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Sales Planning: 2 Necessary Conversations


For many CPG companies, next year’s sales planning is already a hot topic.

Sales planning is the critical conduit between a CPG manufacturer and its retail partners. While this relationship has always been tenuous, the revenue and margin pressures on both parties emphasizes a more strategic approach to trade promotion planning driven by data intelligence and predictable profitability.

The unavoidable conversations about budgeting, past performance, and (hopefully) predictions for growth arise.

For many CPG sales planning teams, it becomes a race to get plans submitted and approved so everyone can get back to analyzing, negotiating, reconciling, and justifying trade programs. CPGs spend significant time, resources, and dollars trying to understand and compensate for poor performing promotions.

If this sounds counter-intuitive,… it’s because it is.

Circumstances and opportunities surface throughout the year… and teams scramble to make up for well-intended, but poorly executed, customer plans.

2 Questions to Ask During the Sales Planning Process


Bring together your sales team’s experience with your organization’s financial guardrails to optimize your promotional outcomes.

In this way, CPGs start the conversation about strategically improving the ROI of their trade investment in ways that align with business objectives.

Unlike companies who take a wait-and-see approach to their trade planning, companies that use predictive, what-if and constraint-based modeling capabilities of a TPO solution can explore, compare and optimize the promotions during planning to facilitate dialogue about new opportunities.


1) What Happened vs What We Think Happened?

Close the books on last year and never look back! That’s a dangerous practice that puts you at risk of repeating last year’s mistakes.

There’s so much data available to you. And, there are technology solutions that can aggregate, harmonize and analyze your promotion event’s performance.

Think of post-event analysis as a necessary step to your profitable trade promotion strategy. With automated intelligence, conversations surrounding base trends and promotional ROI are possible. Additionally, you can reflect on planned versus actual KPIs.


2) What If and What Else?

Discover promotional possibilities to create better sales plans.

Start by making one change – to one promotional event – for one retail customer.

What if you change the percent discount?

What if you try a TPR instead of an ad and display?

What if you change the billback to and off invoice?

  • Billback: A promotional payment that the retailer bills back to the manufacturer for the agreed promotional performance or deducts the amount they are owed from their invoice.
  • Off Invoice: The discount is a straight percentage off of the sales price to a distributor and does not include any additional administration fees. 

Using constraint-based modeling you can set the budgetary, frequency, and retailer constraints while defining the desired revenue, profit or volume objectives and let the solution calculate the optimal promotion.

“The RGM planning diligence and profit focus has transformed episodic, once a year planning, into an ongoing and dynamic planning practice deeply rooted in advanced analytics.” -POI 2019 State of the Industry Report


The Value of TPO

We’ll start conversations with teams about what they want to see from their trade promotion investment, and often, the answer is, “We want to cut our trade spend.”


Historically trade spending is an acceptable loss draining the bottom-line. It makes sense that to improve the bottom line, you would spend less. But if we dig a little deeper, what we see is that these CPG companies want to improve their topline revenue with better performing objectives.

So, would you rather spend less and sell less or spend the same and sell more? Instead of cutting promotional spend, you should invest smarter.

To get started with growth-focused trade investment, you must align your planning with the objectives that you want to achieve:

Sales Planning Growth Focused Trade


Consider the possibilities with predictive planning capabilities — it opens the door to more strategic conversations about promotional mix and the ways to align predicted customer plans to your objectives.

67% percent of POI respondents said they find the promotional planning process is burdensome. It doesn’t have to be!

A TPO solution compares annual optimized customer plans with predicatively calculated KPIs including:

  • plan vs budget
  • retailer profitability
  • manufacturer profitability
  • trade spend rate

Claims Screenshot Blacksmith TPM


How to use ROI in Sales Planning

ROI should be used as a barometer of promotional effectiveness, not as the sole measure of promotional success.

  • Consider the relationship between a scenario ROI to the overall plan objective.
  • Identify ways to improve ROI without compromising other spending or performance objectives.
    • Moving from a -20% ROI to a -10% ROI may drive significant incremental profit without sacrificing forecasted volume.
  • Evaluate the promotional mix of your customer plan to balance the combined outcome with the impact of individual event ROIs.
    • You may have to run that one negative ROI event to negotiate other events with a more significant ROI.

🤔 A promotion with a negative ROI may drive more volume than a promotion with positive ROI. Therefore, if the corporate objective was to increase volume, the event is successful.


Final Thoughts

Together, CPG sales and finance teams can create an effective sales plan that is financially feasible to execute with retail partners.

Sales planning doesn’t need to be a process filled with finger-pointing and wishful thinking. You can plan a data-driven optimization strategy that aligns expectation, reality and possibilities positions organizations for calculated and sustainable growth.

With increased competition and tight margins, CPGs need plans that maximize results while limiting spend. In other words, no longer can we rely only on what we have always done as good enough. It’s long overdue that we start creating better practices, better plans, better collaboration, and better results.