The pace of change in CPG is increasing, including proliferating channels making it even more complex to track trade spend. Below we outline some key challenges CPG brands face in trade promotion management (TPM), and questions to ask when selecting a TPM solution provider.
CHALLENGES LEADING TO THE NEED FOR A TPM SOLUTION
Business planning isn’t integrated
Disparate processes, disconnected teams, different departments working to different targets, and reporting spread across various systems and spreadsheets. According to the POI Institute, more than three quarters of CPG companies still use Excel spreadsheets to track trade spend. This means achieving a ‘one-number’ forecast is difficult, and analysis even more so due to data from multiple sources in different formats. Leading to a lack of clarity as to whether the business plans are effective, hindering joint planning with retailers.
Lack of visibility and control of both spend and performance
Nearly half of CPG companies spend more than 20% of their revenues on trade spend yet trade spend isn’t forecasted, accrued for, or settled against properly. Multiple data sources and formats mean a lack of visibility around what is and isn’t working to manage the effectiveness of promotions and programs, including through pre and post event analysis which causes ‘uncaptured’ trade overspends. Invoices, liabilities, and deductions are often misaligned. Potential revenue is left ‘on the table’ because companies don’t know how to optimize Lift, Contribution, & ROI for future promotion plans.
Around a third of CPG companies are dissatisfied with their ability to manage promotions and a key reason is surprise spending, and/or shorted orders due to lack of supply, stemming from inaccurate forecasting.
Some of these challenges are outlined in further detail here.
HOW CAN A TPM SOLUTION HELP?
TPM solutions centralize, integrate, and automate the time consuming, manual tasks associated with trade promotion processes, whilst improving productivity, campaign performance and collaboration. They provide better visibility, alignment, and flexibility to make agile adjustments whilst improving forecasting accuracy. Ultimately, they save you time and money whilst improving your trade spend effectiveness and reducing spend and revenue leakage and lost opportunities.
8 QUESTION AREAS TO ASK WHEN CHOOSING A TPM SOLUTION
How to know which TPM solution is right for your company? Here are 8 different areas, each with some key questions that you could easily turn into a 5-point rating scale when assessing potential suppliers.
- How much will the TPM solution contribute to create an opportunity to increasing profits, lowering promotion spend, increasing market share?
- How much can we save using it?
- Will it provide guidelines for success benchmarks?
2. Fit for Purpose
How well will the TPM solution:
- Improve trade spend ROI and effectiveness?
- Increase forecasting accuracy?
- Provide visibility of data for quick identification of issues and opportunities, and adjustments required to programs?
- Reduce revenue leakage through liability alignments and compliance?
- Optimize trade promotions effectiveness through post promotion event analysis?
How would you rate the TPM solution for:
- Ease of use
- Large data handling capabilities
- Workflow automation
- Automated price adjustments that update daily
- Volatile pricing handling
- Data integration
- How much analysis and reporting time will it save?
- How often can it provide real-time updates?
- How many data sets can it integrate?
- Can it provide promotional benchmarks?
- Can it provide configured reporting capability (e.g. baseline trends, historical and predictive lift indexes, KPI analysis, what-if planning scenarios)
- To what extent can dashboards be automated?
- How easy to read are the report outputs?
- How well will it help maximize our trade investment?
- How much can it assist development of optimization scenarios?
6. Cross Channel Flexibility
- What cross-channel data integration capabilities does it have?
- How accessible is the platform?
- What open APIs are available for data exchange?
- How easy will it be to implement? (Timeline, flexibility, enhancement costs, training & support)
- Is it value for money? What is the cost per user and service fees?
8. Industry specialization & experience
- Does the provider have specialist experience in the CPG industry?
- To what extent does the solution reflect CPG specific needs?
MEETING THE BRIEF
Exceedra specializes in TPM solutions for the CPG industry.
Exceedra’s single integrated TPM/O solution ticks all of the fit-for-purpose boxes above, and then some, as well as more than meeting the brief on the other areas listed as it is an end-to-end solution covering planning, implementation, and optimization.
Trade spend ROI is improved with scenario planning and constraint-based modelling.
Forecasting employs true baseline modelling and management to achieve more accurate volume forecasts, along with modelling for uplift, cannibalization, and dips. Increase future promotion success using real-time forecasts on promotional spend and dynamic scenario planning. It uses a ‘one number’ approach combining financial forecast, integrated demand and supply plans with bottom-up channel and customer plans. All routes to market can be handled in the same solution.
Historical data, seasonality trends and predictive analytics are used to measure, and track spend, pre and post promotion performance, and best performing promotion mechanics.
Reduce revenue leakage with a software solution that consumes, scrubs, maps, and generates electronic claims data for rapid, accurate settlement and reporting. Save time with an automated accrual and settlement process.
Harmonized data and remodeled baselines enables integration of planned and projected performance with actual shipment, consumption and spend data to evaluate competitor actions and measure true promotion ROI.
The flexible solution enables tailoring P&L and scorecards to individual retailers’ metrics to improve retailer relationships.
Exceedra’s TPM solution has been proven to increase sales up to 2%, improve trade investment ROI up to 20%, and decrease inventory levels and accounts receivable.
Learn how White Castle enabled collaborative performance-based trade planning and unlocked actionable insights and reporting for all key stakeholders, providing them with a full view of the category to move from brand player to category player with Exceedra TPM Solution. Read the case study here.