Adopting Point-of-Sale (POS) Marketing Technology – Taking the First Step
Recent Prospect to Customer Experience
In 2013 we conducted a product demonstration of our software to one of the largest beverage distributors in the United States. This distributor operates in several states and is predominately a beverage alcohol distributor with 30% of their business in non-alcohol beverages.
By third quarter 2014, we had finally sorted out what they wanted; how we would deliver it, and began the steps of moving them from prospect to customer. During that one year effort we convinced our prospect that we could bring solutions that would address several of their POS marketing issues. But we learned a lot in the process.
This distributor is a leader in adopting and embracing technology that will help them grow their marketing and sales capabilities and capacities. Additionally we learned that they use technology to gain a cost advantage. What they save by adopting technology can be invested in other marketing and sales initiatives. When they contemplate a new system, one of the key components examined during the selection process is the potential ROI.
Working with our customers is often like being taken to school on becoming more effective and more efficient. Not only to allow change, but actually to push an organization to change in ways that will “move the needle clockwise” and move the organization forward.
Our new customer has demonstrated the growing importance of POS marketing in the beverage industry. Likewise we’ve learned that “POS growth” has happened so quickly that it has become virtually unmanaged. Their concern is that if something isn’t done to get it under control, it may become practically unmanageable. We’ve heard this “trend” expressed with greater frequency and urgency these past few years especially by distributors with over $100M in sales and now with increasing volume from even smaller distributors.
The Importance of Tracking POS
Simply put tracking, measuring, managing and determining the ROI of at-retail marketing initiatives – custom/temporary printed signage, and inventoried permanent POS items – has become a priority for beverage manufacturers and distributors. Of course, retailers want the most effective POS programs put in place, but are somewhat less focused on the ROI of POS programs since the marketing materials typically come to them at no or virtually no cost.
It is true that more and more beverage companies are investing or planning to invest significantly in at-retail marketing and promotions. Research firms like POPAI, Path to Purchase, and Consumer Goods Technology, who study the deployment of shopper marketing initiatives, believe at-retail marketing point-of-purchase initiatives are steadily increasing and are likely to increase sharply in the next year or two and beyond. At the same time, studies have shown less than 50% of companies do not track POS placement or measure POS marketing’s ROI.
With nearly three-quarters of beverage suppliers stating their belief that the primary objective of POS marketing is to increase sales first and strengthen brand recognition second, it’s no wonder traditional media outlets essentially ignore such objectives and continue to insist on the importance of the “number of eyeballs” that were exposed to the brand’s message rather than any direct correlation to sales. Of course, an increase in sales is exactly the “sweet spot” POS promotions occupy.
In support of the notion that POS’s sweet spot is the increase in sales, let’s examine something we learned from reports coming out of the recent Beer Insights Seminar (BIS) held at the Waldorf Astoria in New York.
According to those in attendance at the BIS, a prominent Beer Industry consultant, Joe Thompson, remarking on the waning effectiveness of traditional media marketing said:
“The next step: Influencing the consumer at the store level. I think that's the key to the distribution system moving forward." Continuing, Thompson said: "[We need] More and more local [marketing] . . . TV has less influence, and the wholesaler is in a position to do a bang-up job of marketing to consumers in their market [at retail].”
Source: November 12, 2014 “The Tech Effect,” Beer Business Daily - https://beernet.com
Conclusions and Recommendations
Until we have an ‘app’ that actually pours beer, or other beverage, from a smartphone in real time, influencing the consumer at the store level is a great use of funds. TV advertising of items that an "unplanned purchase" component, is a waste of billions of dollars of potential influence. With increasingly fewer and fewer audience members actually watching TV advertisements, it merits mentioning that none of them have the ability to instantly buy a 12-pack of beer or cola while sitting in front of their TV's watching a “TIVO’d” program.
If you really want someone to see and be influenced (to buy) by an ad about your product, TV advertising is becoming more of a risk than ever before. Almost half the population simply doesn't watch TV commercials; and, the rest hop on their smartphones to catch up with the burning issues that have come up in the last 5 minute aired commercial package.
If your goal is to increase sales then POS marketing is the answer – particularly if you’re a beverage distributor. In fact, POS marketing may be the key component of your marketing approach.
To get the most out of your POS marketing, it is now important for you to invest in tools to aid in tracking, verifying, measuring and managing your POS initiatives. Doing so will foster competitive advantage. Although it is likely the larger enterprises will lead the charge, smaller companies will only be able to survive, grow and prosper by making similar, proportionate investments. And it is not too early for any size enterprise to begin thinking about making such investments today.
However, these investments, by themselves, will not provide significant ROI without top management’s investment in the processes and discipline required to integrate POS marketing into the overall enterprise.
POS marketing technology software provides the tools to build a measurable POS marketing function within your organization.
Beverage suppliers and distributors should put POS Marketing Technology on the fast-track; and, they should also develop their people to be the most competent ruthless POS marketers possible.
POPAI - http://www.popai.com/
P2P - http://www.p2pi.org/
CGT - http://consumergoods.edgl.com/
Beer Business Daily - https://beernet.com/
To learn more about OnTrak and our POS Marketing Management solutions, Click the following button:
POS Marketing Technology – How to Drive Down Your Point-of-Sale (POS) Costs and Beat Your Competitors
I was standing in the TSA queue at O’Hare airport within the last couple of weeks and way up high on the terminal wall I could see a prominent 20’ x 12’ sign with the message:
WORKERS LOSE UP TO 70 HOURS A YEAR
WAITING TO BOOT AND LOAD APPLICATIONS.
Seeing this message, reminded me:
For nearly 9 years, those of us at OnTrak Software have been amazed at how many minutes per day sales and marketing people spend in configuring, ordering and following up on their POS signage and other marketing materials.
The Real Cost of POS Placing and Tracking POS
Based on information our customers provide us, sales and marketing people “lose” a minimum of 44 hours per year, per person placing and tracking POS material orders from their customers to their internal printing facilities. This is because most beverage alcohol distributors use a manual system to order and track POS, and not a suite of POS marketing technology like OnTrak.
Additional time is lost in rework and replacement, to say nothing of the cost to the retailer in lost incremental sales while incorrect POS materials are removed, reworked, redelivered and replaced. When POS materials have to be reworked often several prime selling days are lost. Products are on the retailer’s shelf without the benefit of being marketed at-retail via the promotional materials that typically provide the last “persuasive push” to turn shoppers to buyers.
Quantifying the Components of POS Costs
Salary – With a conservative average cost of $36/hour, the lost time spent inefficiently ordering POS alone amounts to nearly $1,600 per rep, per year. For a supplier or distributor with 200 reps, the “lost time” amounts to nearly $320,000.
Errors and Reworks – For that same supplier or distributor with 200 reps, if each rep makes one ordering error per month, the rework costs add up to an additional $450,000. Based on a rework time of 1.5 hours per rework (according to our customers), the number of hours lost just to get the right POS to the customer swells to about 62 hours per rep, per year. That’s up 18 hours per year, per rep from the 44 hours mentioned earlier.
Additional Time – Production time can also be lost in locating and loading the raw graphics files that match the supplier’s graphic templates. On average, it requires about 15-20 seconds to locate the raw graphic files based on templates referenced in POS production orders. If 30,000 signs using graphics are created annually, and the time spent in locating the raw graphics for these signs is cut from 20 seconds to 10 seconds each, the savings is 300,000 seconds or over 83 hours per year. Some of OnTrak’s customers produce nearly 10 times as many signs as our example – about 300,000 signs per year. To say the time (and therefore cost) savings are impressive is probably an understatement.
Using POS Marketing Technology to Achieve Significant Savings
These areas of improvements in time, materials and costs amount to substantial, attention getting savings. All this is possible with the deployment of an automated POS promotional materials tracking system. When your reps are freed up of this time spent on ordering, tracking and reworking POS, they can spend more time selling, and generating incremental sales.
For many beverage distributors, hourly sales in the thousands to tens of thousands of dollars are the norm and easily determined with even basic sales analysis tools.
Using our example 200 sales rep beverage supply company, and our expectations of up to 62 hours per rep, per year able to be “reclaimed”, it is simple multiplication to see the potential top-line impact of an additional 62 hours per year spent in selling by each and every one of the reps.
If a typical rep sells an average of $2,000 per hour in product, and is able to work selling products 62 hours more per year, the potential annual incremental revenue per rep would be $124,000. In our example of 200 reps that would be a potential reclaimed top line revenue of more than $24.8 million.
Apply your numbers to this example and you can quickly calculate the significant saving from investing in a POS Tracking software solution. Even if you would expect less than 100% of the hours saved to be spen in making additional sales, the potential incremental revenue you could gain is impressive.
If you need some help with this calculation please give us a call at the number below.
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An Automated Point-of-Sale (POS) Tracking System Makes Your Sales Reps Look Good!
If you are a supplier or distributor of beverage alcohol, an on-line, Point-of-Sale (POS) tracking system can and will help your sales organizations improve their performance more than ever before.
This is true today due to the on-going acceleration of competition for not only market share but also for actual market size.
The Distributor’s Sales Function in the Beverage Alcohol Market
We have lived through a fairly prolonged period of essentially zero growth in the overall beverage alcohol market, but 2014 data seems to signal the return to at least modest growth in the total beverage alcohol market - notably beer and other malt beverages. We’ve also seen some double-digit growth in certain categories like craft beers and imports.
There has been a continued erosion of loyalties between retailers and the distributors. Part of the reason for this erosion is the accelerated turnover of Sales Reps within beer, wine and spirits distributorships. Of course, there has been similar turnover within the distributor’s customers which decreases the retailer’s need to have a “relationship” with the distributor beyond the mandatory “order taking” function.
Should this continue on the current path, it won’t be long before the “ordering function” gets transferred to an on-line function via the Internet.
The fear is we may be reaching the end of an era.
A distributor’s customers tend to buy on price alone, if given a choice. The salesperson seems to continuously do less and less actual selling and more and more inventory replenishment.
Look at it this way:
A retail customer will most likely buy from your competition, especially if the competition’s price is $2.00 less per case. The risk to the retailer in choosing one versus the other is fairly slim since retailers know that beer drinkers are quite willing to buy either Bud Light, Miller Lite or Coors Light based exclusively on the per-case price. Craft beers, so far, seem fairly immune to this phenomenon.
How Do You Track POS Today?
If you’re like the majority of distributors, you don’t track POS at all. Often sales reps when trying to get a beverage order handle POS like this:
The salesperson offers up some appropriate POS materials (signs, for the most part) to the customer to “sweeten the deal”. The rep is trying to overcome the retailer’s objections about increasing the sales order-size or winning additional “shelf space”. So how about some “free POS”.
I’m sure you can imagine your rep offering paper and/or permanent signs, displays or other point-of-sale materials to encourage the retailer to accept additional cases of both the usual and perhaps new products, too.
Typically the POS order is hastily written down on a piece of paper (including napkins) or entered into a free-format text box at the bottom of the beverage order-entry screen. The customer is trusting that the POS from the distributor will be helpful in convincing his customers to convert from being shoppers into buyers. Your rep then thanks his customer for the order and moves onto the next customer, repeating the process.
In most cases tracking and reporting on what happened never occurs.
What’s a Distributor to Do?
As a distributor owner or marketing executive you need to call upon every system, every tool and every approach you can to gain, grow and retain a competitive advantage. When your reps are in the market, they should be equipped with the latest and greatest weapons of beverage sales and marketing.
You already know that a computerized ordering system is one of your weapons in enabling the sales function. Now you need to bring another weapon to bear in that critical moment when your sales rep works to increase his average revenue or case equivalent sales per customer.
Now is the time to take a look at POS Tracking Software. What you do next could have a huge impact on what you can actually “sell” to your customers.
The Case for POS Tracking
Based on our 7-years of experience working with beverage distributors, your reps’ signage requests are, on average, incorrectly translated into a sign or display that has to be re-worked. On average each rep will generate at least one reworked sign order per month.
That is unless you have a system that helps you track and manage your POS.
We have found that the cost of a sign or display re-work averages between $35 and $50. However, the real cost of a re-work is much higher due to the fact that a sign that has to be re-worked usually reaches your customer days after your competition’s latest and greatest POS material has been put up at-retail. So, having a lot of reworks does erode the market share for your brand or product. What does that cost you?
Poorly Managed POS Can Negatively Affect Sales
It may be overly dramatic to suggest one of the possible consequences of not having a point-of-sale marketing tracking and management system is the loss of customers; but it is completely without exaggeration to suggest that you are very likely to lose sales without a POS management system.
Sales efforts are now fully and permanently intertwined with POS marketing. Your beverage alcohol sales team achieves its peak results when the POS function is tracked, measured and managed – and that is only possible with an automated system.
I suggest that now is the time to apply the same careful thought to your POS marketing tracking, measurement and management that you did many years ago when you began to consider automating such functions as order entry, inventory, warehouse management, truck maintenance, logistics and accounting systems.
For more information on our POS Tracking solutions, click the following button:
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A Concluding Suggestion
If you are a distributor of any consumer goods sold at-retail, I urge you to find out whom, amongst your competitors and suppliers are members of Point of Purchase Advertising International (POPAI) or The Path to Purchase Institute (p2pi) and explore membership for your company.
If you are a point-of-sale practitioner, likewise I urge you to look into POPAI's MaRC (Marketing at-Retail Certification). This is a certification and continuing education program aimed at keeping individuals current on point-of-sale technology, methods, and research as it applies to in-store marketing (POS).
Point-of-Sale (POS) Marketing Technology - The Need for Change Starts Now
According to National Beer Wholesalers Association (NBWA) data, the brewing industry contributes $247 billion to the US economy. This represents more than 1.6% of the total US GDP.
Malt beverages, as you know, are distributed by the over 3,300 NBWA wholesaler members. Today, these wholesalers distribute more than 13,000 different brands of beer. These brands reach the consumer via a three-tier system consisting of:
– Tier 1 - Suppliers
– Tier 2 - Wholesalers
– Tier 3 - Retailers
All three tiers want to sell as much as possible downstream, ultimately to the retail consumer, and to do so they long ago adopted a marketing and promotional approach that has proven largely effective in persuading consumers to buy the brands they sell – Marketing at the Point-of-Sale.
The Big Beer Challenge
As the proliferation of brands continues, it has been difficult for most “Big Beer” brands to increase sales and hold onto market-share. According to a Beer Institute finding in 2013:
“Malt beverage consumption (per capita) dropped by nearly 20% since 1981.”
Big Beer’s brands are primarily sold based on the retail price offered to shoppers. For example, consumer may be increasingly likely to consider all light beers brands interchangeable, especially when one of them is being heavily promoted at the point-of-sale.
Crafts and imports may have some price sensitivity but still have been able to keep retail prices relatively high. This provides each tier higher margins even though case volumes are substantially lower. Nevertheless, crafts and imports have continued to enjoy double-digit growth, while Big Beer sales have actually declined slightly.
Today, Big Beer has little to worry about as crafts and imports still represent just a fraction of the total malt beverage sales. However, Big Beer’s longer term threats are far from benign. According to the Beer Institute, increased beverage alcohol competition is seen as a significant issue overall.
As well, according to an August 2013 USA Today Study, Big Beer brewers like Anheuser-Busch and MillerCoors are facing no fewer than six challenges:
Bye, Bye Light Beer - Drinkers are shifting away from the premium lite segment
Taste Test - Light beer drinkers' taste buds are changing
Downward Spiral - Twenty years ago, beer was the alcohol beverage of choice. Today, beer has lost ground while wine has gained
Young Winos - Those drinkers under the age of 30 who prefer wine as their first choice have nearly doubled, while at the same time, those who say beer is their go-to drink have dropped from 71% to 41%
Male Loyalty on Decline – Men's drink of choice, beer, has been on the decline, and women, too, are less likely to reach for a beer
Poor Earnings Reports - All of the preceding challenges are the root causes for Big Beer’s recent poor earnings reports. While brewers have been able to offset greater losses with higher profits, their forecasts are continuing to suffer.
What Can Be Done?
In response to a market not used to decline, beverage alcohol suppliers and especially beer wholesalers now need to reexamine their marketing approaches, particularly their point-of-sale (POS) marketing practices, in order to regain market share and gain a competitive advantage.
Surveys that are available on the web from a wide variety of research and marketing companies have identified key retailer demands from the up-stream suppliers and distributors.
At or near the top of the retailer’s needs from suppliers are promotions and promotional materials designed to both attract shoppers and persuade shoppers to become buyers. More and more retailers expect suppliers to help them make it easy for shoppers to locate, choose and buy the supplier’s products.
Retailers are demanding POS signage that contains high-impact graphics to be placed in the “pocket” – that sweet-spot placement most likely to catch the eye of the shopper as they enter the store or aisle where the products are on display. A place that Anheuser-Busch aptly calls the Point-of-Connection.
However, more than high-quality production values and smart placement of promotional materials, it is important to deploy marketing technology (software) with features that track, visually verify placement, measure and manage your retail marketing campaigns for maximum ROI.
Have you heard the term Attribution Marketing?
Attribution Marketing is the process of identifying a set of user actions or events that contribute in some manner to a desired outcome – for example, converting a shopper to a buyer – and then assigning a value to each of these events to help determine which event was most influential.
The process promotes an understanding of what combination of events influenced individuals to engage in a desired behavior – like buying your product. This behavior as noted is simply referred to as a “conversion”.
Although typically applied to on-line marketing, I think Attibution Marketing likewise applies to POS marketing initiatives.
For more information click here >> Attribution Primer by Brendan Riordan-Butterworth
Why POS Marketing Technology is the Answer
Without marketing technology the goal of POS attribution marketing – getting someone to buy your product – is difficult to accomplish. Beverage alcohol suppliers, until recently, have rarely adopted any marketing technology tools; instead they relied on traditional media buys which did, at least, provide the promise of “X” number of viewers for “Y” dollars, but little else.
The goal of traditional media buys has always been to introduce a brand to an at-home audience or to otherwise sustain or increase brand awareness of the viewers at-home. Said another way, the market exposed to the message by traditional media is not at the retailer where they could actually buy the product being advertised.
With over 13,000 beer brands in the market, deploying traditional media buys is both impractical and unaffordable, especially if the goal is to regain, sustain or increase sales and market share.
Only POS marketing technology offers the possibility of informing the shopper of the availability, desirability (the “why to buy”) and price of the product at the exact time and place the shopper is able to become a buyer of your beer brand, or other consumer packaged goods.
Standardizing on a marketing technology tool across the downstream elements in the distribution channel will provide suppliers with the data to examine and analyze individual retail outlets. This approach enables the next steps: The aggregation of local outlets performance into local groups; next, further aggregate local groups to create a regional level picture; and finally aggregate regional groups into an overall national picture. The local into regional and regional into national aggregation can, of course, be reversed if it becomes necessary to drill down into the performance of one region, local group or another.
Beverage alcohol is big business and big business needs big data. Deploying marketing technology at every level allows Big Beer to address many of the near and long term challenges it faces.
To learn more about OnTrak’s POS Marketing Technology, please click the following button:
What Is Your Return On Your Point-of-Sale (POS) Promotions Management Investment?
Articles and books on the subject of retail marketing often state that point-of-sale (POS) promotions are to be used to create or increase brand awareness.
I can’t think of any consumer packaged product (CPG) that doesn’t use POS to some degree.
The amount of money spent promoting products in the retail environment is staggering. Currently, over $21 billion is spent on promotions at-retail in the US alone; and that amount is growing between 5-7% annually.
Here is another staggering data-point:
Only about 50% of retail promotions are effective.
A recent Boston College Study on Trade Promotions Management put it this way:
“Studies show that between 50-90% of promotions are not profitable. Many companies are not performing any post analysis to determine which promotions are profitable. Without this analysis, the same unprofitable promotions are run over and over again.”
Assuming you agree with the statement that “POS promotions are . . . used to create brand awareness”, I would like to suggest you consider the following:
The broader goal of POS is – or should be – to increase sales.
Brand awareness may lead to increased sales but it will be more difficult to measure the sales increase provided by your POS when its content provides no direct benefit or incentive for the retail customer to buy.
Hopefully you will agree that POS placed without even the outline of a strategy to increase sales and, in some cases, without even a clearly stated goal to “create or build” awareness of your brand, is a poor use of marketing dollars.
Suppliers and distributors must set retail marketing/promotional objectives, execute, measure and analyze results and adapt the campaigns with the goal of increasing POS marketing’s impact on increasing sales results.
It is our belief that you should plan as many of the factors involved in your POS initiatives as possible, not overlooking the following:
Direct POS acquisition or development costs
Placement cost, opportunity costs and timing
Recovery dollars available from manufacturers and suppliers to offset costs
Post promotional sales analysis, including a comparison of sales ‘before and after the promotional initiative’
In short, if you track the costs of your POS promotions and can correlate these costs to sales during the promotion period, you will have a much clearer idea of how effective and efficient your promotional initiative was.
You will then have information about what to do in the future with respect to your retail promotions.
Data collected, complied and analyzed about your POS campaigns creates this information. And, an informed CPG marketer has the resources – the power of information – to create POS programs that will increase sales, customer loyalty, revenue and profit.
Before you dismiss these notions as impractical due to the lack of marketing technology tools to help with the tracking, measuring and correlating of POS costs to outcomes, please take comfort in the knowledge that OnTrak Software solutions have been providing the technical tools required to track, manage, measure and verify the costs, impact and effectiveness of POS campaigns since 2005.
To learn more about our POS Tracking Solutions please click the following button:
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To download the Trade Promotion Management Study, click this link:
POS Marketing Reality - Is It Your Perception or the Actual Marketing Data?
The subject of this blog is to focus on the importance of POS (Point-of-Sale) marketing data and the analytical tools that allow you to track and measure your POS Marketing investment based on real data, and not someone’s perception of what’s going on at-retail.
A Trip Down Memory Lane
Let’s take a trip down memory lane – Mostly focusing on the days before POS marketing data and supporting marketing technology was generally available.
There are several brand name products which may call up certain emotions – Mostly nostalgia if you are of a particular age group, and the brand had a clear market dominance.
If the brand was very well-known, you may still have the ability to recognize its name or slogan.
Let’s try an experiment using some recognizable phrases: (see Note 1 for answers)
“When you’re out of ________ you’re out of beer!” - Fill in the blank.
“A little dab’ll do ya.” - Refers to what brand or product name?
“For all you do this ______ for you.” - Fill in the blank.
“I don’t always drink beer, but when I do, I prefer ___ ______.” - Fill in the blanks.
“They’re GRRRRRRREAT!” - Refers to what brand or product name?
“________ . There is no substitute.” - Fill in the blank.
“_ _ _ _ _ _ _ . . . ________ makes the very best . . . _________.” - Fill in the blanks.
It has been said that a “brand” is perceived based on about 5% to 10% memory, and 90% to 95% advertising, promotion, and marketing.
Little of the perception of a brand, at the points-in-time suggested by the above phrases, was measured. It’s only in the last few years that real marketing data has been collected about POS Marketing. And only very recently has that captured data been analyzed in order to determine the return-on-investment of promotional events.
Many brand names, and even more product names, come and go only to be replaced with new names. I wonder if the brand names of Plymouth and Oldsmobile or Schlitz are widely remembered, or today’s brands will suffer the same fate. And does it matter?
I'm bringing the subject of “brand recognition” because it has become increasingly difficult for Consumer Package Goods, including beverage suppliers, to bring new products to market via traditional electronic and print media. The clutter of TV channels, print outlets, and the Internet has made it all but impossible to gain sufficient exposure to introduce, build and sustain brand recognition and perception - And “perception is reality.”
You Can’t Manage What You Don’t Measure!
Here are some obvious questions at this point:
“What is a viable – and affordable – alternative to the spending on TV and Internet content?”
“What type of marketing approach can we take that can actually track and measure?”
“How can we collect the data to allow us to track and then analyze the effectiveness (ROI) and costs of our marketing initiatives?”
Lucky for you, there are analytical tools available that will help you to correlate you POS Marketing investment to any incremental sales results. Once again, why is this of such importance?
Here’s why. According to a brand new KPMG International survey as reported by Consumer Goods Technology, released July 28, 2014 (see Note 2):
“More than any previous year, the focus of executive attention has shifted from economic uncertainty to data, technology and the supply chain.” Additionally, “56% of consumer goods and retail business leaders cited data analytics as being important to their firm’s strategy, making it the highest-ranked strategic area in the survey.” Finally, “The survey results reveal that improving capabilities in the area of data analytics is the number one strategic priority for executives in the consumer space in 2014," comments Willy Kruh, global chair, Consumer Markets KPMG International.
From our perspective, the fact that analytics is the “number one” priority for executives in the CPG space is exciting news. The reality, however, is that there are also some studies that suggest these same executives lament the lack of tools to actually accomplish the tracking, measuring and correlation of marketing initiatives to sales.
At the risk of being a broken record:
OnTrak has web-based marketing technology available right now that is specifically designed and developed to provide CPG and beverage distribution companies the following capabilities:
Configuring and ordering POS marketing materials
Tracking these orders through production and placement, with visual verification of the placement
Providing the analysis of what POS materials correlate to the largest sales increases
Determining the ROI achieved based on the costs of a particular POS campaign
If you are a CPG or beverage executive looking for these capabilities, then take a look at OnTrak Software.
Our name says it all – Our marketing technology will keep you OnTrak.
To learn more about OnTrak and its Point-of-Sale Marketing Management solutions, please click the following button.
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Note 1: 1) Schlitz; 2) Brylcreem; 3) Bud’s; 4) Dos Equis; 5) Kellogg’s Frosted Flakes; 6) Porsche; 7) N E S T L E S, Nestles, chocolate
Note 2: “Global Top of Mind Survey” - KPMG International; the survey was conducted by Oxford Economics on behalf of KPMG and The Consumer Goods Forum during April 2014.
Getting Started: Tracking and Measuring Your POS Marketing Activities
“That was then, this is now.”
I'll bet you've heard or read this phrase forever!
It's usually associated with economic, social and political opinion and fact. Elected officials, managers, educators and historians rely on this 6-word phrase to explain changes in their approaches to issues and problems of all sorts.
What this phrase suggests is that we now have new information upon which to base our actions or conclusions regarding any number of subjects - Something like “According to US Government data as of 2012 . . . .”
We certainly could conclude that 2012 data is new enough for us to consider it as sound – or at least “sound enough” for us to base our behavior upon. We’ll see.
For more than a decade, “the” data point used to describe why at-retail or POS marketing was so valuable has been:
The POPAI Perspective
The 70% number came from POPAI and was based on their 1995 study of shopper behavior. That was then, this is now.
In 2012, POPAI released a new “Shopper to Buyer” study, and the 70% number was updated to 76% based on new data. Considering the length of time between the original and the 2012 study, a 6% increase in at-retail decision making was not all that surprising. But, in 2014, a follow-on POPAI study (2014 Mass Merchant Shopper Engagement) was released showing the number had again grown by 6% taking the at-retail conversion from shopper to buyer decision number to 82%.
You may or may not be inclined to agree with POPAI’s “82% conclusion” – but their study methodology, sample size and academic rigor is impressive. What really got my attention was that the 2012 and 2014 studies show just how quickly the CPG retail shopper has changed. The studies show how much today’s retail shoppers rely on point-of-sale materials to help them make buying decisions. Part of the reason for this, the 2014 study noted, is that shoppers at mass merchant retail stores spend very little time pre-planning their purchases.
“The Mass Merchant shopper is more often reminded by something in-store when purchasing an impulse non-grocery product.
This likely is a result from the lower rates of overall planning and calls out the need for in store [POS] signage and displays to remind the mass shopper what he/she needs.”
Calculating the ROI of POS Marketing
The real question is what is the return on investment (ROI) for your at-retail signage and displays? To determine this, you’ll need to correlate sales changes to the cost of placed POS signs and other materials to evaluate their effectiveness. Once you have the cost of the POS materials and the change in sales data in hand, you can determine if the ROI calculated was greater than 1:1.
There are several formulas that you may elect to determine the ROI of your at-retail marketing. Often the simplest formula is the best in that the simple formula will typically provide you with the answer to two basic – yet very important – questions:
Is my POS marketing campaign (sign or display) working to convert shoppers into buyers?
Is the cost of my POS marketing campaign justified (is there a positive ROI)?
One of the most basic formulas you can use is:
If needed, you can modify this formula to measure the ROI of the incremental sales attributed to a particular marketing at-retail initiative:
The components for calculating your POS marketing ROI can change for different customers and different products; but with POS ROI calculations and measurements, you can focus on at-retail marketing programs that deliver the greatest sales increases and the best ROI.
Finally, as noted in basic question #2 above, ROI will help you justify marketing investments. Since marketing is an investment to increase revenue, you can, by focusing on ROI, help your company grow.
What About Beverage Alcohol Companies?
Based on our experience with hundreds of our customers and prospects, if you’re a beverage alcohol supplier or distributor, there is a reasonable chance that you don’t capture the costs of your POS marketing investments and that you don’t measure the ROI.
There is also a good chance that you have an overall sense that POS marketing works, but you’re not sure what campaigns really are most effective or not at all effective.
The fact that you are here at our website, reading our blog, suggests that you know there’s room for improvement and benefit if you begin to track and measure your POS initiatives. You’ve arrived at a “That was then, this is now” moment.
A Good Place to Start
Assuming you currently do not track and measure any of your POS marketing programs, a good place to start is to collect the data required for you to calculate the ROI on your POS marketing investments. You can then review the information over time to make better POS marketing decisions.
Then as you get more data and become even more comfortable with the measurement process, you’ll find your POS marketing campaigns will continue to improve, your ROI will improve, and your at-retail marketing program costs will be reined in, made more efficient or both.
When one of your customers or reps requests what seems to be an expensive sign or display, you’ll be able to predict the merits of spending to create the marketing collateral based on data, not “gut-feel.”
I urge you to begin using POS marketing technology to track, measure and manage one of your biggest expense categories: POS marketing programs. Perhaps you’ll change your thinking once you adopt a system that facilitates capturing, examining and analyzing your POS data.
To learn more about OnTrak's software to help you track, measure and manage your investment in POS marketing and promotional events, please click this button:
Point-of-Sale Marketing: Promotion or Advertising?
I read many trade publication articles, text books and marketing books about the subjects of at-retail and point-of-sale marketing, promotion and advertising; so, this blog will be a blend of both borrowed and original thought based on nearly 10 years of my company providing point-of-sale marketing technology solutions to the beverage industry.
My current read is the excellent, but somewhat dry, book from POPAI, called “Marketing at-Retail: Understanding, Influencing and Winning Today’s Shopper.” I encourage you to check out the POPAI or Amazon websites to learn more.
My background includes a graduate course of study at Miami University’s Farmer School of Business that included marketing, advertising and market research. Little did I know then that I would be neck deep in a software company that produces and sells marketing technology applications designed to track, measure and manage at-retail marketing and promotional initiatives for consumer packaged goods (CPGs) companies.
My professors were attempting to get the idea across that “Marketing” is made up of advertising and promotion; and, that these two different forms of marketing are not intended to produce the same results.
Advertising has the primary goal of building brand loyalty and of generating long-term sales. Advertising is a “steady-as-she-goes” form of campaigning and may, or may not, have the effect of converting a shopper into a buyer – today. Advertising builds brands, just not necessarily today’s sales.
Promotion, on the other hand, would seem to be intended to have little, if any, impact in the area of building brand loyalty. In fact, promotion is designed to generate brand dis-loyalty, by encouraging brand-switching and stimulating short-term sales.
Promotion is to Advertising as a flashbulb is to the eternal flame.
But not so fast!
The Marketing of CPGs
I would argue that while the preceding characterization isn’t exactly false, it misses the point of where we are today in the marketing of CPGs.
The notion that brand loyalty is something to strive for will get no push-back from me. Yet, the notion that spending a fortune on traditional advertising just to “build a brand” – in today’s CPG marketplace – is something I would irreverently respond to by saying, “What are you thinking?”
Remember please, we’re examining the marketing of CPGs in this blog. CPGs, long the staple of prime-time TV programs, soap operas, news, and sports, are products that have proliferated so rapidly in the last few decades. It’s hard to imagine repeatedly spending corporate fortunes to create or build a brand – particularly if brand building is to be accomplished at the expense of sales, short-term or long-term. Investors and other stakeholders hate to wait for sales while countless marketing sums are spent simply to gain mind-share in potential consumers’ minds.
CPG Marketing, both advertising and promotion, must generate sales: Now. Certainly sales need to be generated over the long-term; but, more importantly, sales need to be “promoted” in the short-term. The life-span of so many CPGs today will be cut short if the sales don’t happen in the short-term.
Converting Shoppers Into Buyers
Here is where Marketing at-Retail, shopper marketing or Point-of-Sale (POS) Marketing comes into play today. POS is both advertising and promotion displayed at the time and place where a shopper can be converted to a buyer. The marketing of CPGs should be designed to persuade your potential customer to buy your products today, not just become “aware” of them for some future date purchase.
Why POS Marketing’s power to influence sales is growing:
CPG supplier executives are requiring their marketing spending to have some accountability, and some measurable ROI
CPG companies live in this quarter – not next quarter or next year
Shoppers respond to POS initiatives: Shoppers and consumers increasingly seek-out brand and product information primarily where and when they are shopping
CPG SKU explosion means there is little chance for retail shoppers to have repeatedly seen TV ads
The Internet competes with and sucks time away from traditional media viewing, also reducing the chance for consumers to repeatedly see advertisements
Today’s POS Marketing goals:
Tracking and Measuring Results
One of the most important points presented above is the contrast between traditional advertising and sales promotion as it relates to tracking and measuring results of either.
Advertising has always relied on the “how many eyeballs saw the ad” approach, which due to the time-lag between ad broadcast and shopping event make an ad’s influence difficult to determine.
Promotion effectiveness at the point-of-sale is relatively easy to measure. Also, promotion can be changed and moved practically in real-time, further enabling marketers to determine which promotional type and message yield the highest ROI (as measured by incremental sales).
One other effect POS marketing can offer is the ability to disrupt competitor’s efforts simply by getting the POS to the retailer’s aisle first. This is especially true when one of the goals of a given POS campaign is to grow market share. Good examples include carbonated soft drinks and big-name beers where there is both very little brand loyalty and significant price sensitivity.
As manufacturers, distributors and retailers alike continue to shift their focus to short-term results POS’s power to help brands win at retail is likely to remain on an upward course. The fact that there are now proven powerful software tools that can be deployed to track the effectiveness and efficiency of these marketing programs is also a compelling reason to imagine even further reliance upon at-retail marketing – at least for those who want to increase sales today.
For more information on OnTrak’s suite of marketing technology applications specifically designed to track, measure and manage the impact of today’s at-retail advertising and promotions, please click the following button.
POS Waste Reduction – What’s it Worth to You?
In this blog, I’ll give you some guidelines to help determine if POS Tracking tools, like those from OnTrak, can be justified by the elimination of POS waste. For purposes of this blog, POS means signage, which is placed in the retail market to promote a particular beverage brand.
In order to determine the value of any software that is designed to reduce the costs of your Point-of-Sale (POS) marketing materials, and speed your POS to market, it is important to know just how much wasted POS actually costs.
A Recent Example
Recently, we demonstrated one of our products, SignTrak, to an enthusiastic audience at a large beverage alcohol distributor with over 100 sales reps, who also are responsible for merchandising.
Like most of our prospective customers, and all of our current customers, the first problem this distributor was attempting to solve with our software was his out-of-control POS costs. As requests for signage from retailers have increased, so too have the costs of ordering, producing and installing that POS. But these costs were increasing at a rate disproportionate to the actual increase in the demand for the signs themselves.
For some time, the POS costs for most beverage alcohol distributors have increased due to the increase in the costs of the consumables used to create the POS signs. Paper and ink costs continue to escalate; and with the increased demand for signage, additional infrastructure and labor costs swell too. Indeed it is not unusual for distributors to rank POS – and all the associated costs – as the number two expense following payroll.
It is no wonder, then, that OnTrak’s prospective customers are looking for solutions that will “Stop the bleeding” of cash being spent on what they perceive to be “breathtakingly expensive” POS marketing materials.
Calculating the ROI of POS Tracking Software
The question then becomes, “How do we determine the ROI that can be realized by using a POS tracking and management tool?”
The following will provide you with an understanding of how our customers use OnTrak to calculate and reduce the cash burn associated with the ordering, production and placement of POS signage, and other POS marketing materials.
Remember, there are competitive advantages to using marketing technology to increase both sales results and supplier marketing-recovery dollars; but we’re not dealing with those aspects of deploying marketing technology tools in this blog.
Let's Get Started!
How Much Does a Re-work Cost?
There are three things to consider:
1. Production Costs
Let’s establish some base-line costs for the production of a non-laminated 3’x5’ paper sign to be placed at your retail customer’s location. Sign costs for consumables currently stand at about $1.60 per square foot. This cost includes infrastructure costs, such as your printers, graphics software, office space, etc.
This translates to a base cost for this sign, as follows:
(3 x 5) x 1.60 = $24.00 (production)
2. Labor Costs
Next, we need to determine the cost of the labor required for the production of the signage. Fully burdened, the cost of the graphics or sign shop manager is at least $25 per hour – often more, based on the local labor market. Assuming it takes about 20 minutes total time to: Receive the sign order, create the sign using a commercially available graphics package, load and unload the printer, and finally notify the merchandiser responsible for the installation of the sign that it can be picked up, the labor costs will be $8.33. Your sign’s base cost is now:
$24.00 (production) + $8.33 (labor) = $32.33
3. Ordering and Processing Costs
To that amount – $32.33 – the costs associated with ordering the sign and processing the request need to be accounted for. Fully burdened, sales reps typically cost at least $36 per hour, often much more. Distributors tell us that the amount of time required to order a sign without an automated system is 3 to 5 minutes with an additional 3 to 5 minutes spent on the phone with sign shop personnel to explain what the sign is supposed to look like and subsequently to inquire about the sign’s availability to be picked up. If we simply assume a total of only 5 minutes for these two communication activities combined, we will increase our costs by about an additional $3.00. Our single 3’ x 5’ sign’s cost in this example, not including any time or cost attributed to picking the sign up and delivering it, is now:
$32.33 (production and labor) + $3.00 (order and process) = $35.33
Our prospective customer indicated they would agree that $35.00 is their average cost per sign.
So What is the Total Cost for Re-works?
To which we reply: “How many re-works do you have per month?” (See Note 1)
In this case the graphics and POS production manager indicated that with 100 sales reps and 10 sales-team leaders, they estimated “About one re-worked sign, per rep, per month.” In other words, 100 re-works per month. At an average cost of $35 per sign, re-worked sign costs were $3,500 per month, or $42,000 per year.
The sales manager, in attendance at this meeting, added, “The cost is actually greater, because we had to have our rep place the first order and have our sign shop produce the sign incorrectly the first time – usually finding out the sign was wrong when we delivered it to our customer.” He added, “Then we have to re-order and produce the sign a second time which usually means it doesn’t get to the trade until a day or two after we had planned.”
The discussion continued and the sales-manager pointed out that “Price sells most of our products,” and that “Price is communicated via signage placed near the products.” This suggests that getting the sign to the trade two-days later than he planned would cut into this week’s market share, assuming the competition got their signs up two-days earlier.
So How Much Does SignTrak Cost?
At this point our prospective customer asks: “How much will SignTrak cost us?”
The list price, per user, per month for SignTrak for a customer with 100 users is $12.00; or $1,200 per month; or $14,400 per year. Our customers tell us the re-work reduction after deploying SignTrak is 75% to 95%. Assuming the lower number - 75% - this would, in the above example, be a cost reduction of $31,500 per year. This means that for every $1.00 spent on SignTrak, the cost reduction of re-works alone would be a return of $2.19 – Over a 2 to 1 ROI.
Isn’t this a no-brainer? Act Now!
Please take the time to put pen to paper and take a serious look at the ROI your company could enjoy by deploying OnTrak’s POS marketing technology solutions.
For more information on OnTrak’s suite of marketing technology please click the following button:
A live, OnTrak demonstration will show you how we accomplish these saving. The demo typically requires less than an hour of your time.
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Note 1: A re-work regardless of the reason for it, is any sign request that has to be produced, scrapped and re-produced due to either an error in ordering/configuration or an error made during production. Often a sign is produced according to the order, is picked up and delivered, and then either the rep or the retail customer finds an error in the graphic or the content, or both.
Think You’re Too Small to Advertise? Are You Kidding?
Purpose of This Blog
This blog is intended to focus somewhat narrowly on the marketing of “small” beverage alcohol brands and products such as craft beers, small yield wineries and “limited edition” liquors.
Nevertheless, many of the points made here are applicable to the broader beverage alcohol categories, perhaps even including some of the mainstream, household name brands and products available at your favorite off or on premise retailer.
Our Customers Rely On Point-of-Sale (POS) Marketing
Our customers, who supply or distribute malt-beverages and wine and spirits products, rely first on POS marketing, second on social media and some mobile, and third on traditional word-of-mouth-marketing (WOMM) to promote their brands. And this is especially true when it comes to marketing craft beers, “small” wines and limited supply liquors. In most cases the reasons for distributor’s reliance upon POS marketing for these products is that their suppliers simply don’t have the millions of dollars required to advertise on traditional electronic media outlets, like TV, in any substantial way.
In addition, we have heard our distributor customers frequently tell us that "Nothing will be featured by our retail customers that has not been sampled." Sampling a new craft beer is something TV isn’t good at either, as we all have figured out. Now along comes a recent web-article stating that “55% of Craft Beer is sold on premise.”
To read additional findings pertaining to Craft Beers click this link: Brewbound: Technomic Research on Craft Beers
Sampling comments from our customers and the many articles to be found in trade publications, and on-line blogs on the subject of brand/product introductions and brand building, suggest that:
“At the point-of-sale is both the best place and offers the highest ROI of all of the paid marketing at-retail initiatives and programs.”
How Much Money Do You Have To Advertise?
Excluding Sam Adam's ability to spend $45M on traditional media advertising this year, it is accurate to observe that most craft suppliers simply don't have the multiple-millions of TV ad dollars required to even make a small, superficial impression upon their target market. They can’t afford to make an impression – and this has nothing to do with the inherent quality of their products. Remember, even Sam Adams had to start small.
For those “too small to advertise” suppliers, POS marketing offers a fighting chance to educate, influence and persuade today's shoppers to become buyers.
B2B sampling activities are, for many suppliers (both breweries and distributors), the least expensive way to get a new product "on the menu" so to speak. B2C tastings likewise, can be conducted at-retail and can often build grass-roots WOMM that can yield impressive spot sales.
Now that your local grocer not only has Friday night wine tastings, but also beer pairings, it is possible to get maximum local exposure courtesy of the craft beer distributor's sales reps.
Other reasons that traditional (TV) advertising may not make sense even if the craft or small batch beverage supplier has a few spare millions:
Cable “Cord Cutting” is up by 44% since 2010 to 7.6 million homes who no longer pay to subscribe to TV, rather electing to pay for Netflix or Hulu – and Netflix’s "Orange is the New Black," airs commercial-free, for example
Gaming consoles are getting into the original programming "game". Xbox One started "broadcasting" this year. Is advertising an option here? Not yet.
As if we don't have enough channels: Amazon and HBO are working together so that Amazon Prime members can access HBO original programming. Yahoo! is also joining the growing list of non-broadcast, non-cable, non-satellite providers with its own original programming.
What’s the answer?
In the face of this diminishing power of traditional advertising, POS Marketing is gaining ground. One key reason is that there are now tools available that traditional electronic media has never had, and quite likely never will. With new marketing technologies, supplier and distributors have the ability to:
Directly correlate their POS marketing investment to incremental sales.
Traditional ads will offer advertisers the promise of so many "eyeballs" (often called CPM) and there is the concept that the more eyeballs on your ad there are, the greater your sales will be. But the correlation between the eyeballs of that target market and subsequent sales continues to weaken due both to audience fragmentation and especially the massive number of channel options.
The "good-old-days" of consolidated audiences and only 3 or 4 channels on TV are gone. About the only place suppliers can enjoy some certainty of a consolidated "audience" is at the point of shopping; or as Anheuser-Busch/InBev calls it, “the POC” – the point-of-connection between the brand/product and the consumer.
You may also argue that you can convert a shopper to a buyer on-line, and that too is accurate to a degree. But the truth is there is no better place to connect with a potential buyer, at the time of their decision (to buy), than in the store; and of course in the specific aisle, where your product is available for purchase. You see, shoppers often like the ability to instantly buy and take home, rather than wait even one day for their purchases to arrive.
For information about OnTrak’s marketing technology tools that will help you track, measure and manage your investments in POS marketing, and correlate that investment to sales results, please click this button: