In this post I explain how to build the 5 Key Metrics, including calculations. Using your business data to develop these metrics will inform and validate your strategies, decisions, and processes to grow your winery, distillery, or brewery.
The 5 Key Metrics
Margins, by product (wine): You and your accountant will determine the cost of each product. In calculating the cost of each product, you should include all expenses used to manufacture and overhead (space, utilities, labor, etc.). Additionally, developing a separate cost basis for marketing and sales, including all expenses for each, creates a foundation upon which to grow your winery, distillery, or brewery. Knowing how much margin you can use to execute efficient and effective marketing and sales strategies helps you grow. Cost to Acquire a New Customer: Every business needs new customers to grow. Your loyal customers may sustain your business, but you cannot grow without new customers. What does it cost to get a new customer? This metric tells us if we are efficient in how we get new customers. To create this metric, you first define customer segments. Examples of these segments are:
Next, define the costs to get that customer, by channel, using your investment costs used in your strategies to acquire new customers. Examples:
An example of the formula for a tasting room is: (# Sample Bottles x Average Cost per Bottle)/ # of Customers = Cost to Acquire a New Customer in the tasting room Average Sale per Customer Type: Using your customer segments, as defined in the previous metric: Visitors, Guests, Customer, and Wine Club members, calculate the average purchase per customer in each of these segments. An example of the formula for segments is:
This data reflects the value within each customer segment and is the building block for the conversion progressions. Rate of Conversion Progressions: inform as to the rate at which visitors are converting to guests, guests to customers, and customers to wine club members within each sales channel. An example of the calculation is:
This metric validates the effectiveness of strategies used to convert visitors along the customer journey. Replicating effective strategies allows you to continue to find new customers. The # of Bottles Sold, per Employee, per Hours Worked: helps level set your sales staff, monitor sales results, and elicit questions for deeper understanding of your sales process, such as:
An example of this calculation is: # of Bottles Sold / # of Hours Worked per employee over a week, month, or year These metrics make your data consumable and actionable. They allow you to be agile and sell more wine. Comments are closed.
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