Technology capabilities that enable consumer goods companies to better serve their retail customers are evolving with the times. Trey Alexander, Partner at PwC Strategy&, explains why consumer goods companies are now better positioned than ever to enhance customer management processes — and where there is still room for improvement.
Q: How does technology impact business processes in the area of customer management?
ALEXANDER: Over the past 10 to 15 years, nearly every consumer packaged goods manufacturer has implemented some form of trade promotion management tool, often with the hope that it would deliver robust customer planning capabilities. But most of these efforts have only delivered trade payments and robust financial control.
Customer planning, for a variety of reasons, tends to remain a spreadsheet-based activity. However, TPM solution vendors have continued to enhance their offerings, often leveraging advances in technology, and are now well positioned to focus on customer management.
For example, solutions have now advanced to support a full-volume customer plan. Planners typically have the ability to view a projected base forecast and adjust that base for various reasons (customer growth, marketing, etc.). Everyday discounts and trade terms are managed for the total plan rather than being embedded in yearlong promotions. The promotions themselves are now just one component of the comprehensive plan.
As a result, tools can now enable a more robust planning process. Similarly, customer planning has evolved from a “one size fits all” process. Many past TPM implementations focused on planning the Top 20 customers, the ones that typically represent more than 80% of revenue. These processes required lots of details (SKU/week level) for every single planned activity.
Unfortunately, configuring a tool to support that level of detail for 20 customers then required the same level of detail for the 300-plus other customers. Sales teams beyond the Top 20 were overburdened with entering vast quantities of information, making the quality of that information suspect at best.
Now, tools have evolved to support multiple methods of planning. Large customers can be planned in detail where necessary, but smaller customers can be grouped into regions or teams and planned more holistically. While the information for smaller customers may not be as detailed, the information provided tends to be more accurate.
Q: How have solution and service providers adapted their offerings to meet new demands and trends?
ALEXANDER: The continued rise of the digital sales channel has driven a significant amount of change among service providers. One of the more significant changes has been the increase in information available from data providers to help quantify and analyze online sales and behavior.
For example, shopper behavior and purchase patterns are easier to track online and can be obtained through several third-party providers. Other service providers make reports available that look at a manufacturer’s product set across online retailers to provide insights on pricing, ratings, reviews, etc. However, it’s still difficult to obtain sales information at the same level of detail that is provided in traditional channels.
Consulting is another service area that is adapting rapidly. The major consultants have all launched some form of a digital service offering. Firms mainly seek to help their clients develop end-to-end digital strategies. (Where does the company need to play to be successful? What are competitors doing in this space? What capabilities are needed?) Some firms also focus on building tailored digital capabilities.
For example, firms have hired “user experience” teams that help clients envision new ways of interacting with consumers in a digital marketplace. These engagements often provide prototypes and interactive videos to help sell the concepts internally.
Q: Recent research finds that IT budgets have increased slightly for the first time in many years. What are the most strategic technology investments that a consumer goods company can make today in customer management?
ALEXANDER: The most important investment is a focused effort to build strategic insights capabilities. Companies are rapidly evolving to bring all forms of data insights into a single group, supported with appropriate skills and technologies. Today, many of these capabilities are distributed throughout the company, with shadow spend used to solve a particular function’s specific data challenge. A focused insights group can ensure that investments are prioritized and maximized to serve the entire organization.
Solution providers recognized in this article: Accenture CAS, Adesso Solutions, AFS Technologies, Aptos, AT&T, Exceedra, IBM, JDA Software Group, Kantar Retail XTEL, Microsoft, Nielsen, Oracle, Retail Solutions Inc., Retail Velocity, RW3 Technologies, Salesforce.com, SAP, Spring Mobile Solutions, StayinFront, Upclear, Verizon Wireless, Vistaar, Wipro