2021-11-17-科尔尼-Trade_spend_transformation_9页_1mb

Trade Spend Transformation: Overcoming Fear to Generate Value

Background

Trade spend (25-30% of gross revenue) is often inefficient, with many consumer goods companies neglecting it due to legacy systems and fear of change. At least 30% of trade spend has negative returns and creates artificial dependencies.

Key Challenges

1. Legacy Systems & Fear: Companies avoid reforming trade spend due to uncertainty about volume loss, customer reactions, and perceived complexity.
2. Uncontrolled Spending: Trade spend is often unstructured, disconnected from brand goals, and based on historical practices.
3. ROI Blind Spots: Despite significant spend, few organizations measure ROI systematically, leading to ineffective allocation.

Six Steps for Transformation

1. True Trade Spend: Capture Data

   • Collect accurate data using ERP systems to break down components and visualize retailer margins.
   • Benefits: Better internal alignment, improved sales productivity, and clearer ROI visibility.

2. Total Payout Benchmarking: Zero-Based View

   • Benchmark payouts against competitors using central planning or handheld tools.
   • Reset payouts by 1-2% through direct cuts or performance-linked structures.

3. Measuring ROI: Embrace Analysis

   • Define simple metrics and tailored thresholds for different brands (seasonal, mature, evolving).
   • Integrate ROI into budgeting, using digital tools for transparency and root cause analysis.

4. Dynamic Strategies: Flexible Design

   • Redesign schemes using ROI-linked strategies (e.g., target-based rebates) for different customer tiers.
   • Transition to pay-for-performance models in modern trade stores.

5. Strong Leadership: Execution & Communication

   • Communicate ROI rationale confidently with leadership emphasizing long-term growth.
   • Build cross-functional teams for strategic oversight and change management.

6. The Selling Story: Simplify & Communicate

   • Segregate offers by SKU, brand, or category and use digital tools to deliver clear value pitches.
   • Streamline schemes and list prices to ensure sales teams remember and prioritize key offers.

Benefits of Transformation

• Net Revenue Uplift: 10-15% increase through eliminating ineffective spend and reallocating resources.
• Efficiency: Simplified trade offers, standardized terms, and better spend tracking.

Conclusion

Overcoming fear by driving data-driven, structured reforms can unlock significant ROI. Establishing cross-functional teams focused on zero-based budgeting and ROI metrics enables sustainable growth.