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Stockouts turn away potential new triers of our product.
Our Marketing teams spend considerable time, effort and money to nudge new consumers to try our product. This could be through advertising, word of mouth, consumer offers. It does result in many potential consumers, who are positively disposed towards the product, to overcome inertia and go to the shop to buy our product.
What happens when they find our product missing on the shelf? How do they feel? Do you think they would come back to try again? Some of them may. However, a vast majority of them are likely to just drop the idea of switching from their current brand. We have just lost the lifetime value of these new triers.
This impact gets further accentuated in case of new product introductions and consumer promotions. Stockouts have often jeopardised the success of new products!
Have you ever tried to quantify this impact on profit loss? I think we should sensitise the supply chain team to this loss, so that they are doubly motivated to bring down stockouts.