TPM Challenges and Trends
On June 4, 2012, executives from the Trade Promotion Share Group met at the Roosevelt Hotel in New York, NY, during the ninth annual Consumer Goods Sales & Marketing Summit. The group kicked off the meeting by discussing what they are currently leveraging in the Trade Promotion Management (TPM) space, where they are in their TPM journeys, and best practices for TPM success. Some hot button topics include how to take a current TPM system and expand it on a global scale for growing businesses, leveraging analytics, mobility and most importantly, Trade Promotion Optimization (TPO). The following are some more of the trends, tips and best practices that came about during this lively discussion:
--Every year, it seems the biggest reoccurring theme is TPO. Executives want to know what optimization really means, how it works, and what the payback looks like. Although no one can agree on the math or the definition of TPO, one thing the group can agree on when it comes to TPO is “it’s about the best solution.”
Some in the room felt that TPO requires a lot of data and discipline, and so far they have not seen a sales force with enough discipline and/or enough planning to affect a big behavior change. One suggestion was to define the role of the sales person. The expectation of sales today is very different than it was 15 years ago. Today, your sales person’s job is to sell. They need help when it comes to analytics. It was also suggested that sales needs to take an insights-driven performance approach when it comes to the customers. If the focus is centered on the system or the data, it begins to obscure the overall picture.
--Naturally, the group discussion then led to the next major theme of what to do with the data. Is the data/analytics a commodity or competitive advantage? Some companies use sales accounts teams with a trade spend optimization manager, planning manager and finance person. Together, these teams present insights to sales who then bring that data to the customer. This seems to work with many organizations; however it becomes a challenge with small-to-midsized businesses who may not have the bandwidth.
Another company shared how it uses a small group that is headquarter-based to start and then they manage sales in the field. One final option was to have dedicated teams for the top customers and then everyone else manages the channel of smaller businesses.
--How do you connect TPM/TPO to the supply chain? According to one attendee the inputs into the TPM systems are valuable, but the inputs are usually the wrong inputs. Some companies approach their TPM system as an enterprise tool and not a sales tool. The group was cautioned not to jump into the enterprise tool too fast because of scope creep.
Trade and S&OP can grow together, but it was felt that companies need to be careful about generalizations. Companies expect more from customer teams where more information is shared: “We expect them to get down almost to the item level at those customers.” There isn’t any one solution. A solution with flexibility to get deep with robust companies and yet stay high-level with other customers is what is needed. “It isn’t as easy as pushing a button.”
--Is there any progress being made on the journey to TPO maturity? Outside of sales teams, there aren’t a lot of structured toolsets for HQ-based trade marketing professionals. This is the next step in evolution. Pricing analytics is also a big component, understanding trade rates, analyzing optimum trade rates for different parts of the country, etc. Companies are doing that but there is no structured tool – instead there is a lot of manual hard labor.
For some, however, TPO can be frustrating and seems like the impossible dream instead of a roadmap. However, attendees offered some insights into their biggest unexpected values including mainstreaming ROI into a tool. This enabled smaller accounts to have metrics to make decisions that they would not have had otherwise. The gains at these smaller accounts collectively add up. One attendee shared how his company looks at forecast accuracy, measures trade and measures usage and adoption (by conducting four surveys per year). It was also pointed out that by looking at trade spend, poor performing accounts can often be better managed.
One executive posed the question of whether or not attendees first piloted TPO or if it was a big bang implementation. One perspective was that by the time you’re done building everything for the pilot, you have already built everything you need and can just go big bang at that point. Others took the opposite approach – trying to define that business case.
If you would like to submit any other topics for discussion, e-mail Kara Romanow at [email protected]