How to plan and execute promotions better with store-level data

Promotions are the second-largest item on a CPG company’s P&L after cost of goods sold, accounting for up to 25% of sales. Many of these in-store promotion execution, on the other hand, have no discernible effect on sales – or, worse, have a negative impact. According to one estimate, 20 to 30 percent of promotions erode margins by failing to produce enough sales to cover marketing expenditures.

How successfully is your consumer promotion execution being carried out?

The Popai Compliance Initiative, a survey done by Quri (now a Trax business), reveals a significant gap between CPGs’ estimates of display compliance and retail reality. Ahold Delhaize, Kroger, CVS, Dollar General, Walmart, Safeway, ShopRite, and Rite Aid were among the retailers whose advertising displays were examined by Quri. To provide a full view of display execution, the audit collected over 112,000 data points from floor stands, end caps, PDQs, and shippers. This store-level study revealed that 42% of displays did not comply with the plan, despite CPGs assuming compliance rates of 70% or higher! More significantly, compliance displays resulted in increased sales. End caps had the highest compliance rates, and it’s no wonder that this display style also had the greatest sales increase.

Why do more CPGs require data at the store level?

Traditional mass media such as television are losing market share to the shop. Why? Because the “first moment of truth,” the purchase decision at the shelf, is influenced by in-store promotional vehicles. But, more importantly, do CPG firms track promotional performance at all? Are they doing it with enough analytical rigor if they are?

Some major manufacturers have entire teams of analysts dedicated to analyzing the impact of a few promotions. However, according to a Booz & Co research, just one out of every five businesses can track their trade spending down to the individual event level. According to a more current POI research, a consumer goods company’s ability to analyze the maximum percentage of deals is around 40%.

First and primarily, this has an impact on promotion strategy. The failure to capture cause and affect insights in the increased recognition is due to a lack of reliable store-by-store data. As a result, most companies use a “grandfathered” approach to advertising, repeating the same campaigns year after year. Furthermore, they are forced to work with retailers using “pay for performance” techniques, which are based on averages and do not account for the complexity and interdependencies of performance that allow for store segmentation and analysis.

Obtaining the correct data at a rapid and large scale

Using crowdsourced data from a large number of retailers to verify display conformity and continually assess campaign performance is a fast-emerging solution to this thorny challenge.

Retail crowdsourcing provides CPGs with accurate big data in a timely manner. CPGs may immediately obtain access to evidence-backed, trustworthy data on a huge scale by engaging consumer auditors who conduct in-store display and shelving audits. This information gives a comprehensive picture of in-store execution, reducing bias and the potential for mistake.

The most frequent use of the “crowd” is to conduct survey-based audits, which are usually supported by shop pictures. More advanced manufacturers also provide image-recognition-based smartphone applications to this consumer field army, which totally digitize the shop and provide greater data for analysis. What’s the bottom line? Using a crowdsourced presence to collect data at the shop level allows you to impact promotional outcomes in the near term and get insights in the long run.