Trade promotion optimization largely depends on an exhaustive understanding and analysis of event ROI. Post-Event Analysis/ Post-Promotion Analysis determines the effectiveness of trade promotion spending. This analysis is crucial to understanding the profit and incremental volume that has been achieved for the trade dollars spent.
Post Event Analysis (PEA) is an important step in determining if an event has achieved the expected goals and success. This analysis helps sales executives drive better strategizing and decision-making, while also enabling marketers to leverage well-informed promotional opportunities.
Therefore, given how critical PEA is, it is rather surprising that too many CPG companies don’t have a structured procedure for PEA or simply skip this step.
They seem to have their attention placed solely on increases in volume, which unfortunately does not provide deeper insights into a promotion effectiveness.
Granted, a large section of CPG companies do want to invest in PEA, but are intimidated by the fact that it is a rather complicated capability to implement.
This is due to a glaring lack of powerful analytical function or companies attempting to implement a manual approach, which involves building a spreadsheet for each event or promotion across the organization, thereby reducing their analysis to only a limited number of promotions and only a small percentage of overall trade spending.
As limiting as it can be to do it manually, what is also concerning is how chaotic and time-consuming such a process would be. This has forced companies to choose between devoting additional resources to addressing this issue or resort to limiting the analysis to only a small portion of the promotions.
But here is why a strategic PEA capability is vital:
- It enables organizations to analyze promotions more effectively
- As a part of this analysis, they can also determine exactly which factors contributed to the effectiveness of the promotion, or the lack of it
- When promotions are evaluated efficiently, companies stand to gain at least a 10 per cent increase on their trade spending ROI
Obviously, there are clear benefits to effective PEA – gains which directly affect the bottom-line of the company. It is no surprise that CPG companies across the globe are looking very closely into their trade promotion investments, making PEA an absolutely vital capability.
How CPG companies can get trade promotion analysis right
The narrative is straightforward – CPG companies know that they need to be on top of their game when evaluating trade promotion spend, but how can they ensure that they are doing this in the most efficient way? Below we discuss three things to consider:
a) Automation increases efficiency and generates more accurate results
According to the Promotion Optimization Institute “ The current obstacle to more meaningful post-event analytics is that it largely lacks automation”
Traditionally, many CPG companies choose a manual approach in the initial stages of the PEA process. This requires building individual spreadsheets for each promotion across the company and putting together small teams who focus on PEA. While a manual approach does have its merits, namely – it allows companies to learn the ins and outs of the process and requires very little investment, it is generally not a viable option.
Manual PEA is not sustainable for a variety of reasons, least of which has to do with the fact that highly qualified employees looking for a challenging role, may soon get disappointed with the arduously repetitive nature of such work. And as one might imagine, adopting a manual approach does open up the process to a whole lot of errors that may be lost in the analysis. This may lead to companies limited their focus to only certain products or accounts.
Leveraging an automated capability can be significant game changer as it allows companies to automate a variety of processes such as extracting data from sources, converting customer and product identities to a universal code that can be compared, and so on.
Another key benefit of automation is allowing field force to have more time to focus on leveraging insights derived from the data as opposed to being burdened down with the effort of compiling extensive amounts of data.
b) Check to ensure that data sources are not getting mixed up, but rather integrated efficiently
CPG companies often fall into the trap of spending far too long, often months to determine how effective an event was for overall sales. This also includes conducting random analyses to figure out how much an item would have sold had it not been promoted and comparing it to how much it did sell during the promotion.
Engaging an analyst to identify if a promotion was effective would mean that a variety of data sources are analyzed- inventory data, competitor data, sales data, as well as internal data. However without the ability to use an analytical platform, combining all of these different data sources can quickly become a prolonged and chaotic process that is also prone to errors. Businesses cannot afford to wait months to figure out how well a promotion worked.
c) Identify the right PEA solution and vendor to address your challenges
Making a well-informed investment into PEA solutions by identifying the right vendors is crucial. Because PEA has garnered massive interest for the promise it holds of delivering vital insights, software vendors have cropped up across the board claiming groundbreaking PEA solutions. However, businesses must choose wisely to ensure that the vendor they select has a deep foundation in business intelligence (BI) technologies.
It’s also important to look a step further to ensure that the tool isn’t just providing high-level insights, but also the ability to drill down and do a root cause analysis, which is often the more complicated, yet highly important part. Spend time in vetting potential vendors to gauge their expertise as well as prior experience in BI, TPO and the CPG business, in general.
Compass is an AI-Powered TPO software which offers a powerful Post Promotion Analysis module.
What you can do with Compass’ Post promotion Analytics?
- Learn sales uplift for all promotions run
- Analyze trade spend ROI for different promotions, categories, retailers, locations etc.
- Compare different promotions and know the top and bottom performing promotions.
- Analyze promotion impact for each month, quarter and year.
- Have a single window view of trade spend analysis data without switching different systems.
- Compare promotions with that of competitors.
HOW AN AI-POWERED TRADE PROMOTION OPTIMIZATION SOFTWARE CAN IMPROVE CONSUMER GOODS REVENUE MARGINS BY 2%