Trade Spend Blind Spots
Today’s vehicles have safety features that alert you to blind spots. The logic is that to increase safety, we must eliminate vulnerability.
In business, there’s plenty of blind spots – areas of assumed stability that can quickly lead to susceptibility.
For consumer goods companies, few blind spots are as great or as preventable as their trade marketing investment. CPG companies struggle to measure and quantify promotional results.
After all, you can’t measure what you can’t see.
You’re running the same plans year after year, failing to see the ineffectiveness of the promotional investment.
Without being open to change- in the form of powerful analytics and optimization capabilities – you’ll continue to see less than optimal returns in future planning initiatives.
The Present
CPGs invest a quarter of their revenue on trade promotions.
Inaccurate baselines and a limited view of event and plan performance compromise your investment (skewing the view of the health of the business).
In other words, CPGs are missing the opportunity to know whether promotions are working.
The confusion over data validity and the various measures of promotional success leads internal stakeholders vying for funds to spur results (instead of analyzing the best investment). It’s impossible to assess these competing priorities, but the fear of not meeting objectives results in needlessly spending on plans that historically do not work.
A flawed view of your business affects the bottom line. And as your peers adopt promotion optimization capabilities, the competitive gap widens.
It is long overdue: CPG execs must recognize any blind spot(s) within their trade investment strategy. It’s time to commit to data-driven trade spending with quantified and predictable ROI.
Important Questions CPG Should Answer
- How much are we spending on trade promotions?
- How have our top 5 accounts contributing to revenue generation over the last 6 months?
- How will we invest differently in the next year to meet our company’s growth targets?
- How does our promotional plan account for new product innovation, distribution changes, and other disruptions?
- How does our promotional plan optimize our individual brands and our company portfolio?
The Possible
Good news! Inefficiency and miscommunication are no longer the norm.
Now, you can turn information into profit.
All it takes is commitment. See results when you make one change, to one promotion. Multiply that by all of your promotions, and each of your retail partners. You’ll be leading the way in trade spend efficiency.
Through data analytics and trade optimization, sales planning becomes informed, flexible, and intelligent.
Thanks to one, harmonious view of the truth, departments can collectively work in synergy to meet company objectives, and do so with an realistic understanding of quantified historical performance. Furthermore, view competing promotions for a strategic advantage – knowing the price points, timing and promotional strategy of your competition. Couple this advantage with an integrated view of consumer marketing activity and you can really see look at how they optimize their entire marketing spend.
“As other CPGs begin to adopt advanced analytics and predictive planning capabilities, the competitive gap widens. Those who do not adopt these strategies will fall further behind.”
Trade Spend versus Trade Strategy
If you’re repeating last year’s plans hoping for different results, like many finance and revenue management teams are, you build your investment strategies on gut feelings and historical inaccuracies. As a result, in-store spending, intended to drive volume, improve incremental profit and grow revenue, is reduced to just another expense.
This story is nothing new for CPGs who face accountability of their spending and pressure from retail partners to do more to earn their category share. The inability to leverage the intelligence (through technology) leaves organizations exposed to unanticipated competitive threats, lost market share, and even unwelcome acquisition.
Jump-start your proactive approach to trade spending.
You’ll no longer search for answers – you’ll create effective strategies with learned tactics to execute controlled and profitable promotional plans.
All in all, CPG companies should be aware that the cost of the status quo places them in a position that jeopardizes growth and competitive advantage. Secure your opportunity to manage trade promotions with effective automation.
