Most distribution companies track one metric: revenue. Revenue tells you what happened. It does not tell you why, whether it is sustainable, or what to do differently.
The 8 KPIs
1. Order Frequency Per Account — Orders per account per 30 days. A drop of 30%+ over 60 days is your at-risk alert. 2. Average Order Value — Flat AOV means you're not expanding within existing accounts. Declining AOV means accounts are ordering less. 3. Days Sales Outstanding — Should be within 5 days of your stated terms. Over 40 on Net-30 is a collections problem. 4. Order Error Rate — Under 0.5% for self-service ordering; under 1.5% for phone/email orders. Above 2% is systemic. 5. Client Retention Rate — 85%+ annual retention is healthy; below 75% and you're running a leaky bucket.
6. New Account Acquisition Rate — 2–5% of current account base monthly. A spike to 15% is a warning sign. 7. Gross Margin Per SKU — Low-margin SKUs that drive high order frequency are strategically important; low-margin SKUs ordered occasionally are candidates for removal. 8. Fulfillment Cycle Time — Next-day delivery for orders placed before your cutoff is the standard. Orders taking more than 48 hours are a competitive vulnerability.