If you already know the velocity expectation for your product’s category and are meeting or exceeding it, hi-five. Seriously, well done.
But if you don’t know, or if you don’t even know what I am talking about, keep reading.
Velocity is the speed at which your product moves off the shelf, per SKU, per week, and per store. Every category has a different velocity expectation, and it’s up to you to determine yours. You can ask the store. You can ask your distributor. But make sure you do ask because not knowing is like driving through a rain storm with no wipers.
In order to create the velocity expected from your product, you need to make sure that it is memorable and that consumers understand why they should purchase it.
That’s important to achieve the holy grail of all CPG objectives, getting repeat purchases under your belt.
Repeat purchases, purchases after trial, will only happen if your product solves a specific and defined consumer problem and communicates the solution clearly and effectively.
Many entrepreneurs make the mistake, often following bad advice, of chasing store counts and opening as many accounts as possible as a way to drive growth, all the while ignoring velocity.
That’s a fool’s game. Adding accounts is expensive. The costs associated, free fills, listing fees, deliveries, scaling manufacturing will all burden your cash reserves significantly, and if there are no repeat purchases, you’ll be stuck in a loss-making situation in no time at all. Many promising startups have been sunk because they went too wide, too soon.
Before you go wide, go deep
To go deep, you will need a memorable brand. The best definition of what a brand is that I’ve ever come across goes like this and was coined by Ted Wright:
“A brand = a product’s qualities + consumers’ conversations about these qualities + the passage of time”
The passage of time is important here. It takes time for a brand to gain traction with consumers, especially an undercapitalized brand that’s offering something new and innovative, which is what 90%+ of new entries into the market are.
Traction is gained by ensuring the consumer understands your product, its benefits, and how it improves their lives, creating reasons to buy. Big established consumer brands solve this problem by throwing massive amounts of money at marketing campaigns for new products and forcing widespread distribution into stores, but even these programs can and do fail.
As a food entrepreneur who has to watch the pennies, the only advantage you have is a strong brand. Once consumer understanding of that brand has been built and proven by growing velocity in select stores, it is time to widen distribution.
- Invest in a go-to-market plan. Almost 50% of the food and drink businesses that fail in Canada do so because they don’t solve a consumer problem; they fail to achieve Product Market Fit. Yes, a go-to-market plan will cost money, but it will be a fraction of the money you’d waste if your business goes bust later.
- Look at your product through the eyes of the consumer. Many founders I work with look at their product like new parents look at their first baby – they cannot see any faults and they don’t think something as perfect as their creation needs explaining. But where they see perfection, the consumer may just shrug their shoulder and move on.
- Become an expert in your category, giving you a huge competitive advantage over all the other entrepreneurs who simply don’t bother. You want to know your category better than the category manager, you want to know where it is heading, what the trends are, and how much people are willing to spend. Know your category, it will make a huge difference.