Plan customer spending that is not short-term promotions. EDLP, Slotting, other Contracts.
“Terms” is the vernacular used to describe customer expenses that are not for short-term promotions. This can include things usually classified as trade spending like Everyday Low Price (EDLP), Everyday Low Cost (EDLC), and Slotting/Listing fees. Terms also covers non-trade spending like Prompt Pay Allowances, Damages, Logistic Fines & Fees, & event sponsorships.
The premise is this: Understanding the total cost-to-serve a customer requires an understanding of both trade and non-trade spending categories. Planning terms like you plan promotions enables three important outcomes: 1) A customer-specific forecast of all customer spending. Deferred spending (i.e. not invoiced) can be accrued just like promotion spending is accrued. 2) Spending is actualized just like short term promotion spending is actualized. This enables you to build history and better forecasts in the future. 3) You can understand the total cost-to-serve a customer and use this information in your customer investment strategy.
