What does it cost to implement and maintain a modern trade promotion management solution? How should consumer products manufacturers and suppliers prepare for, justify the expense, and calculate the return on investment?
Look closely and listen carefully to the accelerated pitch of trade and channel promotion discussions today.
Highly reflective of the priorities most consumer products companies are giving to improving the ROI and consumer engagement outcomes from promotions is the attention given to TPx in the reprise of in-person trade organization conferences and meetings. As an example, two trade organizations, the Promotion Optimization Institute and EnsembleIQ’ s Consumer Goods Technology have upcoming schedules of conferences which highlight topics dedicated to TPx as well as data and analytics, retail execution (REx), and overall revenue growth management (RGM).
It is also a major topic at the industry analysts’ events, Consumer Goods Forum, and a host of other virtual and in-person marketing, supply chain, and advertising events as well.
Trade promotion, retail execution and analytics vendors, along with the top system integration consultants and industry analysts will be present promoting their products and services to the hundreds of consumer products manufacturers attending. The hope all vendors and service firms share is to do more than break even from the high costs of attendance and sponsorships with, at the minimum, a solid list of prospects, and at the most, the blue ribbon award of a license and/or implementation deal.
The attending manufacturers want to network with their industry colleagues to learn about the latest TPx, REx and RGM technologies, trends, and best practices and share ‘war stories’ over coffee or a drink. Agenda topics are full of great presentations and case studies that help attending CPG companies to establish the kind of intelligence that helps grow the industry and achieve breakthrough outcomes. They know they will be approached by the vendors, invited to hospitality suites, and taken to dinner to present their pitches in a less crazy atmosphere.
These conversations often begin the journey toward a new TPM/TPO implementation project. We are seeing more of them than ever before in this writer’s recollection—and this writer has been involved in a lot of them.
From the perspective of the manufacturer, going into a TPx vendor selection initiative means a long line of decision-making, evaluations, internal process and technology reviews as well as an often politically-charged schedule of meetings leading to the creation of a project plan and a team of executives and stakeholders assigned the responsibility to see it through.
And that is even before the first vendor communication.
Because TPx, in particular, is going through a rapid acceleration of new vendors and massive upgrades in existing technology and functionality, the new team and steering committees find themselves trying to know what they don’t know. As an industry consultant who is often called in during this early period of trying to identify the players and determining next steps, I can tell you it is often a somewhat confused team I meet for the first time. They have a lot of questions.
What vendors should we talk to?
How much is this going to cost us?
Will we need to change our processes?
How long is it going to take…really?
What internal organizations do we need to include in the project?
How or where should we begin?
Oh, and did I mention the most frequently asked question: “How much is this going to cost us?”
Because of the nature of this issue as a significant enterprise technology initiative dealing with the billions of dollars of trade promotion spending, there is little or no real data available against which a consumer products manufacturer or supplier can measure and compare detailed costs. It is so highly sensitive a topic that the only way to gain hard core intelligence is either to have been involved directly as a managing team member of a corporate steering group for a TPx implementation or as a vendor or systems integration consultant with full P&L responsibility for the delivery and installation of the technology.
Compounding the mystery is the fact that, even with a rather sophisticated and comprehensive “out-of-the-box” technology solution, individual corporate requirements often result in numerous major customizations and alterations of functionality, making it virtually impossible to create a standard. Even for vendors and SI partners which have significant experience implementing new systems, the danger in presenting a range or “ballpark” estimate to the client without a deep set of detailed design specifications is too risky to consider. And given the often wide swing in costs and timing presented by bidding vendors, it is often difficult for the consumer products client to be completely comfortable with the eventual accepted figures.
Having been on so many of these TPx implementations over the course my career, I see how frustrating it is for a consumer products company to wade through the planning and execution of a vendor selection not knowing what to expect in order to answer those questions above. With so much attention on trade promotion today, there should be an objective and unbiased source of intelligence that can help consumer products companies prepare for and be confident in readiness to take on a business challenge that is most likely going to be the next 18 to 24 months of their professional lives.
In response to so many requests for this type of information, HPM has responded with an in-depth study of several recent large-scale TPx implementations that provides this intelligence.
We contacted more than 25 consumer products companies across several industry sectors and categories to survey and analyze realistic data from their trade and channel promotion management, execution, and analytics technology implementations. This data included details of cost and time which would inform and fully prepare a corporate cross-organizational team for a successful outcome. The data provided includes, but is not limited to:
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- Key processes and metrics across the entire scope of the project
- Original estimates of project time and costs, broken down in realistic workflows and milestones
- Actual costs and time to completion and “Go Live”
- Value stream process mapping best practices
- Types, timing, and costs for classifications of customization and technology alignment
- Project management best practices
- Return on investment metrics and measurements
As you might expect, this is highly sensitive data, and to protect those surveyed, we crafted questions to be answered in specific terms and, to the highest degree possible, very short ranges and windows. Company names, products and categories, vendors and consulting partners were all left off. We did capture size of company, industry sector (i.e., FMCG, fashion, durables, and so on). All of these companies were global, even though most of the initiatives tracked were for a particular region such as North America, Europe, Asia/Pacific and Latin America.
With this data, a consumer products company considering a major TPx implementation will have a much better chance of achieving initial objectives and doing so at or below budget. Most importantly, the entire team will know what to expect, how to respond and how to be proactive throughout the entire TPx initiative.
The level of detail and the realistic metrics we received in this survey provide a unique perspective and an opportunity to be more efficient and effective in the actual execution of a major TPx transformation initiative. Knowing what you don’t know up front is far more effective and less risky than the “gotchas” you will no doubt encounter along the way. There is never a guarantee that the project goes without issues, but this is an opportunity to reduce the liability and proactively anticipate the usual issues the team will face in the march toward “Go Live.”
We have published an industry white paper with the results, and it is available to any consumer products company that is preparing to begin an evaluation of their trade promotion management and execution processes and/or technology. HPM will provide a one-hour presentation and Q&A session with each delivery of the White Paper. For further information or to schedule the presentation, contact Hand Promotion Management LLC at info@handpromotion.com.
