Everybody likes a discount. That sense of serendipity you feel when you chance across your favorite product and get a little money off.
But for the retailers behind the promotions, it’s not always such a great feeling. While companies around the globe have doubled the amount of money they spend on their trade promotions over the past 10 years, Nielsen reports more than two-thirds (67%) that happen each year in the U.S. don’t break even.
With $1 trillion annually spent on promotions, consumer companies need to reduce overspending and improve trade management if they want to maximize their ROI in an incredibly competitive market.
Trade promotions set out to increase brand awareness, take market share, and boost product penetration. When they don’t have those desired effects, companies tend to cut prices further and make promotions more frequent. That’s pouring oil onto the fire. Promotions won’t cut through if they simply scale up and fail to account for customer behavior.
If Consumer companies can pinpoint where their promotions are going astray, they can create an effective strategy to please their customers and their balance sheets. Here are three areas to focus on:
Measurement: Consumer purchase data sits in various systems: internal financials, third parties like Nielsen and IRI, retailers, retailer-owned shopping data, loyalty systems, and more. Capturing and sorting that data will give companies a granular picture of what customers want – and when.
Stock: Companies have to ensure their supply chain can get the product to the customer. Failure to do that means lost sales and high dissatisfaction. It’s a tough market, so make sure your supply chain is in a fit state to deliver on customer expectations.
Consistency: Integrated software ensures trade promotions are consistent and effective. Open up siloed departments and their knowledge and data with technology to create powerful promotions.
Trade promotions done right need data. Process mining is here to provide it. With Celonis’ market-leading process mining technology, Consumer companies can visualize what’s really happening in the business and surface the digital truth. It’s an x-ray for processes that reveals all the inefficiencies and their root causes. That includes granular detail on how customers are behaving, and importantly how the business is responding.
Using process mining, companies get the data to respond smartly to how trade promotions are performing in real time, including making more targeted spending. And by tapping into the automation capabilities of the Celonis EMS, they can take easy action to improve compliance and effectiveness. That allows employees to spend less time on crunching endless data and more time on value-added tasks like coming up with inventive ways to take more market share.
Backed by data and the insights it provides, Consumer companies can better manage trade promotions and leave everybody – not just the customer – with a sense of joy.