Transforming Trade Spend from Commercial Expense to Growth Driver

If you are a grocery manufacturer you don’t need us to tell you that you are investing more than 20% of your revenue in trade spend. But what if we told you that you could transform that 20% cost into a driver of growth?

In general, the intent with investment into trade spend is to invest in your brands, as well as in both the consumer and customer relationships, to drive the right activity that generates profitable growth. You will also be more than aware of the difficulty there is in directly connecting this spend to resulting growth.

Manufacturers typically have processes in place that look to deliver on this objective. In simple terms, they usually comprise of 3 core elements:

  1.                    Developing the strategy
  2.                    Selling in the plan
  3.                    Executing the plan

In each of these ‘siloed’ processes there are different teams working on achieving the overall common goal. However, without a common set of data, and with a lack of visibility around the constantly changing plans in a such a dynamic environment, the views of these siloed teams can often be quite different.

Different Interpretations of the Same Strategy 

Something that might be presented as a clear strategy for a brand may need to be interpreted or flexed beyond its original guidelines in order to satisfy a specific retail customer’s need. Which means that any plan that is adjusted for a retailer at the last minute may not be fully visible to all those who are involved in its delivery.

This process works in principle, but over time the elements can become disconnected from each other, usually because there are different teams using different systems, spreadsheets or data. This contributes to losing control of your strategy, selling-in less effective and joined up plans, and poor execution because of misaligned expectations.

And the result? At best you maintain your trade spend at the same level, despite market pressure to increase it. Yet, it’s treated as a fixed “cost of doing business”, out of your control rather than part of your organisations’ working capital.

Increasing pressures on cost of goods and pricing pressure add to the highly resourced process that you have in place, resulting in declining profitability, and the heavy workload required to keep the status-quo prevents your teams from innovating and getting on the front foot with your customers.

Addressing the Issues Can Sometimes Take Years

Most manufacturers look to a combination of technology solutions and improved end-to-end Revenue Management processes to address the problem.

Many take a holistic view of the issue and approach the problem across the full planning lifecycle. They go into a big consultation before issuing out an “all-encompassing” RFP, before engaging in a year long process to find a vendor or series of solutions and adjusted processes that will cover everything!

The rigour of the buying process truly lays out every angle of the problem; every functional requirement is detailed to the nth degree, and there is an unwavering belief that the final solution, once achieved, will meet today’s needs.

However, the news then comes down that the implementation and change management programme will take 3 years, and a further 2 years to allow these changes to settle in before the process truly begins delivering the desired changes and results.

And by this time, the questions that you wanted answers to, and the problems you needed to solve, have changed.

There is a Better Way

The smart investment is in looking at how you can use technology and best practice processes today to impact your business tomorrow. Not 5 years from now.

By doing this, you minimise the cost in both time and money, and you will see an immediate impact on your business performance.

The key to unlocking real profitable change is in thinking big, starting small and delivering value quickly.

You can have the same holistic effect and impact as your previous change programme by focusing your attention on the sales element of this end-to-end trade planning process. You can improve the way you digitize and dynamically integrate it with the rest of your business. And you can do it in a much shorter space of time.

Connect Your Strategy and Execution

With this in mind, you should focus on deploying a bespoke approach to your sales process that meets your specific needs NOW and integrates seamlessly into your existing strategy and execution approaches where they are adequate.

In connecting the selling process with Strategy and Execution you can use your data and analytics (both past performance, and future forecasts) to increase visibility and begin making better-informed decisions throughout the process.

Addressing how strategy guidelines are embedded into the account planning process, for example, will provide connection to every decision made and approved as related to those guidelines. As those guidelines change, so do the subsequent account planning decisions.

Deliver a Greater Return on Investment

Put simply – if you can improve the quality and visibility of decisions made in the selling process you can ensure strategies are better adopted and easily adapted inflight, ensuring that plans are executed more efficiently and effectively. In the end, it means better decisions are made and you get a greater return on trade investments.

The result – your 20% trade “cost” transforms into a “driver of growth”. You are empowered to spend it in ways that drive profitable growth. Making the process more efficient means you can remove cost and react quicker to opportunities or changes in the market. This combination of driving further growth and better managing costs delivers profitable growth.

Sellex brings together extensive commercial expertise along with a world class trade planning solution in Prometric to deliver maximum impact to your trade spend return, in an efficient and sustainable way.

To find out more on how we can help your business think big, start small and deliver value quickly, have a look at our Services page.