Measuring the ROI of
Trade Promotions
As Consumer Packaged Goods (CPG) increase their BTL (Below The
Line) investments in absolute terms with retailers it is becoming
more important than ever to ensure that Sales Driving investments
are implemented in store in line with central agreements made
at Head Office level.
This is particularly true of Promotional investments where the
stakes are so much higher – the costs both in terms of gate
fees and also in funding the consumer offer are significant, but
the revenue increases can also be correspondingly high.
It is vital therefore that retailers implement exactly that
which was agreed with the brand owner, but operational difficulties
mean that retailers rarely achieve perfect execution. It is for
this reason suppliers are therefore turning their attention to
measuring compliance to agreements made.
It is not enough to know after the event that the promotion
ran in 85% of stores – suppliers need to know the compliance
level on day 1, then end of week 1, week 2 and so on.
The true value of the promotion will never be known if the supplier
merely calculates the uplift at the aggregate or national level,
because the non compliant stores will bring the average uplift
figure down.
Suppliers need to consider two vital sources of data –
EPoS at store level (such as Asda Retail Link, Tesco TIE, Sainsbury’s
SID and Waitrose Connect) to analyse the differing levels of compliance
& uplift in different store types, and observational sampling
on day 1 of a promotion to ‘fire fight’ the most pressing
execution issues suffered by the retailer.
Diligent measurement will enable suppliers to link compliance
to trading terms, either saving gate fee expense if targets are
not met, or gaining additional sales revenue if compliance levels
improve.
To find out how you can benchmark your approach to maximising
ROI on Trade Investments at outlet level against CPG best practice
click here
