How to Use QuickBooks Online (QBO) to Track Sales Performance by Channel
It's a bird. It's a plane! No, it's QuickBooks Online — a powerful tool for helping you track sales and understand how business is performing. If you think QuickBooks is just for generating invoices and preparing financial statements, think again. In today's competitive market, it's your secret weapon for making better business decisions.
One reason to use QBO in your winery or CPG business is because it allows you to track sales by channel. It's not enough to know that you sold $250,000 worth of products in one quarter. You need to know exactly how you sold those items. Use this step-by-step guide to track sales performance in QuickBooks Online and build a more resilient business.
Why Tracking Sales Performance by Channel Matters
Tracking sales performance by channel is one of the most important aspects of revenue tracking for wineries. You need to know how much revenue you generate each month or each quarter — but that's just one data point. It's not enough information to help you choose the right promotional partners or determine how to spend your limited marketing budget.
Most wineries and CPG brands take a mixed approach to sales. They operate retail shops, work with wholesalers, and sell products directly to consumers. If you don't track sales performance in QuickBooks Online, you won't know which channel generates the most revenue.
Sales channel tracking in QBO also helps you identify trends, creating new opportunities for your business to succeed. For example, if you notice wholesalers splurge on red wines in the weeks leading up to Halloween, you can ramp up production during the summer so you have red wine ready for the spooky season.
CPG sales channel management is also essential for allocating resources appropriately. In the example above, you notice demand peaks in October. With this new information, you might dedicate additional raw materials and labor hours to increasing production during the summer.
Running a CPG business without tracking sales by channel is like trying to unbake a cake. Once you mix everything together, it's impossible to identify individual units of sugar, flour, and baking powder. Without effective CPG sales channel management, you don't know how to answer the following questions:
Are our wholesale partnerships profitable?
Which products perform the best when sold directly to consumers?
Should I spend more money on B2B or B2C advertising?
You need to distinguish your direct-to-consumer and wholesale channels from each other so they don't blend.
How to Set Up Sales Channels in QuickBooks Online
Intuit offers several versions of QBO, but not all of them allow you to create Channels. Before you attempt to track sales performance, make sure you have the appropriate level of QBO access.
By default, we always set up a direct-to-retail channel for sales from a customer's website and a wholesale channel for sales made by brokers and distributors. You can also set up these channels for your winery:
Tasting Room: Creating a Tasting Room channel makes it possible to separate sales made in your tasting room from sales made on your website.
Direct-to-retail: The DTR channel covers sales made directly to restaurants, a common scenario for wineries.
Before setting up Channels, you need to create products. QBO allows you to set up inventory items, non-inventory items, and services. Next, you can use Classes and Locations to create Channels. Locations are ideal if you have multiple business units within the same company, while classes are used to track products and services within each unit.
For example, your winery might have three Locations: DTC, Wholesale, and Tasting Room. Your Classes may include pinot grigio, cabernet, Merlot, pinot noir, chocolate-covered almonds, and mixed nuts. To turn on Classes and Locations, follow these steps:
Click Settings.
Click Account > Settings > Advanced > Categories.
Turn on Classes, Categories, or both.
To make things even easier, some versions of QBO allow you to create custom fields for your business. Once you set up custom fields, you can use them to organize and track data. Follow these steps to create a custom field:
Click Settings > Custom Fields.
Choose "Add custom field."
Create a name for your field.
Use the Data type dropdown menu to select a data type.
Choose a category.
Click Save.
How to Generate Sales Performance Reports by Channel
Sales by Product/Service Detail and Sales by Customer Summary are two of the most powerful QBO reports for tracking sales by channel. Sales by Product/Service Detail shows sales transactions for a specific product or service. For example, if you want to know how many cases of White Zinfandel you sold during a 1-month period, you can use the Sales by Product/Service Detail report to find out.
Sales by Customer Summary tells you how much each customer has spent within a certain time frame. This is especially helpful for making decisions related to wholesale distribution. If your top three wholesalers buy more than the next three combined, you may want to focus more on your relationships with those companies.
It's best to review these reports regularly and customize them according to your business needs. For example, when you set up a new product, make sure it has a unique name. Otherwise, it may be tough to track sales by channel.
You can even have QBO email custom reports to you on a regular basis.
Go to the Report Center.
Click Custom Reports.
Find the report you want emailed. Click Edit. Here, you can see the Report Name, Report Group, and who the report is shared with.
Click the toggle under "Set email schedule."
Enter the desired frequency, such as weekly or quarterly. QBO even allows you to choose specific dates.
Enter the recipient's email address, a subject line for the email, and text to accompany the report. You can enter multiple recipients or send carbon copies of each email if desired.
Click Save and Close.
Analyzing Sales Data to Optimize Performance
Many people think of accounting as a transaction-driven business function. Although you need to track sales transactions, this type of tracking is only one piece of the puzzle. You need to use your sales data to optimize performance. QBO gives great data when it's set up properly, but you won't get all the data you need straight from QBO. For things like tracking sales by state (important metrics for wineries) and contribution margin by channel (important for CPG brands), you need to add the data to Excel.
Once you've compiled the data, use it to adjust pricing, allocate resources, optimize your marketing efforts, or determine which channels deserve more of your focus. In terms of pricing, QBO sales performance analysis can help you determine if you're charging too much or too little for a particular item. As noted in the example above, you can also use the data to allocate labor, raw materials, and other resources, especially if you anticipate increased demand.
If sales in one channel are lacking, you can boost your marketing efforts in that channel. You may even want to stop using a channel if it's not helping your bottom line and giving you plenty of return on your investment in time, money, and labor.
These changes allow you to eliminate unprofitable products, use your marketing dollars wisely, and ramp up your promotional efforts when needed, all of which can make your business more profitable.
Common Challenges in Sales Channel Tracking
Tracking performance by sales channel isn't without challenges, but you can overcome every obstacle if you prioritize accuracy and completeness. Here's how to tackle three common challenges:
Data-entry errors: Before you save a Class, Location, or Product, double-check your text. It's easy to choose the wrong item in a dropdown list or mistype a product ID number.
Inconsistent categorization: Train every employee to use the same approach when categorizing sales. Provide step-by-step instructions in writing to reduce the risk of errors.
Difficulty tracking multiple channels: Use Classes and Locations consistently to ensure every business unit has a dedicated sales channel.
Track Your Performance in QBO
Channel-specific sales tracking is almost like having a crystal ball. It can't help you predict the future, but it can help you make better decisions about your business. To benefit from QBO's capabilities, start tracking sales by channel today. Balanced Business Group can offer additional insight and expertise to help you maximize profits.
Contact us today to inquire about personalized services. You can also visit our blog to read more about QuickBooks Online and other CPG accounting and finance topics.
