3 Best Practices For Moving From TPM to TPO

One of the biggest investments consumer goods (CPG) companies make is into trade promotion and for a good reason. It’s a highly competitive market and sales are closely tied to effective trade promotions.

But while CPG companies are open to spending significant amount of revenues on trade promotion, they often fall into the trap of being unable to obtain the desired ROI from these efforts.

Trade Promotion Management (TPM) systems help to a certain extent – they enable companies to strategize and monitor activities in a more streamlined manner. However, they do not completely address the challenge of missed returns from high investment into trade promotions.

Industry leaders are quickly moving to adopting trade promotion optimization (TPO) solutions to close this gap. TPO solutions extracts data from the TPM system to perform post-event analytics and generate important insights that can help drastically improve performance.

TPO helps companies obtain deeper insights into the baseline and an understanding of promotions which have yielded an increase in sales and promotions which may have cannibalized  sales for another product.

Learn more: A Quick Guide to Measuring Trade Promotion Effectiveness & ROI

All of this data enables firms to create  promotions that are far more effective and also recommends which of these promotions should be run where and when and for which products to achieve the desired business outcomes.

Monitoring, measuring, and optimizing is key to the success of any new system. As you move from TPM systems to TPO, here are a few things to be aware of to ensure that you’re getting the most bang for your buck:

1) Strategize around change management

The shift from a TPM system to TPO can be quite dramatic for the teams adopting it. It requires a change in mindset and a level of unlearning to be able to replace relying on their own instincts to extracting insights, recommendations and forecasts from an algorithm-based system

Because of how radical this shift can be for trade promotion teams, it is essential that senior leadership and management get actively involved in facilitating an environment that is conducive to change, and ensuring that people are not going back to old practices, and are provided required amount of support as they maneuver the transition.

It is vital that there is a top-down approach to ensuring that employees across various functions, including but not limited to marketing, sales and finance, are educated and supported as TPO functionality is introduced to them.

TPO2) Invest in Training

In order to ensure that you are able to derive maximum ROI from TPO, it is vital that you invest in training teams so everyone knows the ins and outs of using the system. Too often, businesses rush training when introducing TPO solutions. This training typically only features an introduction to the system and basic guidance on using it.

However, it doesn’t delve into important details as to exactly how the systems works – which data inputs are being fed into the system and how algorithms are applied to generate meaningful predictions. This lack of understanding makes it hard to rely on the system and may hinder adoption.

It’s therefore recommended that businesses invest in training right from the get-go and also ensure that there is a system to manage and address issues as they come.

3) Be goal driven and evaluate progress  

Work towards setting up specific goals you want to achieve by using TPO solutions. The functionality that you choose should be aligned with your business targets. Activities around trade promotion optimization should add to your existing TPM processes, rather than separate.

It’s also important to realize that you don’t have to push yourself to use every functionality immediately, sometimes the business may just not be ready yet. However, ensure that you’re setting up a mechanism in place to measure progress and performance consistently. Measure what you have achieved with TPM vs the gains you’ve made by supplementing it with TPO activities.

When TPO systems are leveraged to the best of their abilities, they help CPG companies identify which promotions should be repeated and which ones will have to be modified to produce better outcomes. The only way to understand what is working is to consistently measure performance.

Learn More: A Quick Guide To Choosing a Trade Promotion Optimization Software

If you’re planning to switch from TPM to TPO or want to upgrade your TPM system with optimization capabilities, feel free to get in touch with one of our CPG and retail business experts for a personalized consultation.

You might also be interested in exploring our AI-Powered TPO software – Compass.

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HOW AN AI-POWERED TRADE PROMOTION OPTIMIZATION SOFTWARE CAN IMPROVE CONSUMER GOODS REVENUE MARGINS BY 2%

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