Tactical Trade Promotion: The Fourth Dimension

Can you name the top three tactics used by sales people in planning a promotion?

…tic toc…buzzer!

If you said temporary price reductions (TPR), displays and feature ads, you are right.  I would love to state the actual number here; but our survey on revenue and trade promotion management has yet to be launched.  However, we will have it out soon, and this and other exciting and NEW information will be available – stay tuned!

Nevertheless, if I asked what the fourth most common tactics would be, I may get responses such as discount price coupons, BOGO’s (2-for-1’s) or perhaps even product demonstrations.

But if your “fourth” was social media, stand up and take a bow, because you have just proven that you are a true digital transformationalist.  If that is not a word, it will be now.

Social media statistics are well known and they are staggering.  According to Statista.com, here are the numbers:

  • 9% of the entire world’s population uses Facebook
  • 1% of the entire population of North America uses Facebook
  • 81% of Millennials check Twitter at least once a day
  • 32% of teenagers consider Instagram to be the most important social network
  • YouTube on mobile alone reaches more 18 – 39-year-olds than any cable network in America; and,
  • 80% of the time spent on social media platforms is done on mobile phones

I could go on; but you get the point, eh?

But if you take the combined figures from trade promotion spending today, I doubt if social media accounts for more than 2% of the total.  So, who’s missing this boat?

Not the CMO’s organization.  They are ramping up their spending to cover these key social media platforms.

I had one sales rep tell me that social media is rarely used because, “let’s face it – retailers are not going to spend their precious trade funds on Katy Perry on Twitter.”  Really? According to Statista, @katyperry is the number one Twitter destination with almost 95 million followers!

The rep’s comment was “Social media is really not a business platform yet.” What? Wait…aren’t you looking for, uh, consumers?

Let’s look at some of the “business” statistics of social media for 2016 thanks to the Pew Research Center:

  • Instagram earns $595 million in mobile ad revenue per year, a rapidly increasing number
  • Twitter’s revenue is up 8% YOY – and that’s not all Katy Perry!
  • 59% of Americans with social media accounts think that customer service through social media has made it easier to get questions answered and issues resolved
  • Over 50 million businesses use Facebook Business Pages
    • Facebook’s total revenue grew 56% in 2016, and advertising revenue grew 59%.
  • 93% of Pinterest users use the platform to plan or make purchases
    • Pinterest drives 25% of all retail website referral traffic
  • More than 56% of online adults use more than one social media platform

One of the more interesting stats above, to my way of thinking, is that 93% of Pinterest users shop there and drive a quarter of the retail website referral traffic.  Think about this: if you are a retailer that wants to expand margins using the same amount of trade spend, focus on those products that the Pinterest shoppers are researching and buying, and pair them with other products on deal. If the Pinterest shopper is checking out a cool recipe, not all those component products will be on deal. Include them in the training for the department heads so that they can set up referral displays and signage and/or actively point out the referral products.

Using market basket analyses, it makes sense to keep these peripheral/referral products in mind as the sales teams configure promotions. This is how you grow promotion margins. One of the overlooked areas is service. The above figure showing that nearly 60% of Americans have high opinions of service and support via social media. Try convincing someone to sign a cell phone renewal with a company that gave them bad service – can you hear THAT now?

We already know that mobile phone use while shopping in stores has zoomed over the past couple of years; so why isn’t mobile couponing a common tactic of trade promotion plans? The general answer is because those direct-to-consumer (DTC) promotions are typically managed and executed by the marketing organization.

Oh…yeah, those guys.

Their argument may always be that they will drive more customers into the stores than trade promotion; but that is not a valid point to make here. True, there is more of a tactical slant to the CMO’s DTC marketing plans these days, and because most trade calendars are not integrated, neither marketing nor sales knows what the other one is doing. That needs to change.

Social media is going to drive a significant change in the way trade promotion is executed, is it not? Say yes, because it is. Therefore, the planning and execution of trade promotions certainly must be aligned with the DTC and national advertising strategy. Moreover, being able to know what and how the shopper is doing in the store is more critical than ever. The logistics alone kill any chance to cover retail execution and merchandising compliance at near 100% levels; so there needs to be more attention paid to social media as a real-time communications tool – both with the shopper AND the store personnel.

Right, I said store personnel.

Right now, we have two ways of learning how successful (or not) a promotion is. First, we can get POS data that gives us near real-time assessment of how the product is selling. Second, we can wait until the promotion is over and the metrics are counted so that we have this sort of ‘rear-view-mirror’ look at what happened. That helps a lot, doesn’t it? (Sarcasm)

Since everyone seems to be connected, even the stockers, sales associates, department heads and store managers can communicate in real time to provide alerts triggered by POS and even online shopping activity in advance of the trip to the store.  This is one of the best arguments for interactive collaboration between suppliers and retailers for both trade promotion planning and execution.

Social media is an untapped resource in trade promotion. Too bad, too, because with the numbers like those stated earlier, it tells me that there are still far too many “seat of the pants” sales and promotion planners out there and little or no attention paid to the potential of social media as a major trade promotion tactic. Frankly, retail buyers are not all that innocent either.

That will change. Getting ahead of the change might be the difference between the current level of failure in promotions and near 100% successful ROI. Not all promotions use all three of the top tactics, but all of them should have an element of social media marketing for more effective customer engagement.

So, step into the fourth dimension of trade promotion tactics and begin taking social media seriously as a viable part of every promotion.

My two cents…

 

Follow Rob:  @RealRobHand

Rob Hand

Author Rob Hand

For most of my career, I have worked in four industries: Consumer Products, High Technology, Retail and Wholesale/Distribution. I was fortunate to begin my career with of one of the oldest channel promotion management companies in the world where I cut my teeth on the heart of consumer marketing around the business processes of co-op advertising, trade promotion and market development. Within consumer products, I covered all major sectors including fast moving consumer goods, fashion, DIY/Hardware, home furnishings, consumer electronics, retail telecom, oil & gas retail, automotive and beer/wine/spirits. I have formed and brought to successful outcomes three companies focused on these business processes and technology. I have worked with companies like Frito-Lay, Southwest Airlines, Intel, Hewlett-Packard, IBM, Nike, Sealy, Hanes, SABMiller, Anheuser-Busch and so many more – all of whom enabled me to build a strong cross-industry and cross-line of business viewpoint. I have guided the industry strategy and product management for companies like SAP and Oracle. Each of those companies gave me unique insights that have helped forge the way I look at every aspect of the consumer chain. My career has also provided me with a drive to be realistic in my analyses of observations and a pragmatic view of solutions. My parents blessed me with a penchant for hard work and an attitude that honesty is the always the best policy. I am a musician and a former NCAA football and basketball official; and I have a wonderful wife and children who continue to teach me something new every single day. I consider my opportunity with Lora Cecere and Supply Chain Insights as an excellent and inevitable channel to provide guidance, counsel and advice to a transforming group of industry leaders.

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