The State of Customer Management and Analytics

Industry thought leader Keith Peers, vice president, product marketing, CAS, shares notes on customer management and analytics challenges and trends. Find out his expert opinion on the move toward modern marketing outlets; using trade promotion management as a strategic business weapon; engaging in collaboration to ensure promotional success and measuring marketing ROI.

Companies are moving away from traditional marketing outlets and are reaching the consumer in non-traditional ways. What are the benefits and challenges of this new approach to marketing?

PEERS: Traditional marketing outlets like print and television are not as effective as in the past because consumers have changed media reception in the course of the last decade. However consumer product (CP)  companies are looking for innovative ways to interact and collaborate with consumers to improve brand awareness, promote brand loyalty and increase overall category effectiveness. Using the internet to both "push" their messages to consumers and to "pull" consumers into individual Web sites is a very important vehicle in today's marketing programs.

With a parallel trend towards "clustering" retail stores and reduced format size, a focus on specific assortment to meet the demographics within the clustered area will create the need for increased targeting of messages to the consumer. It will also require technology investment to ensure manufacturers and retailers can effectively manage the level of increased assortments and varying trade promotion programs required to support the consumer advertising.

Segmentation has long been a consumer marketing strategy and with these industry changes it can be applied in a much more effective manner. A dedicated segmentation strategy that fits into Web-based initiatives and targeted assortments, with the right technology investment, will invariably result in more effective trade spending; increasing revenue while maintaining marketing spend levels.

For these programs to be effective however, consumer knowledge and purchasing patterns are a must. Technology solutions that effectively manage all consumer manufacturers demand side processes are necessary to maximize the benefit of consumer marketing and trade marketing programs.

CP companies are leveraging analytics to make their promotional spend more efficient. What tools can be implemented to improve and manage the process of trade promotion management?

PEERS: Adoption of formalized trade promotion management (TPM) remains an important consideration in developing technology budgets for CP manufacturers. The view of TPM is indeed changing from a tactical method to capture short term market share or incremental revenue to strategic initiatives to create overall category growth and brand loyalty.

The key to realizing these benefits is to change our thinking from investing in a "trade promotion system" and managing trade dollars in a tactical environment. To realize benefits as a "strategic business weapon" we need to view TPM as a piece in an overall "demand side management" system. Demand side management enables CP companies to manage all their demand side processes in a single integrated technology environment. These crucial business processes include annual sales and spending planning at various levels of the market and sales organization, account planning, trade and volume planning, promotion execution, retail store management and execution, payment and deduction reconciliation and management. These transactional processes provide stability and control over demand side processes.

Alignment of advanced business intelligence and analytics within these transactional processes enables greater business insights into demand side business processes, enabling better decision processes based on historical data. It also enables efficiencies in understanding what trade programs are successful.

Completing the demand-side management processes with optimization is the logical progression of technology sophistication within the CP industry. Optimization enables companies to use advanced predictive capabilities to simulate and model the outcome of specific events based on analyzing historical data and dramatically improve the value and effectiveness of all demand side processes, TPM being one of them.

The key to realizing these benefits however, is to manage all these disparate technology modules in a single, integrated solution, where integration and data interfaces are minimized and the accuracy of the results are maximized.

Are retailers and CP companies more successful when they collaborate around promotions? How can technology help?

PEERS: Collaboration among trading partners is a critical success factor in any business, but even more so in the CP industry, where both manufacturer and retailer target the same consumer. As such, the consumer and a true win/win result can only be accomplished through a sustainable long-term collaborative relationship. The key success factors are really quite simple:

• First and foremost, the willingness to collaborate (truly collaborate) is the primary success factor
  
  
• Given that willingness, understanding and respect for the partner's mutual business strategies and inclusion of these strategies within the collaborative planning process is also of high importance.
  
  
• The willingness to share data with each other to ensure the outcome of planned activities has the highest opportunity for mutual success. Both manufacturer and retailer have access to information that kept separate only provide half the picture for profitable revenue and category growth, while maximizing end consumer satisfaction.
  
  
• Finally a collaborative approach to the planning and execution process will increase the effectiveness of both manufacturer and retailer business plans. That approach should include common business planning, promotion planning, volume forecasts, spending targets and mix, program execution and evaluation.

In a collaborative environment, technology acts as an enabler. Technology investments however, should not be undertaken lightly and CP companies should look to vendors that have a proven track record of implementing large scale, global projects that include all demand side business processes in a single, integrated solution. The implementation of this technology should also be accomplished in accordance to the readiness of the organization, including having the necessary data to implement advanced predictive technology and an organizational readiness to embrace the necessary change.

CP firms have struggled to capture the ROI of marketing activities. What metrics or best practices can companies use to gain a true understanding of the value of marketing activities?

PEERS: Measuring ROI of marketing programs is achieved through integrated processes that manage the following:

• Business planning including volume and spend targets that can be associated with specific marketing programs and specific measurable key performance indicators
  
  
• Promotion management and execution that are also tied to specific marketing programs (consumer and trade), also with specific and measurable key performance indicators
  
  
• Reconciliation of actual results against the plan to understand what worked and what didn't
  
  
• Analysis of the key performance indicators to gain insights into the specific details and general trends to improve future ROI
  
  
• Predictive technology to enhance the effectiveness of the marketing programs based on specific key performance indicators

Following this approach as well as the use of appropriate demand side management technology, will not only capture the ROI of marketing activities, it will also significantly increase the overall effectiveness.

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