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It’s Time To Reimagine Trade Management – Here’s Why

This is an incredible article by Colby Sheridan,  Global Director of Sales and Trade Management Solutions, Consumer Products at SAP.

 

You can read the original article by clicking here.

 

As a consumer products (CP) company, how effectively can you currently plan and execute mutually profitable trade promotions with retailers?

 

If there’s considerable room for improvement, you’re not alone. The good news is the size of the prize is substantial: The typical CP company sees significant improvements across trade spend efficiency, lower deductions, and reduced inventory with a holistic trade solution.

 

According to a 2016 survey of CP companies conducted by the Promotion Optimization Institute (POI), 79% of companies are not satisfied with their ability to manage promotions—nor should they be. The typical trade promotion loses money, erodes baseline volume, and fails to account for the retailer’s own business objectives. And yet it is typically the number-two item in a P&L and consumes 25% or more of revenue.

 

Despite these outcomes, most CP companies simply copy, run, and pay for the same failed promotions year after year. Moreover, these promotions are typically not aligned with the retailer’s objectives, and rolling up these individual account plans to overall corporate growth targets is difficult at best. Trade plans are often based on internal data only, because external point-of-sale data, distributor sales data, and other resources (including massive volumes of customer data) are too copious and difficult to work with. So plans rely on estimates instead of actual consumption, when sound decisions require a complete and accurate picture of promotion effectiveness.

 

None of this would be surprising except that many CP firms have actually implemented some sort of trade management (TM) package. The problem is that these solutions are typically limited to assessing promotional profitability and effectiveness – not managing the full customer P&L, which is critical to success. Only sales leaders with accountability for all volume can develop effective plans that can drive customers’ category growth and build baseline volume to drive their own margin growth. When sales leaders own the entire P&L for each retail customer, CP companies can prioritize investments and opportunities for long-term growth – ultimately driving customer value and profitability.

 

Given their limitations, traditional TM technologies are often used simply as a “checkbook” for tracking trade spend. As POI points out, the gaps in system functionality in areas such as reporting and analytics force CP companies to manage many core trade promotion activities using manual spreadsheets.

 

Sound familiar? Then it’s time to rethink your entire trade management business process, with an eye toward:

 

Owning the entire P&L for each customer, prioritizing investments and opportunities to help them unleash long-term growth, customer value, and profitability – not just short-term results.
Transforming your relationship with retailers from a promotions manager to a trusted advisor who collaborates with them to build plans for customer-specific categories and KPIs that drive return on relationship.

 

Expanding the conversation – for example, by considering marketing campaigns, finance, and supply chain as part of a holistic customer plan for all volume – to improve purchase consideration, frequency, loyalty, penetration, and more.

 

Performing joint, post-event analysis to see what was profitable, what wasn’t, and how and what to change going forward to improve results.

 

The time to re-imagine is now

 

What makes this the right time to reimagine trade promotions management? Consider that:

 

  • Amazon and other market-disruptive companies are encroaching on nearly every category, making it ever harder to compete.
  • Category growth is coming from smaller, more nimble competitors.
  • Retailers are increasingly demanding business plans that are tailored for their buyers in their own language and KPIs – and expecting manufacturers to help them achieve their revenue and profitability targets.
  • The majority of current merchandising trade spend is associated with events that deliver negative profitability and event ROI.
  • Zero-based budgeting is becoming the new norm, which means every dollar spent must be re-justified every year. Expect intense scrutiny regarding how money is spent.

 

New technologies equip you to revolutionize trade management for your business

The good news is, new trade management technologies are now available to support more holistic, collaborative trade management processes that are far more effective. These solutions enable new ways of working, collaborating, analyzing, and planning that truly revolutionize trade management by allowing CP sales leaders to:

 

  • Coordinate all volume across all channels via comprehensive programs and tactics aligned to jointly agreed KPIs
  • Elevate value proposition and alignment to help retailers achieve broader business objectives versus simply hitting promotion targets
  • Understand implications for all strategic and tactical decisions versus full-year targets, plans, and KPIs for both parties
  • Enable fact-based decision making for sales leaders to drive activities best aligned to targets
  • Align planning and execution across marketing, finance, and extended supply chain
  • Simplify volume dimensions across all channels and enable coordinated, flexible, and agile responses to demand and supply dynamics

 

You can read the original article by clicking here.

90% of marketers are reviewing programmatic ad contracts in quest for greater transparency

90% of marketers are reviewing programmatic ad contracts in quest for greater transparency

 

Read the full original Drum article here

 

Agency trading desks may be the default way advertisers run programmatic campaigns but as many as 90% are set to review these deals after growing frustrated by the lack of transparency being offered.

 

According to a new report from the World Federation of Advertisers, nearly two-thirds of marketers are uncomfortable with the conflicts created by trading through agency trading desks (the principle model used by the majority of advertisers.)

 

They were found to “broadly reject the idea” that agencies and holding companies should act as principal in the media buy and be able to mark up inventory they have acquired in direct deals with media owners before selling it on to brands.

 

While 53% claimed to have a “disclosed or transparent” programmatic relationship, 33% admitted their trading desk model was “non-disclosed/non-transparent”. A similar number – 34% – also agreed that there was nothing in current contracts that precluded arbitrage or principal trading and so many advertisers are now seeking to clarify their positions in these contracts.

 

“Programmatic has expanded rapidly and it’s no surprise that the market and mechanisms that big brands use to spend through this channel are evolving. The rise of in-house, hybrid models and independent trading desks demonstrates that the original trading model left much to be desired,” said Matt Green, global media and digital marketing lead at the WFA.

 

The results are based on a survey of 59 WFA member companies representing 18 industry sectors with a total global ad spend in excess of $70bn. All are spending increasing amounts of money through this channel with an average of 16% of digital ad spend now programmatic, compared to 10% in 2014.

 

Transparency has been the overriding factor in this evolution.

 

Also responsible for this shift has been the rise in the number of marketers seeking closer relationships with their day-to-day agency teams. Some 42% of those surveyed now work with agency level trading desks rather than the legacy holding company operations such as Xaxis, Accuen and Cadreon – although 51% continue to do so.

 

“The second generation of trading models is now being built and while agency trading desks still take the greatest share of digital spend there are now real alternatives being developed that give brands more control over data and technology alongside the wider push to ensure greater transparency. Ultimately, there are advantages and disadvantages for each approach and brands should identify the strategic principles which matter to their businesses, as these will govern partner choices,” continued the WFA’s Green.

 

Read the full original Drum article here

B2B Companies face hurdles in updating e-commerce technology

B2B companies want better e-commerce sites, but balk at the cost and are unwilling to try new ways to sell online, a new report says.

 

E-commerce technology improves every day, and for many businesses that’s good news. The downside is that many can’t keep up with the costs or the rising expectations of their buyers.

 

A new report shows that 54% of companies in a 2016 survey say that the cost of technology is the biggest obstacle to meeting their customers’ e-commerce needs. But there’s a shortfall in another key area: commitment to technology. 44% of respondents to the survey behind the report say their organisation’s unwillingness to innovate with new approaches to e-commerce is the second-largest hurdle.

 

The findings are in a report from CloudCraze Software, which is based on responses from 197 companies representing distribution, manufacturing, software, healthcare and government organisations. 26% of the respondents are with companies based in the United Kingdom, the rest in the United States.

 

The report maintains that businesses that sell online to other businesses generally are not keeping up with new e-commerce technology and therefore are not meeting their customers’ complex needs.

 

B2B companies selling online today say their biggest challenges include containing costs (37%) and the inability to provide an omni-channel customer experience (35%) that lets customers shop with consistent information and service across multiple channels, including on websites and mobile devices. Other shortcomings include gaining a holistic view of the customer (31%), effectively using e-commerce data (30%) and employee I.T. knowledge for platform management (28%).

 

Survey respondents want to get out in front of customer e-commerce needs by offering an outstanding buyer experience, which is the highest-ranking priority among survey respondents (38% say it’s their top priority). One in four report that updating antiquated technology is a priority for their business and about a quarter (27%) plan to spend more than $2 million in the next fiscal year on e-commerce systems.

 

The report’s authors recommend combining e-commerce and CRM technology to tap the most relevant data and place the customer at the centre of the e-commerce experience. What’s more, today’s cloud platforms offer flexibility, cost savings and quick speed to market.

 

Elevate can help B2B companies by leveraging experts in their suppliers to overcome resource constraints in creating exceptional and commercial customer experiences for no cost. Find out more at Elevaate.com

The Evolution of Decision Making: How Leading Organisations Are Adopting a Data-Driven Culture.

This is a summary from a Harvard Business Review – The Evolution of Decision Making: How Leading Organisations Are Adopting a Data-Driven Culture.

 

IN A RAPIDLY CHANGING global business environment, the pressure on organisations to make accurate and timely decisions has never been greater.

 

The ability to identify challenges, spot opportunities, and adapt with agility is not just a competitive advantage but also a requirement for survival.
People have long preached the benefits of relying on data and insights from business intelligence (BI) and analytics to help make better and timelier decisions.

 

A reliance on data from these tools was expected to deliver better financial performance.

 

A global survey of 646 executives, managers, and professionals across all industries and geographies reveals a significant, albeit subtle, change in decision-making processes and their use of these analytics/BI tools.

 

This evolution is marked by users:

 

  • Enhancing skills. With the ever-quickening pace of business, executives and business users are enhancing their skill sets so they can integrate analytics tools into their normal way of working to uncover strategic insights.
  • Balancing data with instincts. These business users are not going on autopilot in using data; they are learning how to strike the precise balance between using analytics and their managerial instincts as well as how to manage business rules in tandem with analytics.
  • Forging new relationships. As the use of analytics becomes critical for decision making, leading business users are forging new—and deeper—relationships with analytics professionals. Leading analytics users embrace a host of strategies, which evolve into best practices to create an “analytics ecosystem” in their department or organization over time.

These leaders constitute a small group of cutting-edge companies in the survey—about 11 percent of respondents. They are creating decision-making processes inside their organizations with an emphasis on data and transparency by widely distributing data and tools to analyse the data.

 

Some of the key survey findings indicate the current practices of decision making, including some frustration as well as enthusiasm over how the process is changing:

 

  • Compressed time frames: 74 percent of the respondents felt pressure to achieve results in less time.
  • Decisions lack transparency: Almost three-quarters of companies have no formal corporate-wide decision-making process; therefore, nearly half of respondents say there is no transparency in how their organizations make decisions.
  • Data drives decisions: 80 percent say they are reliant on data in their roles, and 73 percent say their areas rely on data to make decisions.
  • Skills being enhanced: 52 percent of the respondents say the use of analytics at their organizations required them to enhance their skills, and 43 percent say the use of analytics increased the importance of their function.
  • Wider use of analytics pays: More than 70 percent of the organizations that had deployed analytics throughout their organizations reported improved finnancial performance, increased productivity, reduced risks, and faster decision making. Organizations with less widespread distribution of analytics access were typically 20 percentage points less likely to report such beneifits.

 

As timely decision making becomes more important, analytics is improving—and changing—the way those decisions get made.

 

“In any industry—from consumer electronics to fashion design—the speed of product innovation to the market is increasing,” P&G’s Passerini explains. “In consumer products, you might think there isn’t much reason to invest in another new laundry detergent, but consumers respond strongly to innovation. What’s different now is the tools allow me to see what was important last year, last quarter, and last week so that I can understand what will happen tomorrow, next month, and next year. That is a huge conceptual shift in thinking. We’ve used data analysis for 50 years, but we’re just beginning to develop predictive ability through business models to anticipate what’s coming.”
As Passerini and others have noted and as the survey data shows, analytics is not just a tool or a technology as much as a driver of a decision-making discipline that ushers in an era of cultural change—and improved performance.

 

Read the full report here (PDF) https://hbr.org/resources/pdfs/tools/17568_HBR_SAS%20Report_webview.pdf

Research shows that the trick for companies is to combine speed with stability

Over the past decade, McKinsey studied the impact of a wide range of management practices on different dimensions of organisational health. This analysis, based on surveys of more than two million respondents at over 1,000 companies, has become a stable baseline for understanding the incremental contributions of specific organisational and leadership characteristics to the health, positive and negative, of the companies in their sample.

 

From November 2013 to October 2014, they added new questions on speed and flexibility. Their goal was to discover how often leaders and managers moved quickly when challenged and how rapidly organisations adjusted to changes and to new ways of doing things.

 

The output was a simple matrix, comprising a speed axis and a stability axis. The matrix turns out to be a surprisingly strong predictor of organisational health and, ultimately, of performance.

 

McKinsey look at 37 management practices. When these practices are combined with speed and stability, they generate better performance. In fact, in 4 of the 37—financial management, financial incentives, capturing external ideas, and involving employees in shaping a company’s vision — speed and stability had a particularly striking impact.

 

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Key Take Outs

  • Relatively few companies stood out as being especially agile from the sample: 58 percent of them had speed scores, stability scores, or both that hovered near average.

 

  • An additional 22 percent of companies in the sample were slow—either slow and unstable, a group we describe as trapped (14 percent), or slow and stable, which we call bureaucratic (the remaining 8 percent). These slow companies generally have poor organizational health.

 

  • Twenty percent of the companies in the sample were fast. Eight percent were fast, pure and simple—a group they describe as “start-up.” (These companies were not start-ups, but resembled start-ups in their speed, irrespective of size.) The rest (12 percent), which McKinsey call agile, combined speed with stability. All of these fast companies had better organizational-health scores than the other 80 percent did. Agile companies, however, enjoyed a far greater premium: the odds that one of them would rank in the top quartile for organizational health were 70 percent. Fewer “start-ups” enjoyed top-quartile performance, but this quadrant was our only nonagile category in which a majority of the companies (52 percent) had health scores above the median.

To read the full article, please click here.

How Elevaate Supports Bi-Model Capabilities to Provide Agility and Speed

Bi-Model IT is a concept which has been gaining interest in the enterprise sector over recent years. The term was first coined by Gartner.

 

According to the official Gartner glossary “Bimodal IT refers to having two modes of IT, each designed to develop and deliver information- and technology-intensive services in its own way. Mode 1 is traditional, emphasising scalability, efficiency, safety and accuracy. Mode 2 is non-sequential, emphasising agility and speed.”

 

Gartner suggests that organisations should configure their IT in this way in order to meet the increasing requirements being put on various business units. By utilising bi-model IT, businesses can create operations that are both rock-solid and fluid.

 

This essentially means that organisations should operate two separate but concurrent modes of IT each of which develops and delivers information in its own way.

 

The first one operates in what would be considered a traditional IT manner. This mode of IT is generally housed in the core business functions including most critical business processes and sensitive data. This is often liner and plan driven.

 

The second mode meanwhile is all about agility and speed. This allows organisations to meet digital challenges and develop new products and services without being weighed down by legacy systems and processes. By leveraging the power of emerging technologies, such as cloud solutions like Elevaate, businesses have the ability to quickly and easily develop, test and scale new offerings.

 

By implementing bimodal IT, organisations can reap all the benefits of adopting and utilising new technologies without having to upgrade their entire legacy system.

 

This allows companies to keep pace with emerging technologies and customer demands in an increasingly digital world, without disrupting their core business functionality.

 

Elevaate helps commercial and marketing teams scale the trading capability which is otherwise constrained by technology and resource. By providing real-time trading capability on any digital channel – internal and partner teams are able to create exceptional customer experiences with scale.

Increasing the success rate of new products

According to a recent Gartner report, by 2018, expert use of data/analytics will result in a 10% increase in the product success rate for a consumer goods manufacturer.

 

New products are critical to the ongoing success of the consumer goods industry.According to Nielsen, in its 2015 report on new product success, of more than 60,000 new SKUs introduced in Europe over the last years, just over half (55%) made it to 26 weeks, and only 24% lived to reach a full year.

 

So although every year, thousands of new products are introduced on grocery shelves, but sadly, very few reach a level of sales considered successful.

 
Nielsen goes on to state new product success is a combination of organization commitment, a disciplined product development process, and a comprehensive view of consumer preferences and behavior. So could more access to data around how consumer discover, interact, and buy products improve the odds of new product success?

 

Gartner 2015 survey suggests that BI/analytics was listed as the number one technology investment area for consumer goods CIOs. In fact, 43% of senior management see advanced analytics as critical to their organisations success. In the consumer goods industry, we are seeing more collaboration. We know that the consumer goods and retail industries have one of the richest data ecosystems second to the financial services industry. As partners start to share this data in meaningful and useful ways it is conceivable that greater use of this data could be applied to the problem of new product success.

 

Market Implications

 
Improving the odds of new product success represents significant financial gain for both consumer goods manufacturers and their retail channel partners. When a new product fails, it creates waste for the entire system, which cannot afford it, given the low growth in consumer products sales. Leveraging data and advanced analytics to identify ways to understand and predict consumer behaviour will become an increasing driver of new product and company success in the consumer goods industry.

 

Opportunities also exist to apply the analysis to improve the launch and post launch growth of the product. For example, ensuring product visibility in key growth retail channels – such as online.

 

Creating more compelling, data-supported cases for new products online will also increase the confidence of retailers that are making financial decisions about the best ways to leverage their offline shelf space.

 

Recommendations

 

  • Work to identify the most pressing challenges associated with your company’s new product success rate. It is product, price, visibility?
  • Share online insights with your retailers to gain preferred shelf placement offline

CMOs + CIOs should unite in 2017

Salesforce’s CMO for Europe Guillaume Roques explains in Marketing Week why senior marketers need to get inside the head of the chief information officer in order to succeed.

 

Salesforce CMO Guillaume Roques is the first to admit that 2016 has been a turbulent year for marketers. Even though events such as Brexit and Trump’s election victory have brought about political and economic uncertainty, he remains optimistic about the future.

 

“When you have turbulence you have to rethink your strategy and refocus, and that’s when you can capitalise on new opportunities,” he tells Marketing Week.

 

Speaking to Marketing Week, Roques shares his thoughts on what is in store for marketers in 2017 and what their main challenges will be.

 

What should marketers start doing in 2017?

 

It’s really important that the CMO also does the CIO job and vice versa due to the convergence of tech. Very often the IoT is perceived as being a technical project but it’s critical for the CMO to understand it too. It’s something they can learn a lot from and they can use to create new campaigns or ways of engaging with customers.

 

There are so many digital touchpoints, and as a CMO you need to understand how all these work together and how you connect the dots. You have to work very closely with the CIO, so it’s important to understand how they operate and what their constraints are. That kind of CIO-CMO synergy we will see even more in 2017 than before.

 

Digital transformation isn’t about how the CMO and CIO can work together to better manage those touchpoints, it’s about the CMO and CIO working together with the CEO to transform the way they are serving their customers. While before we were selling a product, we are now selling services or a customer experience. It changes the way you position your customers and how you position them within your system.

 

Read the full article here 

Growth Is Optional: 10 Reasons Why Companies Fail At Growth

This is a great article by .

 

Alex Schultz, the VP Growth at Facebook, give a lecture on Growth for the CS183B class. He made a lot of great points, but the last 60 seconds I thought were the best:

 

“Mark [Zuckerberg] has said he thinks we won because we wanted it more, and I really believe that. We just worked really hard. It’s not like we’re crazy smart, or we’ve all done these crazy things before. We just worked really really hard, and we executed fast. I strongly encourage you to do that. Growth is optional.
I bolded the words, “growth is optional”, for a reason. I think this summarizes things so well. It might sound crazy because I’ve never met a company that says they don’t want to grow. But many don’t do the things required to grow. It reminds me a lot of people who want to lose weight, stop smoking, or make some other major change in their life. They have the desire, but not the will to do the hard things.

 

The wrong mantras have been pushed. Product is everything. You growth hack your way to success. The way to find growth is to try every channel possible. Paid acquisition is for companies with bad products.

 

They are all simply wrong.

 

The concepts behind growth are much simpler than most people think. As with most things, it is executing that is the tough part.

 

Here are 10 things I’ve seen companies fail at executing that prevent them from growing.

 

10reasonsfailatgrowth-001

 

Read the full article here – http://www.coelevate.com/essays/growth-is-optional 

Zero-based budgeting becomes the new normal

Marketing Week outlines 12 trends, predictions and issues that will gain pace over the next 12 months. We look at Zero-based budgeting and the impact it will have.

 

Several trends have coalesced to make zero-based budgeting an imperative for marketing teams in 2017. The practice requires marketers to justify spending on all new activity, rather than having set budgets based on revenues or the previous year’s spend. This carefully costed approach reflects the economically uncertain and austere conditions under which many marketers now operate.

 

The latest IPA Bellwether report forecasts that ad spend in 2017 is set to decline by 0.7% as business investment is pared back in line with the continuing uncertainty over Brexit. Moves to consolidate agency services, payment-by-performance agency models and increased scrutiny of digital metrics will also lead more companies to adopt zero-based budgeting as a way of keeping a closer check on their spend.

 

The motivations are not just financial, though, and are also driven by the need to work in a more focused and targeted way. Charles Ireland, Diageo’s new general manager for GB, Ireland and France, recently told Marketing Week that the drinks group adopted zero-based budgeting earlier this year as “a requisite of being a world-class organisation”. The company wants “to get the same services but more efficiently”, he said.

 

Marketers will face a series of challenges as zero-based budgeting becomes the normal way of doing business in 2017. Agency relationships will have to be renegotiated as tighter cost controls and targets increase the burden on both sides.

 

Internally, marketing teams will require people who are both financially-minded and effective planners. They will also need to keep creative marketers happy and create working environments that do not feel too stifling or rigid as the purse strings tighten in 2017.

 

Read more at Trends for 2017: Zero-based budgeting & influencers 2.0