By Janet Zlokovich
While unpacking my groceries at the check-out line of my local supermarket, I like to look over the discounts I’m going to receive on my purchase. 2 for 1’s are one of my favorite ways to save and usually results in the largest subtraction off my final grocery bill.
Since I am always wearing my Foodservice hat, I ponder the strategy manufacturers have taken to position their products so consumers will notice a sale display and make the ultimate decision to purchase one brand over the competitors. Will the manufacturer receive the ROI they hoped to achieve by reducing their price to be lowest for comparable products? Especially if they are currently the market leader for their product category…..Has the manufacturer made the correct choice and will their campaign result in long-term gains to permanently change the consumer’s behavior?
I think the same approach and thought process can be applied for the Trade Spend Management and how the manufacturer will offer incentives that target electronic claim submission as a requirement for meeting the contract criteria. Earned Income/Shelter Rebates, Corporate and Local Growth programs and Marketing spiffs are all ways the manufacturer can change behavior for their distributors….while Deviated Pricing and Headquarter Rebates are the most effective ways to influence their operators – both national chains as well as local independents. It can be an attainable goal to have this impact on your customers reporting if the contract terms are structured correctly. Reward those who are compliant and incent others when they are willing to commit to enhancing their billback reporting capabilities.
According to the recent The Hale Group and Market Intelligence survey , 81% of the respondents said that they receive less than 50% of their distributor Proof of Performance claims in a usable electronic format. For clients that use Answers Systems ContractPro® for their Contract Management and trade spending Solution, electronic data is a “big deal”! This efficiency is utilized to the fullest when we leverage our advanced technology and experienced resources to maximize this capability. Even though we have exceeded the 2010 industry projection of 50% - Answers Systems attained over 80% compliance with our data acquisition on Trade Spend claim submission from distributors and operators, there is still much more on our roadmap which we plan to do. data acquisition is constantly in motion so we can receive more electronic billback reporting rather than paper….not to mention trading partners have evolving technology and will completely overhaul their internal systems, impacting their billback reporting.
Another criteria Trade investment measurement for a manufacturer is having visibility to their product movement throughout the supply chain. Without this critical information, they have no way to measure their customer’s success. The foundation for trackability requires full operator unit address information for each contracted sale. Deviated billback reporting from the distributor and Operator purchase rebates should include the unit where the product was sold. This information will help the manufacturer discuss strategies with their distributors for growing their business with their shared customer.
Overall, establishing benchmark terms for your Trade Spend programs are important to ensure manufacturers will get a return on their investment from the customer. Just like the marketing campaigns in the grocery store, you should be able to measure your expectations against your customer’s performance. Validation is an important step prior to finalizing any contract to make sure your customers reporting capabilities meet the objectives. This will better position your company to increase your ROI and meet the objectives for sales growth and distributor and operator penetration.
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Trade Spend Management,
Rebates,
Foodservice