Commercial Scorecards: The Key to Elevating Sales Performance Management in the Alcoholic-Beverage Industry

"What you measure is what you get".

Have you ever given it a thought- how spirits, wine, and beer brands perform at various levels? If not, you’re leaving valuable data on the table. This information can help you reach customers, increase sales, and determine your target audience.

Today, Sales heads are often tasked with keeping up with their team's performance. Defining success can be difficult since a variety of factors may come into play. Thanks to evolving technologies and smarter use of data.

As you know, the alcoholic beverage industry is highly competitive, with major players controlling a significant share. Knowing the details of on-premise sales performance can help you set yourself up for success, steering your brand to the venues and markets that will help it thrive. In the current scenario, brands are becoming more strategic in their approach to performance, gaining greater insight into their sales processes and the ways to drive success, balance territories, and improve operational efficiencies.

In this blog, we will explore the commercial scorecard for sales performance management in the alcoholic beverage industry. We’ll define its purpose, unravel its complexities, examine real-world examples, and guide you through building an effective commercial scorecard.

Understanding Commercial Scorecards and its Strategic Purpose

A Commercial Scorecard is a tool used to measure and monitor the company's performance across various commercial aspects. This scorecard typically includes key performance indicators (KPIs) related to sales, market share, distribution, and brand performance. It helps align commercial strategies with business objectives and ensures that the company is on track to achieve its financial and strategic goals.

Here is an outline of what such an initiative might entail:

Components of a Commercial Scorecard for Sales Performance Management

Volume Metrics: This component involves tracking total sales volume in liters or cases, with breakdowns by product categories, brands, and package types. It allows companies to compare current sales to previous periods and targets, identifying trends across different regions or territories. This granular view helps in understanding which products are performing well and where there might be opportunities for growth.

Market Share Analysis: By calculating the percentage of total alcohol sales attributed to the company, businesses can gauge their competitive position. This metric can be examined across different product categories and market segments, allowing for the identification of areas where the company is strong or weak compared to competitors. Tracking market share over time reveals growth trends and can highlight the effectiveness of various strategies.

Distribution Coverage: This metric focuses on the percentage of on-premise (bars, restaurants) and off-premise (retail stores, supermarkets) accounts carrying the company's products. By analyzing distribution by product type and brand, companies can identify gaps in their network and opportunities for expansion. It also helps in evaluating the effectiveness of distribution partnerships and tracking the acquisition and retention of accounts.

Price Realization: This involves calculating average selling prices across different products and channels, as well as analyzing price per liter to account for varying package sizes. By tracking price trends and comparing actual prices to suggested retail prices, companies can assess their pricing strategy's effectiveness. This component also helps in understanding the impact of promotions and discounts on overall price realization and how the company's pricing compares to competitors.

Discover how Commercial Scorecards are changing brands with these real-world scenarios

Several companies in the CPG space and beyond use commercial scorecards extensively to monitor and optimize their performance. Here you go:

• A famous Spirits brand’s scorecard focuses on key metrics like organic growth, market share, innovation success, and customer satisfaction. It also tracks sustainability goals, aligning commercial success with environmental and social responsibility.


• A well-known Alco-beverage brand’s scorecard includes metrics such as A volume sales, revenue, brand health, and market penetration. It also integrates sustainability KPIs, such as water usage and carbon emissions, reflecting the company's commitment to responsible growth.


• A Non-Alcoholic Bottler tracks its sales volume, revenue growth, market penetration, and brand health. The scorecard also includes sustainability targets, such as reducing plastic waste and improving water stewardship.

These companies use commercial scorecards not only to monitor traditional business metrics but also to integrate broader objectives like sustainability, innovation, and customer satisfaction. This approach helps them maintain a competitive edge in the current VUCA world.

While Tactical Tools Like Commercial Scorecards Offer Benefits, They Also Have Drawbacks

🌟 Complexity in Implementation with considerable time, resources and expertise involved.

🌟 Overemphasis on Quantitative Metrics: Overemphasis on quantitative metrics, potentially overlooking qualitative factors like employee morale, innovation culture, or customer relationships.

🌟 Data Quality and Availability issues leading to incorrect insights and poor decision-making.

🌟 Rigidity: A scorecard might become too rigid, leading to inflexibility in responding to rapid changes in the market or business environment.

🌟 Risk of Manipulation: Employees or managers might manipulate metrics to meet targets, especially if their compensation or bonuses are tied to scorecard results.

Till, we’ve covered a lot on this subject area. Now it's time to grasp how to build the commercial scorecard in the Alcoholic beverage industry.

Creating an Effective Commercial Scorecard: Key Steps for Success

Polestar Solutions recently assisted one of our clients in the Alcoholic-Beverage sector in establishing a commercial scorecard tailored to their needs. The client aimed to utilize this scorecard for performance monitoring, incentive management, and appraisals.

The implementation setup was done by following steps-

1. Define Objectives and Goals – Polestar’s business analysts’ setup deep dive sessions with the commercial leads and understood the commercial business processes, goals and objective defined for the set period.

2. Identify Key Performance Indicators (KPIs) – With the help of Commercial and tech enablement team, we devised the KPIs for the client that would effectively measure progress toward your goals. KPIs included volume, market share, growth figures, campaign performance, width of availability, market execution KPIs and data holisticity.

3. Setup KPI-Role-Weightage - Performance Scoring Matrix – To ease out the technical development, we defined a matrix identifying which KPI is applicable for which role, what is weightage of that KPI for the role and what are performance scoring slabs for each KPI.

4. Gather and Validate Data –

• Data Sources: Identified data sources, such as planning data, sales databases, market research reports, and financial systems.


• Data Quality: Ensured that the data is accurate, consistent, and up to date.


• Data Integration: Combined data from various sources into a centralized system to ensure seamless access and analysis.

5. Design the Scorecard –

• Select a Format: With the commercial team’s alignment, we prepared the user story flow, dashboard wireframes, reports, for the scorecard. The design was made user-friendly and easily accessible to stakeholders.


• Visualize Data: Used visual elements like charts, graphs, and color-coding to represent data clearly and effectively. Ensured that the scorecard is intuitive and easy to interpret.


• Customization: Tailored the scorecard to different user groups (e.g., executives, sales teams, marketing teams) by highlighting relevant KPIs for each group. We devised a separate page for each role where he/she can see performance and scores for his/her peers and lower roles (but not higher).

6. Implement the Scorecard –

• Choose Technology: As per client’s global recommendation and Polestar’s expertise, we developed the scorecard over Power BI


• Data Automation: Automated data collection and reporting processes via Azure ADF and Power BI scheduling, we ensured the scorecard is updated in real-time or at regular intervals.


• Integration with Existing Systems: Ensured the scorecard integrates with existing business systems to provide a seamless flow of data from planning, SFA and financial tools.

7. Communicate and Train

• Stakeholder Communication: Ran roadshows and clearly communicated the purpose, structure, and usage of the scorecard to all relevant stakeholders along with business leads.


• Training: Provided training sessions to ensure that users understand how to interpret the scorecard, use the tools, and act based on the insights provided.

8. Monitor and Review

• Continuous Monitoring: With the help of hyper-care phase and established Support agreement, we regularly monitor the scorecard to ensure it reflects current business conditions and remains aligned with strategic goals.


• Review and Adjust KPIs: Periodically review the relevance of the KPIs. Adjust them as needed to reflect changes in strategy, market conditions, or business priorities as service or change requests.


• Feedback Loop: Establish a feedback mechanism to gather input from users. Use this feedback to improve the scorecard’s design, usability, and effectiveness.

9. Align with Broader Business Systems

• Integration with Performance Management: We proposed and ensured the commercial scorecard is part of the broader performance management system within the organization. This helps in aligning departmental goals with corporate strategy.


• Link to Incentives: Tied scorecard performance to employee incentives and rewards where applicable. This has driven behavior that aligns with strategic goals.

By following these steps, the impact of a commercial scorecard post-implementation can be transformative for a company. Firstly, it enhances strategic alignment by ensuring that all departments focus on common goals, improving overall organizational coherence. This alignment fosters better decision-making, as managers and leaders can rely on real-time data to make informed choices that drive business success.

Since implementation, our client’s commercial leadership and HR team have extensively used the same for performance analysis and appraisal process to get clear insights on employee performance and decision-making.

Conclusion

Therefore, Commercial Scorecard is not a set-it-and-forget-it solution. To truly harness its power, companies must approach it as a living tool, continuously refining and adapting it to meet changing business needs and market conditions.

As we've seen from industry leaders, the most effective Commercial Scorecards go beyond traditional sales metrics to incorporate broader business objectives, including sustainability and customer satisfaction. This holistic approach not only drives commercial success but also positions companies to meet the evolving expectations of consumers and stakeholders in the alcoholic-beverage industry.

Book a demo with us to understand where we can help