Have you been following the debate about business support and recovery investment programs? Perhaps you also wondered about business case realization. Meanwhile, right across industries, we’re wasting billions in trade promotion management and channel incentives.
Massive Waste In Global Trade Investments
I just finished reading consumer packaged goods (CPG) industry guru Rob Hand’s book on trade promotion management. He shows that global trade investments, intended to enhance revenue growth management, exceed $1 trillion in CPG alone. Nielsen data proves that more than 70% of trade promotion management (TPM) investments generates no return. Rob identifies root causes such as:
- Lack of joined-up thinking across digital, brand, and trade marketing, Whether in consumer durables, CPG, or industrial multichannel distribution, there is always a right moment to trigger content, pricing, or promotion offers. The right moment depends on specific buyer context on the path to purchase.
- Lack of granularity in analysis of tactics. Rob’s examples of TPM tactics, such as temporary price reduction, reminded me of the meager promotional coding in most store POS systems. Escalating e-commerce offers opportunities for more granular and timely TPM analysis.
- Lack of real-time execution feedback. In previous research we looked at improving TPM feedback across multiple sales channels in syndicated data.
Leveraging The Right Tools Will Drive Investment Returns
As an old bean counter, I’m probably biased. That said, I sympathize with CFOs who struggle to understand the real return on trade, brand, and digital campaigns. They like the idea of revenue growth management using a cocktail of TPM tactics. But on the other hand, they must allow for the margin impact of strained supply chain operations. My colleague, Liz Herbert, has been researching planning and performance management across functions such as sales, marketing, supply chain, and finance.
Meanwhile, some vendors, such as Anaplan with TPM clients including Coca-Cola, Diageo, and Estée Lauder, help to bridge the planning gap, incorporating trade campaigns into enterprise sales, operations, and financial planning processes. We just published our review of a sample of trade promotion platforms that can help you ensure that your incentive investments generate a positive return.
Wishing you all the best for a successful and profitable 2022.