All of us get dozens of weekly flyers containing grocery coupons like buy one get one free, a free toothbrush with toothpaste, etc. Did you know that American CPG companies spend about 15% of their revenues on those promotions (or events, as CPG people call them), and managing those promotions and calculating their ROI is a fascinating space (Trade Promotion Management) in its own right?
Timing limitations typically cause the greatest challenge when the details of a promotion are being examined and aggregated to understand event return-on-investment (ROI) or other key financial metrics. Depending on the duration of a retailer event, the feature, display and promotion price might execute concurrently, overlap, or be spaced at intermittent periods. Additionally, the spending associated with the event is generally not limited to a single method type (lump sum, bill back, off Invoice and scan), and is likely to occur across different time periods, requiring it to be appropriately aggregated.
Good Data Harmonization is Essential
Proper harmonization of data from the ERP/back office system, syndicated data source, and Trade Promotion Management (TPM) application is fundamental to achieving the fidelity necessary to accurately assess an event in the post-execution period. This undertaking is not necessarily complicated, but it is cumbersome, and needs to be performed so that anyone associated with promotion decision-making (Sales, Trade Marketing, Finance) has confidence in the results. It’s not just those closest to the event execution that depend on accuracy and fidelity. Finance and Marketing, tasked with budget development and accrual funding, also need accuracy to help with strategic planning.
How Accurate is Your Event Forecasting?
In all likelihood, an event, and the promotion plan of which it is a part, will have been vetted in terms of volume, revenue and spending forecast accuracy. Understanding other key financial metrics (ROI, spend/incremental case, trade as a percentage of sales, etc.) prior to the event’s execution also aids in decision-making and further bolsters the event’s value. Remember, though, at this point, everything is predicated based on the forecast. Add to this any presumptions made related to promotion exclusivity, feature placement, ad execution, and competitive measures from branded products and the retailer’s own store brand goals. Will the forecast align with the actuals?
Post Event Analysis is Critical
Post Event Analysis (PEA) is a critical step in determining if an event and plan achieved the expected level of success. This foundational information drives not only better decision-making on the part of sales executives, but, it also empowers brand marketers to make decisions based on promotional opportunities that cross retailers, geographies and classes of trade. With trade investments and promotions being scrutinized to the extent that they are today within every Consumer Packaged Goods company, PEA is rapidly becoming more of a must-have capability.
Find out more about how Saama Post Event Analytics (PEA) utilizes advanced data science techniques to drive significant increases in return on trade promotion spend.
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