I recently read an article from 2016 titled, Trends in Trade Promotion Management. The article had some interesting statistics and points in it about TPM. Here are some of my thoughts related to TPM solutions.
You’ve probably heard the mantra, “Consumer goods companies spend 20 percent of their revenues on trade promotion” The scary thing is that many CG companies are still using spreadsheets as their trade promotion management solution. Don’t get me wrong…I’m a big fan of Excel and working on spreadsheets–when it’s applicable. And I’m a big fan of using Excel to slice and dice trade spend data. However, it’s not the best tool to manage your whole TPM process.
The Paradigm Shift
There’s been a paradigm shift in the way foodservice manufacturers handle their trade promotion. In years past, the process has been more about being reactionary. You get an invoice/billback, and you pay it/approve the deduction…no questions asked. That led to manufacturers losing money because they didn’t have a solid way to validate claim submissions and see all of their trade spend data in one location.
Fast forward to today. There are many different solutions available to help foodservice manufacturers stay on top of their trade promotion management. Yet…
“An AMR Research study shows that only 30 percent have a TPM solution in place, but that Excel is the largest TPM provider.”
“Forrester says that 40 percent use a ‘home grown/Excel’ solution.”
This is mind-blowing to me! Why would a manufacturer stick with using Excel to manage their trade spend? Budget constraints? Comfort? Change management? Fear of the unknown? Time? The answer will vary from company to company.
No matter the reason, the fact remains that moving away from managing your trade promotion in Excel is a good idea. The ability to be proactive, identify trends, and increase sales far outweighs the reasons to continue using a tool that’s limited.
If you’re not sure what a successful TPM process looks like, learn more about the Critical Steps to Foodservice TPM Success to know what you need to be doing to get the most out of your trade promotion management process.
Effective Trade Promotion Management Requires Measurement
According to AMR Research, “Promotion effectiveness is the measurement of the results of a promotional activity based upon uplift, cost, margin, profit, revenue and account management considerations.”
So, based on this definition by AMR Research, there’s a lot of work that needs to be done using Excel to measure your trade promotion activities effectively. And there’s a lot of room for human error. The right TPM solution will do a lot of the work for you and remove the manual labor behind creating reports and tracking data.
The best way to manage your trade promotion is to invest in a TPM solution. There are many different solutions out there. We suggest you invest in one that has all of the following features so that you get the most out of your investment.
- Contract Management – with contract entry and approval automation
- Claim Acquisition – work with a company that works to get location level data
- Electronic Claim Loading
- Claim Processing – with contract to claim validation
- Deduction Clearing Management
- Analytics for Planning and Budgeting
- Support – Make sure they will support you and not treat you like a number
If you’re still using spreadsheets to manage your foodservice trade promotion, it’s time to consider other options. To learn more about how GoSimple can help with your TPM needs, request a demo today!