Today is Episode 5 of Interview series on Expert-talks @MAAVRUS, with Leaders in the Analytics, AI and Transformation space. For this episode, our CEO Mahadevann Iyerr (Mahaa) is in conversation with Rob Hand, Founder & CEO of Hand Promotion Management, a company that provides advisory services and transformation consultation to Global CPG and Retail Organisations, in the areas of Trade Promotion, Retail Execution and Revenue Growth Management. Previously Rob has worked with Capgemini, SAP, Oracle and Media Net. He is also author of the book “Invisible Economy of Consumer Engagement” We are sure we can learn a great deal from Rob’s insights based on his extensive domain experience. 

A few key points from the interview : 

Around 19-20% of CPG Sales turnover is spent on Trade Promotion, making it the 2nd largest cost line for CPG & FMCG companies, and hence there is a need for a lot more linkage between Trade Promotions and the end Consumer engagement and outcomes. This requires a good understanding of Trade Promotion Planning, Execution and Revenue Growth Management processes. With Covid lockdown strangling businesses, Rob decided to write the book “Invisible Economy of Consumer Engagement” to explain the current on-ground situation and his thoughts for the future. 

Two-thirds of trade promotions do not deliver on business expectations and are categorised as failures – a key reason being the availability of trade promotion performance data. Even existing data with CPG companies are lacking in accuracy, granularity and scope. To be able to apply sophisticated AI/ML engines, will require data with highly concentrated hierarchical detail. 

Historically, Grocery retailers have looked at Trade Promotion spending by CPG companies as a way to boost their thin profitability margins. So while retail data which is rich and timely in customer shopping behaviour and experience, can help the overall product value chain, there has been a reluctance to transparently share data. However, given the rise of e-commerce during the pandemic and the fact that it has remained at record levels, the brick and mortar retailers know they have to fight back smarter, and that means sharing intelligence with CPG companies to execute productive promotions. 

A traditionally painful area of trade and channel promotion is the full reconciliation and settlement of deductions taken by the retailers and distributors where, due to the lack of visibility, the supplier has difficulty identifying the source or reason for the deductions. For most CPG companies the deduction could range between 20 to 40K deductions per month, and write-offs in the range of approx. 3% of that value. Lack of historical data granularity is one of the reasons, why auto-reconciliation continues to be a challenge even with sophisticated trade promotion solution vendors. 

Another reason for trade promotion failure is the lack of alignment between the trade calendar and the corporate marketing event calendars – coupons, e-commerce events, advertising, and so on. With most CPG companies also investing in their own digital commerce channels, a portion of their consumer marketing spend is used up in immediate gratification through coupons etc, putting pressure on their brand-building investments. Most CPG companies have now adopted Revenue Growth Management roles to be better prepared for the Omni-world. His book “Invisible Economy of Consumer Engagement” explains, 4 stages to the level of consumer engagement. The final stage “Engaged” is almost utopian – and means no failed promotions, which means accurate, granular and trusted data, NO out-of-stock conditions, 100% alignment between trade promotions, corporate marketing and ecommerce promotions, and it means 100% execution of the integrated business plan every day of the year. Most companies are though in the first or second stage of the ladder.