product is selling on a weekly basis. In other words, velocity is your sales rate. This information is essential to CPG brands, to see how well your product measures up next to your competitors. 

Your product velocity is affected by a number of things: price, the number of distributors/retailers you have, the size of the retailer’s store (this will determine how many units/products you can have on the shelf), any promotions/ads on the products, and coupons available to the consumer. These factors will determine how fast your product sells on a weekly basis. 

Retail solutions like Sampoll, can help CPG brands build awareness and drive product trials to increase their sales velocity. How so? By using an incentive-based marketing strategy to help consumers get to know, and purchase your product. In other words, Sampoll is your one-stop-shop for all of your retail product sampling needs!

Instead of using the old school, in-store sampling method, Sampoll uses multi-channel consumer targeting capabilities, based on their interests and location to introduce your products to them. This method is what we call, high velocity sales. 

What is High Velocity Sales?

High Velocity Sales (HVS) is a process of using artificial intelligence (AI) and automation to increase the productivity of selling a product or a service. Think of this as effectively moving your consumer through your sales funnel. This is a huge opportunity for CPG brands to explore and help increase their product velocity, while producing new leads through automation. 

Sampoll helps this process by using our AI-powered chat ambassador to have a 1 on 1 engaging conversation with your new lead (consumer), sending them to their local retailer to purchase your product, using a cashback reward incentive such as a 100% discount offer. 

The retailers will see this as a regular sale, which is great, because this velocity triggers for sale. They will have no idea that this is an incentive for the consumer. Which is also great because with Sampoll’s help, your brand will be able to run this incentive campaign at major retailers like Whole Foods, Walmart, Target, Trader Joe's, Stop & Shop, Earth Fare and many others. 

This will give you the chance to maximize your marketing efforts to many distributors/retailers to help increase the availability and exposure of your products, while being accessible to your consumers. 

How to Measure Sales Velocity?

The overall success of your products will determine how widely available it is (distribution) and how well it sells per distributor/retailer (velocity). To get a whole scope of your brand’s success, you should measure the velocity for each product per retailer. 

One of the easiest ways to measure your sales velocity is to multiply the number of opportunities (products) on the shelf by the average sales price and the conversation rate, then divide that number by the length of your sales cycle. 

The number of products is the number of products you have at that retailer. To find your average sales price is to divide the total revenue earned of a week by the number of products sold that week. Your conversion rate is dividing the number of products sold by the number of opportunities (products) given to the retailer for that week. And your sales cycle is measured by the week, 7 days. 

So let’s put in some simple data. Let’s say that product A costs $5.00 and you sent 100 of those products to Walmart for the week. You only sold 78 products during that week, which generated $390. That will make your average sales price $5.00. Your conversion rate will be the number of products sold 78, by the number of products given for that week 100, which would be 0.78. 

Sales Velocity = (100 products x $5 x 0.78) / 7 days

Sales Velocity = $390 / 7 days

Sales Velocity = $55.72 a day

This information will tell you how each product is doing per retailer on a weekly basis. From here, you can determine how to successfully market each product and tailor it according to the retailer.

Sampoll is here to make sure that each campaign will be as successful as they can be, through product trials. Not only do we help generate new consumers to your brand, we also provide feedback from your consumers to help you effectively target your marketing dollars, identify behavioral trends, and understand customer sentiment.

CPG brands, If this sounds like a dream to you, click here to request a demo.