Managing Growth
Your mission used to be getting on the shelf and driving trial. While shopper love for your product is still paramount, things get a little more complicated when your brand takes off and distribution grows. In fast moving Consumer Goods, when distribution grows so does trade spending – income to your customers, but a margin eroding expense to you. And when exponential growth levels out, and you look to maintain margin by reducing costs, your customers won’t want their income to go down. Managing growth requires clear, attainable goals for the salespeople and the ability to track progress throughout the year. A good Trade Promotion Management (TPM) solution will offer you more than promotion planning and deduction management. TPM should also help you set these goals and monitor performance.
Begin with the End in Mind
American businessman and author Stephen Covey said, “Begin with the end in mind.” This seems to allude to a goal…knowing what you want to achieve. But Covey also said, “Stop setting goals. Goals are pure fantasy unless you have a specific plan to achieve them.” The best path is a combination of the goal, and a reality-driven plan to achieve it.
Start with your top-down growth objectives. Identify customer-specific sales goals and a practical expectation of trade spending. Generally speaking, you cannot substantially cut trade and expect substantial sales growth.
Specific Plans
Next, you need bottom-up input from your customer teams. They should define the specific plans required to deliver the growth target. Unless it’s a completely new customer, you’ll have a foundation to start with. Distribution, pricing, and promotions. They need to identify the changes that will be required to achieve the sales goal. Is growth organic or will it come from expanded distribution? Will adjusted everyday retail prices create closer parity to competition and steal sales? Does the mix of promotions and discount depths need to change to vehicles that will drive greater lift? Is greater promotional frequency needed to achieve the desired growth? What are the customers’ margin requirements and constraints? Is there a higher price tag associated with the growth plan?
Arriving at a specific, achievable goal is usually the outcome of a series of sessions that consider all of these dynamics.
How TPM Helps.
Top-Down
With this year’s business already in progress, you’ll already have a starting point. To efficiently create top-down goals, pick your desired level of the customer organization and product and apply the growth assumption(s). Let the system spread this across lower-level customers, products, and time, creating granular Key Performance Indicator (KPI) metrics for sales and spending. Next, fine tune your goals where necessary to define what you’re asking your customer teams to deliver.
Bottom-Up
Since you’ve already got your current year, actualized customer plans in place, you’re half-way there. Instead of starting from scratch, you begin where you left off in the prior year. Use post event analysis to identify what promotions work for you (or don’t work). Build distribution changes, retail price adjustments, promotion mix, depth, and frequency changes into your new plan.
Let the system do the critical work of structuring the data and creating reports that allow you to compare the top-down and bottom-up as you go through the annual planning process. When you’re ready, lock the volume and spending goals in place and monitor performance at the push of a button.
Conclusion
A TPM solution makes goal setting more efficient, actionable and ensures that KPIs don’t become a relic in a spreadsheet tucked away on someone’s laptop. Use of TPM enables you to quickly and thoughtfully create both top-down and bottom-up plans that will get you off on the right foot when a new year starts.
About UpClear
UpClear makes software used by Consumer Goods brands to improve the management of sales & trade spending. Its BluePlanner platform is an integrated solution supporting Trade Promotion Management, Trade Promotion Optimization, Integrated Business Planning, and Revenue Growth Management.
