Remember the Pyramid of Causality as You Look Back

OK. You absolutely now have all your 2022 numbers. Topline. Bottomline. Your accountant is working on your corporate taxes. If you didn’t hit your topline goal in 2022, know the following:

1. This is common among folks new to this crazy industry of consumer brands. 
2. TikTok is no magic rescue handle.
3. You should diagnose what caused the underperformance.
4. To do this, you need to do a root-cause analysis.
5. Root cause analysis should follow the assumptions in the pyramid of CPG causality.
   
   

It’s easy to skip any analysis of your product’s role in your business underperformance. The primary reason for retail brands is that you primarily stare at account-level sales data. You tend to start diagnosis at the Placement level. 

You must use sales data cleverly to see if the product is potentially the problem:

1. If your sales are trending down in ALL channels, you absolutely have a product problem.
2. Same-store unit velocities should be growing month over month (when smoothed).
3. If unit velocities are flat, you may have a product problem causing a low repeat purchase rate.
4. If unit velocities keep declining after a ‘successful’ demo lift, you most likely have a repeat problem driven by product.
   
   

These are just a few tricks for you to be honest about your product quality as you begin 2023. The earlier you iterate formulation and package symbolism, the higher the odds of escaping the Death Funnel. Diagnose away!

And don’t forget that my Q1 2023 Riding the Ramp training takes place on Jan. 27 from 10AM-Noon PST. Register early to grab one of only 20 spots.