Consumer Product (CP) companies need to know which levers to pull to yield the highest ROI…
The 2010 Industry Benchmark Survey developed by Quofore and Booz & Company, a global consulting firm for business, government and not-for-profit, reports that the goal of better reporting and monitoring, both in-store and in the field, is now an imperative for competing and winning at retail. With trade spend accounting for CP’s second largest expense after the cost of goods sold, an expense which can reach 20% of a company’s sales, visibility and the ability to course-correct on the fly based on the latest accurate in-store data, is critical to achieving the highest possible ROI and winning at the shelf.
The increasing urgency to address ROI issues and attainment pertaining to trade spend and in-store retail execution activities can be attributed to a number of key trends. One is the change in consumer purchase behaviours as recession-battered shoppers have become more frugal, less brand-loyal and more focussed on price and value. CP companies also face added pressures from retailers’ more aggressive marketing of own private label lines which lessens space and visibility for CP brands, and from the growth of in-store marketing tactics designed to influence consumers closer to the moment of purchase. These factors have led to a heightened industry focus on how CP companies can increase their competitive advantage.
In response, Quofore and Booz & Co conducted further research to determine the percentage of companies that measure ROI for in-store sales and merchandising activities; the extent to which ROI is measured; the metrics utilised in calculations; factors that impact in-store ROI such as out-of-stocks and trade promotion compliance and the frequency of ROI measurements and reviews. The study yielded the following key insights:
• 83% of key CP decision makers ranked out-of-stocks or trade promotion compliance as the #1 factor impacting ROI
• 62% of respondents said they measure ROI for in-store sales and merchandising activities
• Of companies that measure ROI, about three out of four say they calculate it for each individual programme/promotion
• However, just 8% feel they optimise their use of in-store technology; another 8% rate themselves ‘effective’ and 29% regard themselves as ‘efficient’
Of the CP companies that participated in the initial Benchmark Survey, just 37% of companies achieve their target ROI for in-store sales and merchandising promotions, while 63% said that they couldn’t determine, or weren’t achieving their targets. As with other links in the overall value chain, companies that leverage technological advances in the field gain a competitive edge in retail execution. The Quofore-Booz research found that companies that invest in mobile Sales Force Automation (mSFA) technology are 50% more likely to achieve their in-store ROI targets. In-Store Visibility Among surveyed companies that have adopted mSFA technology there is clear consensus that usage improves retail execution and ROI attainment and measurement. Benefits include optimised workflow processes and the ability to respond creatively to real-time actionable intelligence from the field. Shamrock Foods Ltd, Ireland’s leading FMCG sales, marketing, warehousing and distribution company, introduced Quofore technology in 2007.
Since its introduction, the business has seen measurable gains in operational efficiency including greater ability to leverage data and order capture to increase sales. Joe O’Callaghan, Field Sales Manager of Shamrock Foods reports that improving communications between the field force and head office was a key required project outcome from the outset. “Prior to implementing the Quofore system, field force work patterns and administrative processes meant we experienced an interval between field data capture and issues reports and our ability to generate planning processes to track and rectify them. We now have actionable insight with a minimal time lag – virtually in real-time.” Simplot Australia, a wholly owned subsidiary of the US-based JR Simplot Company, is another in the vanguard of companies that have invested in mobile technologies to automate and optimise the day-to-day tasks of their field sales teams.
Simplot’s key business driver for implementing a retail execution system was the need to obtain real-time data from its 170 strong field force in order to inform critical business decisions on their products and distribution in-store and to plan for business expansion. The company recognised that its paper-based reporting system militated against its ability to receive, analyse and respond to in-store intelligence. “Implementing the Quofore solution has helped us close the distribution compliance gap, which actually equates to millions more dollars in sales per year,” said Nigel Drews, National Sales Manager – Retail Operations. “The field team can capture real-time product data in-store so we’re armed with factual data to determine whether retailers are complying with agreed trading terms and we can work with them to improve distribution.
” The company has also achieved a significant 80% reduction in paper usage, saving over several hundred thousand dollars. Patties Foods, the largest Australian owned manufacturer of frozen foods, has also completed its transition to mobile technology. Confronted by the challenges of a paper-based system that rendered critical field intelligence inaccurate and out-of-date by the time it reached head office, the company embarked on a phased roll-out of Quofore technology across its retail division.
The company reports that the main strategic benefits have included greater visibility of its products, improved accountability of field staff and the ability to take immediate action to rectify and plan for out-of-stocks, range corrections and missing tickets. “Consumers call our Customer Service department to ask where they can purchase certain products. Using the data captured by our field team during a distribution check we can accurately inform them of the exact store and time a product was on the shelf; this simply wasn’t possible before”, said Gavin Hands, National Trade Marketing Manager. All three companies report that the technology’s user-friendly interface has boosted the efficiency and effectiveness of their field teams and has led to higher employee engagement, with Shamrock Foods citing a 100% user uptake.
The measurable returns realised by Shamrock Foods, Patties Foods and Simplot align with recent AMR research which found that companies taking responsibility for the supply chain all the way to the retail shelf can gain a 2% to 15% improvement in sales. The industry is increasingly recognising the benefits of mSFA technology in facilitating retail execution and monitoring, and ultimately greater ROI. It is unsurprising, therefore, that of the companies surveyed by Quofore and Booz & Co, 36% plan to add ROI measurement capability within the next 12 months, 45% within the next 24 months and the remainder from 2013 onwards. About Quofore Quofore is the world’s leading developer of software solutions that help Consumer Products companies transform the effectiveness and productivity of their mobile field representatives.
In use by leading companies in more than 30 countries, Quofore solutions automate and optimise field sales, marketing, merchandising, van sales and direct store delivery operations. Working closely with customers, Quofore can demonstrate quantifiable increases in rep productivity, retailer compliance, brand performance and revenue growth. Today, Quofore is recognised by leading industry analysts as the premier Top Tier company delivering retail execution solutions across multiple geographies.