By: Dale Hagemeyer,
Partner and Board Member,
Promotion Optimization Institute (POI)
This year’s list is pretty comprehensive including some non-US-based players, which we are seeing more and more. The surprise is that when people think trade promotions they still focus on the transactional side. I would have expected to see more optimization players like Periscope, Sequoya, TABS Analytics, and T-Pro Solutions. But eight on the list offer TPM/TPO combined so clearly optimization is getting attention. Additionally, I think we will be seeing more from Visual Fabriq and Xtel coming in from Europe and CPGToolBox, which is getting traction across the Americas.
I don’t believe there is one ideal solution in this area, but there are many good options. The Promotion Optimization Institute 2015 TPx Survey clearly showed that user organizations want best practices in addition to software, but they aren’t getting them. Thirty-six percent of respondents said they expected best practices but didn’t get any. Another 37 percent just got a few. That means 73 percent were basically disappointed. Also, the survey showed that change management issues are much bigger than any associated with technology. For example, 92 percent of respondents had change management issues during deployment and 78 percent did when subsequently bringing new users on board. Also, user experience in deployed solutions isn’t where it needs to be. Ninety-three percent of respondents said that they find the plan/execute/settle/analyze process in their solutions to take a “burdensome amount of time.” Finally, respondents said they have issues “moving capabilities from being transactional to more analytical” so there are unmet needs around more insightful analytics. Some 68 percent said this is definitely the case and 29 percent said that it is ‘somewhat’ the case. Hence, it is pretty damning that only 3 percent feel they are sufficiently analytically empowered.
Small wonder that when asked how satisfied they are with their ability to manage trade promotions 43 percent were dissatisfied, 36 percent were somewhat satisfied and only 21 percent were satisfied. So while there is no ideal, I believe that it is critical to seek a partner that can deliver best practices, have a solid change management plan in place regardless of the solution, focus on user experience as opposed to what IT wants to buy, and look for a tool with analytical horsepower to help sell more and smarter.
With trade spend in the U.S. approaching 25 percent, and 30 percent in China, I don’t believe there is a more significant investment opportunity, especially given the 2014 Nielsen study that showed 2/3 of promotions don’t break even. It is a great market because of the variety of regional and global solutions, delivery options and pricing plans for every preference. Those that focus on the user experience and analytical capabilities for insights are achieving the best results. PepsiCo comes to mind as making good progress.