In today’s era, promotions and discount offers a part and parcel of the marketing strategy of any CPG company. Various studies show that consumer companies are spending to the tune of 20% of their annual revenue on trade promotions, which is significant and worth studying.
However, a no of factors influences the success of promotions. Measuring promotion effectiveness is the key to ensure that a business is getting optimum returns on its promotion spending.
The successful businesses concentrate not only on developing innovative and creative promotional campaigns but also pay an equal attention to tracking trade promotion effectiveness analytics as well.
Now, let us expand the horizon of our knowledge about what trade promotions are and how to measure promotion effectiveness with the best approach in this blog.
Promotion is an attempt by marketers to inform, persuade, or remind consumers and B2B users to influence their opinion or elicit a response. Most firms use some form of promotion. Because company goals vary widely, so do promotional strategies. The goal is to stimulate action from the people or organisations of a target market. In a profit-oriented firm, the desired action is for the consumer to buy the promoted item.
Trade promotions are marketing offers and incentives offered to the members of the distribution channel in the form of coupons, discounts, promo codes, rebates, and other methods to drive growth in sales.
Today, promotions can be found everywhere, and running constantly. Visit your local mall and you will likely be overwhelmed by the “% off” signs and abundance of special offers and discount scheme. The customer is nowhere ready to pay the full price anymore. This bombardment is changing the behaviour of consumers, who are becoming all too used to buying most of their everyday need products on promotions only. One can easily say trade promotions are powerful drivers of sales at the retail level. However, along with implementation promotional activities should be also analysed using a data-based approach; this is to understand if they have delivered the targeted results.
Before starting any promotion, it is critical to study past promotions. Analysing these campaigns helps determine factors driving success and the pitfalls. Past data about sales, profits, ROI serve as pillar posts against which we can compare current results.
Developing a proper promotional plan with a clear aim is vital to analyze and improve promotion effectiveness. We must define the channels used for a particular sort of promotion to identify the source of data.
The next step is to determine the primary metrics for measuring trade promotion effectiveness. Metrics like sales volume, profits, sales lift, pull-forward, cannibalization, ROI need proper tracking. No single metric can give a clear idea of the performance of a promotion, and businesses must use a combination of KPIs to ensure good results.
Promotion managers can identify the effective promotional products. They can also analyse other parameters, like customer satisfaction, engagement of old customers, and life-time value of customers.
Data collected from different sources now have to be harmonized and cleansed to make them comparable and reliable. It can be confusing if distributors are using varied formats to record promotional data.
The next step is to organize the data so you can attribute sales and profits to the right promotional effort. Knowing which promotional effort brought about which sale helps in determining the return on investment (ROI).
After organizing the data from different channels of promotion, it is time to dive deep into it. Every measure, like sales volume, the cost of promotions, profits, and return on investment, are analyzed in depth.
Many promotion management platforms are available that make computation and analysis across large data sets easy and fast. They use machine learning and AI to reliably deliver insights about the effectiveness of sales promotion.
In the last step the results have to be recorded and reported. Reporting is critical to not only understand the reasons for the success or failure of a promotional campaign but also to optimize it in the future and its efficient working. A promotion effectiveness dashboard in a promotion management platform is ideal for recording and reporting relevant metrics.
Consumer goods companies spend as much as ⅕ th their revenues on trade promotion. So, it is now of much importance to measure the effectiveness of spending such a huge amount of money. Before, it was a difficult task as Channel Partners who were executing such promotions vigorously used to control the dissemination of sales data partly because of fear and there was no such incentive to do so.
But as with growing trends of the passing of inventory risk with suppliers, retailers are now readily sharing sales and inventory data with suppliers. Combining this with the availability of higher computing power at a relatively low cost, Artificial Intelligence (AI) technology has been making rapid strides in consuming such data and predicting outcomes based on past performance.
Rebates, discounts, creative displays, boards, and coupons are strategies that almost every business uses. The most vital thing is to track and find the most effective promotional strategies that have yielded the best returns.
The use of technology to track trade promotion effectiveness can streamline the whole process. Today, many trade promotion effectiveness analytics platforms are available that have in-built features are effectively handling large chunks of data generated during promotions.
The data management and predictive analysis of these advanced platforms are tools that can help businesses get the most out of their promotional campaigns.
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Artificial Intelligence | Nov 30, 2018»
Artificial Intelligence | Nov 30, 2018»
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