Accurate Baselines are Important
CPG manufacturers are spending millions of dollars to impact growth in their category. All CPGs need to analyze ROI. And, in order to analyze correctly, there must be a way to measure the volume sold in the absence of a promotion. That starting point is your base business.
The Mystery of Base Volume
When we sit down with CPGs, there are common frustrations that lead them to seek a TPO solution.
- The need for better post-event analysis
- The need to quantify promotional ROI
- The need for a more controlled and profitable planning processes
However, none of these needs resonate with CPG sales and marketing professionals as much as having confidence in their baselines.
What baseline volume? It’s the volume the consumer purchases in the absence of a promotion. Those loyal brand and product consumers who buy the same items week in and week out whether it’s on promotion or not.
Base volume should provide you with the best understanding of the underlying health and trends of your brands.
The Need for Change
Dean Zuta, Head of Trade Planning and Finance at Solaris Paper says it was “very hard to see what our true baseline was. Nielsen showed the baseline higher than what they really were. We needed a way to strip out the noise. TPO does that. We look at a calendar in the system – we see display, promoted. We select a week and see a true view of the baseline. See what the true incremental is.”
Emily Saidnawey, Senior Sales Analyst at Welch’s explains, “Before, we were using an excel spreadsheet to manage all the planning and all the changes made to our plan – including base changes. It was a very manual process; it left a lot of room for error. TPO allows us to centralize the way we review our business and make sure what we had planned was being executed.”
Transitioning to TPO
The Solaris Paper team is transitioning to trade optimization with a crawl, walk, run approach. They became a TPO customer in 2018. Zuta notes, “You know, our biggest concern was ‘Are the sales guys going to use the tool? Are they too busy to look at the analytical information?’ You don’t want to invest in a tool that isn’t used.” The competitive information, the visualization of data is going over well. Now, the sales team can use the product, see the value, see everything else it can do. “There’s less fear – it’s easy to use, it’s not too techy.”
Solaris Paper already sees a difference in how they view and use baselines within the business. Zuta says, “The finance group has aided us quite a bit at looking at incremental programs. We’ve imported a lot of competitor information. We can compare the baselines. This is a great way to get the team engaged.”
One big surprise – “We had a couple of retailers that used us as a lost leader. They used us more than we expected. We had to take that to planning. What if next year, they choose not to do that? We use the TPO information to know, hey if we do something different, maybe we can save some dough now.” The Solaris Paper team is going to test the information and work on retailer collaboration. “Being a partner with the retailer is important – it’s something we’re working on.”
Functionality: The Master Calendar
“The Master Calendar in the TPO system is my favorite tool that I’ve ever used for planning,” raves Saidnawey.
The Master Calendar gives you the ability to code weeks of data which helps get to show an accurate baseline. She adds, “Stop and Shop grocery stores went on strike and I didn’t want those weeks calculated in the base value calculation – I can take them out. Being able to code the week for the consumption data is very helpful for us.”
Welch’s has even used screen grabs from the Master Calendar specifically with retailers. “The TPO tool helps explain – in a visual way – changes that the retailer is making and how they can course correct quickly. The retailer is definitely engaging with it – it’s easy to read.”
At Welch’s, “We’ve been diving deeper into the way we use trade promotion dollars. We were spending where maybe we could have used those dollars else where and gotten more for our money. With all of our data in one place, we can assess total spend vs. individual account level review.”
Saidnawey reveals that it doesn’t take long to get accurate baselines. “It’s very simple. There’s a baseline planning function that you can access. It will show you the current unit sales. The optimization system automatically does the projections for you. You can tell the tool if you want a flat or rolling value, then the TPO automatically makes the trends. It’s easy to save your plan. It’s a very user friendly tool.”