The level of sophistication in the consumer chain has advanced a thousand-fold in the past decade alone. What was formerly a rather simple process of planning promotions has now become a complex blend of technology and skill at predicting consumer behavior.
It hasn’t been too long ago that a typical consumer products manufacturer rep would replicate last year’s plan, make any adjustments for an account’s expanded stores, new markets, or new product launches, and dub it the new current year forecast.
These guys were great at what they did. They knew their accounts, they had a great grasp of the buyer’s philosophy, and they felt that they knew what worked and what didn’t. They were satisfied if they increased their sell-in and averaged a positive incremental volume, because THAT is what they were compensated to do. It was a tedious effort, but, overall, rather easy.
Ah, those were the days!
The only real problems they had outside of vying with their competitors were helping their accounting folks in the home office locate the source of deductions that were not obviously linked to the promotion plans; and heck, that wasn’t their problem anyway, right? Just a nuisance.
Ah, GONE are those days!
The combination of advanced intelligence, integrated predictive planning, and the social media landscape has created an ocean of data (“lakes” seems way to confining, doesn’t it?) from which the retailer and consumer products manufacturer can come very close to accurate predictability of demand. Armed with this intelligence, the technology can be created to refine this raw and unstructured data into insights that translate to pure tactical direction.
Gen X, Y and Millennial kids are now filling the ranks of buyers, category managers, market planners, and yes, even sales reps. These people grew up slaying dragons, aliens, and a host of killers in Smash Bros©, racing at Talladega, and creating futuristic cities in SIMS® while doing their homework, making 4.0 GPA’s and managing a 1,000 friend Facebook account. They have no fear of technology and embrace it as easily as blinking an eye.
This has really been on my mind as we have just about completed our vendor technology study briefings (to be launched in October 2017). I am pleasantly amazed at the use of innovative technology that is designed to turn the entirety of a forecast and trade promotion planning process into something that has been missing forever – a precise and trustworthy prediction of consumer purchase behavior. While it is still not perfect, it is certainly easier now to create a plan that has a much higher degree of success than the typical rates of the past (e.g. about 45% of the trade promotions fail).
What amazes me the most is that every vendor gets it. There are no laggards in recognizing the power of predictive analytics, optimization and cognitive machine learning. To a vendor, everyone is working hard to continue the improvements. The calls we are making to the references that were provided prove it as well. The level of confidence of the manufacturers in the outcomes of the trade promotion planning and optimization technologies is reflected in the excitement and exuberance within the sales community who are becoming more adept at using the technology. I am also encouraged by the random calls we make to the field sales executives who soundly welcome the technology, grasp the ease of use and hail the time they have with their families because of the reduction in time spent in planning activities.
But this did not come easily to any of these vendors. Each vendor gave us detailed stories of how they struggled with their respective roadmaps and spent huge amounts of time and money in construction, testing, and monitoring new solutions before declaring general availability. In many cases, entire technological direction was dumped in favor of different technology, just to ensure that they could build and adapt the technology to the company’s overall strategy. Decisions around cloud versus on premise versus mobile came at a price that often meant financial pain, bruised egos, and in some cases, hard personnel actions to be taken.
Throughout the entire research and development process, these companies kept their eyes on both the ultimate objective of accurate and productive consumer engagement and the corporate bottom line. Of course, the primary focus was always on serving their customers and making life better for their people who use the solution.
I can say from direct experience that R&D efforts in this [Trade Promotion Execution] industry are never easy because, for decades, TPx has been on the bottom of the stack of priority technology and executive focus. But I am excited to say that is no longer the case. I think old Rip Van Winkle woke up and stared at the balance sheet and said something like, “Wow, what is THIS line item…trade what?” “When did this happen?”
Oh, let’s say around 1970, Rip.
So, let’s take a look at the areas where we are seeing marked improvement in technology and innovative focus:
- Access and usage of Point-of-Sale (POS) data – this is becoming a mainstay in promotion planning and a critical element of inflight and post promotion metrics.
- Converting POS, historical transactions, social media, service and loyalty data into strategic and tactical direction – the technology we see today, including AI, Cognitive Learning and the data science to support it is creating immediate and accurate forecasts for promotion planning
- March toward 100% promotion compliance – The mobile integration of trade planning and promotion execution at the retail floor is improving real time visibility of store conditions including compliance and out-of-stock conditions with immediate communication and action
- Elimination of Deductions – We’re not there yet; but improving order management and networking (such as SAP Ariba’s Collaborative Supply Chain Solution among others) has been proving the power of collaboration and drastically reducing errors that contribute the most to deduction problems.
Let’s look ahead – what is coming that we can further address?
- Full collaboration in real time between buyers and reps – We have come a long way from the 2007 “New Ways of Working Together” project between Oracle, Wegman’s and J.M. Smucker; but that gave us a real understanding of what can be done.
- Unification of Direct-to-Consumer and Trade Promotion planning and execution – This is the “big one” as they say. Somewhere down the line, and soon, it will become necessary to blend the resources and technologies between sales and marketing to create a unified plan to every consumer – driving them to the stores or online points of sale and collaborating with their retailers to ensure 100% success.
- Remote Control of Promotion Performance – Don’t laugh…if you want to check out my blog on Clientelling (HERE) you will see that it is already being done. Being able to provide real-time consumer shopping intelligence to the floor associates and department managers is coming fast – be prepared!
The idea of using advanced technology in an innovative way to ease the pain of labor and improve the chances of success in each of our roles is not easy. Making our lives easier is a long-time objective of technology; but as you will no doubt agree, it ain’t easy being easy!
My two cents…
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