How to Optimize Promotional Outcomes
A Guide for CPGs: Advance to Successful Trade Promotion
Research says 33% of trade planning is reactive. Set yourself up for success.
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Trade promotion is a strategic component of a CPG company’s revenue management plan.
Although ecommerce and direct-to-consumer initiatives are important pricing channels, consumer goods companies haven’t stopped investing in in-store promotional events. Shopping in-store represents the majority of buying decisions.
Unfortunately, many CPGs aren’t sure which promotions work or how to improve future promotions, leaving them dissatisfied with their results.
We suggest that you prioritize analytics intelligence during promotional planning…
You’ll see more profitable trade investments.
Even with data insights, so few companies are satisfied with how they manage trade, and many don’t have a clear understanding of where their investment is going.
We had to wonder, what’s standing in your way?
Many CPGs have grown comfortable with the fact that the processes they use don’t deliver the level of performance they desire. 👎
There’s an assumption that adding new technology will be painful and time consuming, creating resistance to change.
Resistance to change doesn’t work in an industry that experiences turns and adaptation. Just look at these stats:
- By the end of 2019, online sales of CPG food products totaled more than $38 billion.
- Online channels contributed to nearly 70% of overall CPG growth in the last decade.
- Considering the pandemic, research shows that 70% of people still like to shop at the grocery store.
- Walmart has overtaken Amazon in share of online grocery transactions as of August 2020.
Don’t let the trouble of changing processes outweigh proven benefits.
The value of TPO software is its ability to shift from a tactical reconciliation of trade spending to an analytical investment approach with a quantified return on trade investment.
It’s time to take your trade investment intelligence to the next level.
6 Steps to Advance Your Trade Investment Strategy:
⚡ Technical
⚡ Organizational
⚡ Support
⚡ Process
⚡ Training
⚡ Success
Technical Considerations
“One hesitation we see with new clients is that since trade promotion optimization is a newer technology, companies can lack the internal confidence that TPO is not the same implementation as TPM,” states Blacksmith TPO Chief Knowledge Officer, John Weller.
The fact is, adding a TPO solution adds new and different capabilities to your organization, beyond those of TPM, and implementation is quite simple. TPO solutions integrate directly with your existing TPM or planning tool.
Today, you might manually compile consumption and spend data in spreadsheets…
Instead you could couple TPO with TPM software to allow for automated harmonization of consumption, spending, shipment, and other data sources… maximizing your time and keeping data centralized.
Of course, companies without a TPM solution in place can still take advantage of TPO functionality such as post-event analytics and planning capabilities.
During the software implementation process, the TPO vendor will help you navigate your data structures and define how your current practices will fit into the new approach. We kick off our implementation process with these conversations, to ensure your data is integrated in an organized fashion.
Organizational Considerations
With TPO, analysts can make better planning decisions – compared to someone tasked with creating plans and evaluating trade investment without automated, accurate intelligence.
You may only see a small portion of your business and therefore it’s more difficult to make decisions that positively impact your full brand portfolio and / or retail customers.
Implementing a TPO solution means you’ll spend less time compiling data and instead spend your time:
• Evaluating trends
• Identifying gaps
• Answering questions like, “What if?” and “What else?”
The value in a trade promotion optimization tool is its ability to shift from a tactical reconciliation of trade spending to an analytical investment approach with a quantified return on trade investment.
Your company can address issues like retail execution and joint business planning.
Focus on change management that empowers users throughout the organization, since implementing a TPO solution requires a mindset shift – they’re accustomed to their current way of analyzing and promoting.
Executive Support
67% of trade promotions don’t break even.
So, senior management asks why they should invest more money into new technology for a struggling approach.
Executives view trade as an acceptable price of doing business, rather than an investment.
It’s important for those at the top of an organization to connect investment in trade improvements to corporate priorities. Then, employees who take on the implementation process and use the solution will make it a priority. Ultimately, a large source of motivation and support for change stems from the top executives in a company.
Senior management should communicate a clear message that the intelligence and results that can be gained from this TPO technology is vital to the future of the company.
Some executives are hesitant because of the perceived amount of work and the cost of the solution can be overwhelming and off putting. In reality, deciding to implement a TPO solution is not as time consuming or expensive as they may think.
Learn More: 8 Steps to Gain Executive Support for a Trade Solution
New Processes
Retail Info Systems estimates that 60% of companies are using custom-built or manual processes.
Comparing CPG companies who use manual spreadsheet processes versus a TPO solution is like comparing those who use typewriters to those using computers.
Spreadsheets are not giving employees enough reliable information in a timely manner to make the best decisions.
A TPO tool will harmonize data; it’s efficient and ensures consistency, whereas spreadsheets are inefficient, error-prone and time consuming.
Once a company decides to make the switch from spreadsheets to a TPO solution, the only question will be why they didn’t do it sooner.
As a your company demands more than reconciliation from their trade management processes, one thing that you’ll need to discuss is how to tie in volume, expense and settlement to an event.
Unlike working with spreadsheets, the harmonization of these data sources with TPO event execution helps organizations build diligence around how they organize data, while providing stakeholders real-time, post-event analytics.
Training
Although there are challenges to ensure systems adoption, how you address the issues is what is important, explains Dr. John Stanton, Professor of Food Marketing at Saint Joseph’s University.
To help alleviate adoption challenges, find a TPO provider that is familiar with your existing TPM or planning system and is prepared to help you through the implementation and training process.
Solution providers are there to help the process run efficiently and effectively. Providers should be willing to share advice and best practices based on their knowledge and past experiences. A significant portion of training and implementation should focus on embracing change. Don’t underestimate the need for change management.
POI recommends having a change management plan in-place before implementing a solution. Data found that 92% of respondents have trouble when deploying solutions to existing users, since many employees are stuck in their current way of operating.
TRAINING ADVICE
“Every company operates differently, so adjustments might be needed to make the system compatible for a specific company. That is why it is important to select a TPO supplier that recognizes the need to make compatibility a priority.”
- Prioritize time for training to enable a smooth and successful implementation
- Specify an individual to assist with the implementation, and manage one-to-one contact between suppliers and the client, as this will reduce the risk of additional work for employees
- Prepare the entire company for the changes through clear and regular communication
Set Yourself Up for Success
Trade promotion is an integral, strategic component of a company’s revenue management strategy.
To turn trade promotions from expense to investment requires greater intelligence and predictability. Companies that adopt trade promotion optimization technology without considering these internal obstacles will struggle to realize the fruitful possibilities.
Ventura Foods Uses Blacksmith TPO to Grow Profit
“Housing the information in one spot allows sales to make better business decisions with their customers in a timelier manner.”
By optimizing their trade strategy, Ventura was able to:
💰 Reduce Spend
💰 Grow Profit
💰 Minimize Volume Declines
💰 Drive Better Relationships
💰 Increase Visibility
💰 Centralize Data
