58 percent of respondents in a POI survey confirmed that they have invested in a trade promotion optimization software(TPO) for global markets and 88 percent of them have invested in multiple trade promotion optimization software to manage local markets too.
These numbers indicate that a robust TPO solution is essential for CPG managers to effectively optimize promotions for achieving better promotion ROI.
Choosing a TPO solution involves prior orientation to its features and capabilities, evaluation to ensure that it suits your specific line of goods, and an understanding of what you can achieve out of it. This article provides a complete guide to choosing a Trade Promotion Optimization Software. So, let’s get started.
Why CPG Companies Need Trade Promotion Optimization (TPO) Software?
Trade promotions consume 25% of revenues but 40% of CPG trade promotion spending is useless. TPO is a methodology which needs a robust software for effective implementation. A robust TPO software can help CPG companies measure the ROI and sales uplift of their trade promotions, conduct a comparative analysis between products lines, seasons, and personalize marketing efforts for their consumers. Some other reasons why CPG managers would choose a TPO solution are as mentioned below:
Data-Driven Decisions
Trade promotions today are mostly run based on gut, past experiences or partial intelligence, hence losing out on ROI. A robust TPO solution leverages data from multiple internal and external sources and helps you understand which promotions are driving higher ROI and which ones don’t. You can avoid the hassle of manually going through all the promotion data as the TPO solution transform data into meaningful recommendations and forecasts.
Measure Promotion Effectiveness and Forecast Sales
TPO solutions enable you to measure the effectiveness of your trade promotions based on various parameters like market growth percent, sales uplift, ROI, etc. You can also forecast the expected revenue, profits and costs associated for various promotion offers.
Better workflow: Running Trade promotions in CPG and the retail industries by involves work with multiple business units, stores, and international locations. Each of these entities functions differently. To achieve better coordination and workflow, companies use a TPO solution. They help in aligning multiple teams towards a unified platform of data and a single truth.
Improved performance: Better measurability, access to data, analytics and real-time data mapping are some reasons for a TPO solution to inherently provide improved performance.
Competitive edge: Retailers would not only gain a competitive advantage over other distributors in a location but also would gain intelligence to manage products within a product line for better shelf and inventory management. This helps in maximizing the low margins. It helps you build better relationships with your trading partners.
Better team resource utilization: Time utilized by each team member is spent in excess in the absence of organization. TPO solution allows members with different privileges to access information in a timely manner and avoid back and forth in communication to execute trade promotions effectively.
Are your Trade Promotions generating the Desired ROI?
Check out Compass: An AI-Powered Trade promotion Optimization solution
How to Choose a Trade Promotion Optimization Software?
A TPO solution is required to be capable and agile. The capability is to execute the basic function of implementing a trade promotion across stores and agility to be able to scale and withdraw seamlessly. While selecting a trade promotion optimization solution, consider the following parameters.
Ease of implementation: This is an obvious parameter for any software solution. It should allow users within your organization and supporting partners to quickly adopt a platform.
This also means that you should not invest time and money in hiring new talent or provide extensive training to the existing resources to implement the solution.
Reporting Capability: Reporting capability is not defined just by the dashboards filled with bar graphs and pie charts. The real strength lies in the computational ability to extract data from different sources within the system and to reproduce insights that can be easily interpreted by the user. Reporting combined with advanced visualizations and simpler navigate national flows creates a masterpiece. Advanced data visualizations provide a variety of ways to view data -including visuals such as bubble charts, heat maps, and so on.
The solution should be able to equip you with baseline trends, historical and predictive life indexes, KPI analysis in real-time, and what-if planning scenarios.
Data Integration: Relying only on syndicated data would not help managers to make sounds decisions. With the nature of the business, data flows into the system from multiple locations, devices, and sources. Gathering accurate data from these data nodes into the TPO solution is one of the primary tasks it should be able to perform.
To make this happen each data source needs to be configured into the solution. Trade Promotion Optimization solution should allow the user to configure data from both internal and external sources to flow into the system.
With data integration, the solution should be able to cleanse, harmonize and update data without compromising on its quality. Keeping in mind, the best practice, retailers and manufacturers may not implement the solution at once, all across the organization. The TPO solution should allow users to implement it in a phased manner.
Optimization
Optimization is the reason why you would invest in a TPO solution. A manager can truly optimize trade promotions, when he/she is equipped with data that is comprehensible, transparent, consumable, and with metrics that can be attributed. Managers do not leave the data within a TPO solution. They use it for further comparative and exclusive analysis, using a spreadsheet. This means the system should be able to interact with spreadsheets by allowing users to extract and upload information in large tabulations.
Apart from a centralized access, revenue managers may also wish to access information and scrutinize it for insights, specific to their area of focus. The centralized repository should also be able to use the solution to highlight and communicate about trade promotion that work better for a given product, season, or location. Most importantly, the accessed information should be translated into insights that can help the user optimize existing trade promotions.
What-If, and Comparative Analysis, and Predictive Analytics
Analysts run multiple assumptions to understand how a trade promotion would impact future sales and ROI. Small changes in percentage points have a large impact on the final output. Hence, choosing the right mix for a trade promotion is of hyper-importance.
When a TPO solution can perform what-if analysis using the data within the system, it saves a lot of time and evades risk for decision-makers. What-if analysis gives the estimated ROI of a trade promotion without actually running it
As mentioned earlier, a multiplicity of business entities is the nature of CPG manufacturing and retail industries. This means that the decision maker has to distribute capital and expenditure in an optimal way across these business entities, to achieve better promotion ROI. Running comparative analysis using historical data helps managers to design better promotions and implement them.
Advanced analytics is a business boon. These technologies are powered by Artificial Intelligence and machine learning and give the TPO solution the capability to accurately predict sales and prescribe promotions.
Chatbots:
Giving a Conversational interface to your TPO solution simplifies the way users interact and communicate with the data. A chatbot gives a persona to your TPO solution and brings data to your fingertips via chat. Just like any other human conversation, It provides on-time information.
Learn more: Chatbots for Trade Promotion Optimization Softwares
How to Be Prepared to Deploy a TPO Solution
Change Management
Introducing any new tool into the organization always comes with challenges. Most executives step-back to implement a TPx fearing change management and lower adoption rates.
A TPx that is supported by an intuitive interface and a chatbot makes the usability of the solution simpler and eases the way of obtaining to data. This eliminates the bigger behavioural challenge of introducing an inanimate system before the employees. This is not completely achieved by the technology itself. Your TPx partner should be aware and supportive of keeping the implementation process smooth.
User Experience
For the users to fast adopt different features of the solution, the language, user interface, and configurability needs to be simple. The design needs to be ergonomic for the user to personalize, access information on multiple devices, easily navigate using a single sign-in. This requires the solution to come with tiled architecture, an admin interface, navigational aids, and responsive systems.
Digital Promotion With Cross-Channel Visibility
The solution should be able to integrate with digital channels to provide relevant digital promotions. This requires you to create a digital environment and culture for the rest of your employees to be able to use this ability.
The dexterity that is already achieved with offline channels should be used even across digital platforms. Most technologies fail because the organization lacks synergy between digital and offline medium.
Advanced Analytics
Data without measurement and powerful analysis is useless. The TPx should come with all analytical capabilities such as what-if analysis, comparative analysis, advanced analytics, customized KPI computation, and so on.
Checklist for Choosing a Trade Promotion Optimization Software
Use this simple checklist to run through while purchasing a TPO solution:
1. Ease of Implementation
- Easy data and device configuration
- No extra training or recruitment expenditure
- The inclusion of machine learning for intuitive behaviour
- Possibility for phased and bulk implementation
2. Reporting
- Dashboards
- Computational capabilities
- Use of Spreadsheets
- Rate of Personalization
- Availability of Reporting formats
3. Data Integration
- Ability to gather inputs from different internal and external data sources
- High data quality with the ability to cleanse, harmonize and update data.
- Avoid data duplication.
- The flow of internal and external data
- Convert unstructured data into structured data
4. Optimization
- Scalability
- Exclusive computations
- Data transparency
- Provide insights
5. Analytics
- What-if analysis
- Comparative analysis
- Advanced analysis
6. Intuitive Interface
- Chatbots
- Supported by AI and machine learning
Should you have any questions on how to choose a trade promotion optimization or management software, feel free to get in touch with one of our experts. We helped many Fortune 100 companies to choose, implement and maintain a TPO solution.
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