business-561388_1920It is a common adage that the greatest threat to any business is apathy; however, when business is operating smoothly, it is difficult to see the need for change. In a Wall Street Journal blog post, “Why Some CPG Companies Outperform Others”, published by Jacob Bruun-Jensen, principal, and Kim Porter, principal, Deloitte Consulting LLP, the authors state, “Top CPG management teams have almost universally embraced the notion that their companies must innovate not only their products and services, but also their business models.”

So how does an already successful CPG company do this?

1) Know whether your investment is worth it
The blog prompts CPG companies to ask, “Have we made intentional choices about our business model configuration, and determined how it links with our company’s market positioning?” The truth is that even when companies are intentional in their choices, when it comes to trade promotion spending, very few organizations have a clear and accurate picture of their ROI on their promotions. In this way, what starts as intentional choices can quickly fall into the “Because we have always done it this way” trap.

2) Use the details to build a bigger picture
Like more industries, the CPG world is inundated with Big Data that is supposed to not only inform, but also revolutionize the way companies operate. Specifically, when it comes to trade promotion planning, the ability to use consumption, spending and invoice level data to both assess and predict promotions creates opportunity for greater success. The key, as Bruun-Jensen and Porter state, is that the successful organizations, “develop critical and distinctive capabilities that complement one another and help to support a business and operating model.” In other words, they put tools and practices in place that look at the relationships between datasets to make educated decisions.

3) Find the tools that work and ditch the ones that don’t
Just like understanding the ROI of trade promotions helps you build on past success and revise when there are obstacles, knowing the ROI of your business tools will help you optimize their use. According the blog, “To aid in this effort, CIOs can help align IT capabilities with their company’s dominant business model, determining which capabilities merit continued investment, and which are less essential..” ROI of a business tool can then be calculated by its ability to align with and achieve business objectives. For a trade promotions tool, this means not just shedding light on past events, but having the power to make educated recommendations that align with your company’s goals.

Trade promotion spending averages 20% of total revenue for a CPG company. This significant investment for the most part is managed inaccurately on spreadsheets. In a mature sector with eroding margins trade spending must be monitored more intelligently, utilizing the power of big data, predictive analytics and optimization modeling. CPG manufactures that employ this strategic approach to trade spend management can realize a 3%-5% ROI on their annual trade spend.

T-Pro Solutions wants to be your partner in trade promotion optimization through integrating all of the pertinent data silos for real-time KPI analysis and applying predictive analytics for accurate calendar-based scenario planning.

For more information about how T-Pro Solutions can work with you to make 2016 a record profitable year, fill out the form below or contact Nick DiSabato, ndisabato@t-prosolutions.com

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