Trade Promotion Management (TPM) can be a thorn in the side of many Executives trying to protect their revenue. Specifically because they realise that the effectiveness of the millions of dollars they spend on trade promotions could increase dramatically if only they’d taken measures to pinpoint problems. Further, they could have acquired tools to solve these problems and to measure ROI.
TPM has long been a term used in the CPG industry. Though it’s no longer exclusive to the CPG industry as other industries seek to become more competitive using the tactics found in trade promotions management.
Other industries are now emerging, seeking to better track and manage the discounts or promotions that they use as a way of maintaining customer loyalty and entice new customers. Like CPG, they too have experienced problems where a discount was given and later on they realise they’re actually losing money or narrowing their margins.
Companies that try to fix their trade promotion problems with isolated one-time initiatives, think they’ve solved their problems. However they fail to create a technology enabled process that will constantly measure, monitor, and improve the efficiency and effectiveness of their trade promotions.
In the past there has been a big focus on the importance of being able to plan trade promotions. However, dedicated trade promotion planning software has tended to deliver insight but not execution. Without a strong emphasis on execution, processes already used to execute uncomplicated trade promotions won’t be able to handle more complex promotions.
According to Nielsen more than 20% of revenue spent on trade promotions, making execution critical. An execution solution helps to get to the bottom of discrepancies between orders, promotions, invoices, and deductions within the one software system. Most companies are already using their Enterprise Resource Planning (ERP) system to gain visibility across internal and supply chain networks. With an execution solution that integrates or interfaces with an ERP, companies can get a comprehensive view of their promotional activities.
TPM means being able to manage the settlement of retrospective, current, and future promotions. Being able to automate the settlement process and carefully validate claims cuts lead-time, improves efficiency, and virtually eliminates disputes that can hold up payments.
Companies can also protect themselves from any end of financial year surprises as they understand the true exposure to outstanding claims through correct accounting and accruals. With better management of promotional budgets and a reduction of invalid claims, companies can manage their current trade promotions as well as future trade promotions they have planned.