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:
How Point-of-Sale (POS) Marketing Technology Will Improve Your Company’s Productivity
The “Great Recession” and Corporate Productivity
Watching the business news networks, reading Forbes, Fortune and The Wall Street Journal and talking with our customers and prospects, it certainly appears the US economy is today back to “pre-Great Recession” levels.
In most cases, business reporting suggests companies seem to be at least as profitable as they once were, and in many cases, companies are even more profitable because of the belt-tightening exercises they initiated during the “Great Recession” (GR).
It’s difficult for me to believe that we came out of the recession, technically, in June, 2009; riding on a newfound wave of rapidly rising productivity.
The reason for this productivity, of course, was that companies and their remaining employees were making do and doing more with less. Productivity gains by the end of 2009 were up almost 6% according to government reports.
A sign on the wall of one of our customer’s break rooms goes a long way to explaining why, and how such productivity was achieved:
“Use It Up - Wear It Out
Make It Do - Or Do Without”
Where Are We Now!
Now, five-years later, employees – less likely to be living in fear of being laid-off – are starting to move on to other opportunities and their former employers are finding it increasingly difficult to find replacements. The result of the country’s improved economy and many companies’ improved productivity is, oddly, declining productivity.
Annual productivity has now fallen by almost 5%, now averaging a meager 1% or less, according to government statistics. Although hopefully partially weather related, productivity in Q1 2014 fell below productivity in Q4 2013 – Not a good sign.
The impact of falling productivity is possibly due to the overall economic contraction, including reduced spending on consumer goods, construction, and durable goods, as well as the increased possibility of another recession, based on the official definition*.
But, before we resign ourselves to that fate, perhaps we should ask, what is the reason for this falling productivity – beyond an abnormally harsh winter?
Reasons for Falling Productivity
Various studies mention a primary reason for falling productivity is that businesses have been under-investing in themselves. Capital spending on the “infrastructures of productivity”, such as software, has declined sharply since the onset of the GR. Initially, the reduction of capital spending (belt-tightening) by companies during the early days of the financial collapse improved their financial positions. Lay-offs and pay freezes, justified by the GR, have depressed worker compensation to a multi-decade low, further improving these companies’ bottom lines.
Today, companies are cash rich – at least according to many public companies’ annual reports – and profits are strong, in many cases historically strong. The Dow recently closed above 17,000 for the first time ever and we’ve been enjoying employment growth of some 200,000+ jobs per month for most of 2014.
Now Is the Time to Invest in Productivity Tools
Now is the time to invest in new equipment, software and facilities. It’s time to put the latest and greatest productivity tools in the hands of employees. It’s time to invest in the tools that will provide you and your business interests with a competitive advantage. It’s time to increase both your top and bottom lines. In short, it’s time to grow.
Although companies, including some of our customers and many of our prospects, did tighten their belts, and their purse-strings, choosing not to invest in software to reduce the cost of their point-of-sales marketing initiatives – That time has passed.
For consumer goods suppliers and distributors, especially in the beverage market, now is the time to invest in point-of-sale marketing technology that will not only track and reduce the costs associated with POS marketing, but technology that will also measure the outcomes of your point-of-sale promotions. Armed with this information you can now make marketing decisions that will most likely have the highest return on return-on-investment.
And this investment in POS marketing technology will enable you to track, measure and manage your at-retail marketing programs, and lay the foundation for your company’s higher sales productivity for many years to come.
If you’d like to know more about our POS marketing technology please click the following button:
*The technical indicator of a recession is, “Two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP)”.
Challenging the Marketing Technology 'Status Quo'
POS Marketing - The Status Quo
The definition of an axiom is: A statement or idea that people accept as self-evidently true – Something that is so evident that it is accepted as truth.
At OnTrak, the axiom we hear most frequently from prospects that we approach about our point-of-sale (POS) tracking software is the phrase “status quo” – Or as they say, “We don’t need your software because we’re happy with how we’re doing it today.”
The truth is that without some marketing technology to track, measure and manage their POS, they may not know how they’re doing.
We truly believe that if your company isn’t moving forward with managing your POS, it’s actually going backwards. Not simply staying in the same place.
2014 has been the most successful year in our company’s history, dating back to 2006. As we move forward we can’t be satisfied with the status quo. As a software company, offering a set of POS tracking solutions to the market, we want to keep doing everything we can to challenge the status quo and continue to improve the capabilities of our products for our customers.
As I was thinking about this week’s blog, it occurred to me that we've become much more than a company offering solutions to simplify the ordering of POS marketing materials. Yes, our products have the capability for configuring and ordering POS marketing materials; but there’s so much more to our products.
We’ve transformed into a company that provides tools for the tracking, measuring and managing of POS marketing materials. These tools are designed for use by beverage companies to stimulate sales. Our customers have helped us enhance current products and create new products, and we’ve proven time-and-again that “You can’t manage what you don’t track and measure.”
In many ways, change is an OnTrak hallmark.
We’ve become a leader in producing and implementing at-Retail Marketing Technology solutions for beverage companies of all sizes and stripes.
We started with a medium-sized AB wholesale distributor in Northern Kentucky, and now have dozens of customers – including 10 of the Top 25 beer distributors and three of the Top 10 wine and spirits wholesalers in the US. Our software products are used by thousands of beverage sales, marketing and merchandising personnel; and our customers are producing and using more effective POS marketing materials to sell billions of dollars’ worth of beverage products, in tens of thousands of retail outlets all across the country.
One of the key reasons we’ve recently added dozens of new customers and enjoy customer renewals of over 95% is that we listen to our customer comments and suggestions for product features and functions. Then we innovate to demonstrate to our customers, prospects, and even ourselves how we are committed to keep the status quo firmly in our rearview mirror.
Seeking Change and Avoiding the Status Quo
Now is the time for all of us to recognize and challenge ourselves to not only accept change but to seek change vigorously.
You, as a supplier or distributor of beverages or other consumer goods, are aware of the remarkable changes in point-of-sale and shopper marketing that have taken place and that continue to unfold – principally in the wake of the Great Recession.
Today suppliers and distributors are required to adopt new marketing technologies and effectively and efficiently market brands and products to the current crop of retail shoppers – many of whom see little traditional media advertising, yet seek-out point-of-sale or shopper marketing materials.
Here it bears repeating:
If you haven’t adopted marketing technologies to help you track and measure your retail marketing initiatives and programs, it’s impossible to manage them.
What was once “acceptable” point-of-sale marketing – placing temporary and permanent signs, displays, etc. without knowing what works and what doesn’t – now serve as little more than defensive marketing tactics. Your in-house graphics and printing departments need to be managed by leaders in shopper marketing, highly curious types of individuals unwilling to be satisfied with the status quo.
It is now necessary to go on the marketing offensive, providing retail marketing materials that are:
Tracked - From order, to put up, to take down,
Measured - To find out what works best to provide positive sales impact and determine ROI, and
Visually verified - To find out what materials are actually placed at the point-of-sale or for compliance purposes.
We do all this in order to help you establish, retain or gain market share. Going on the retail marketing offensive at its core requires marketing technology – software that enables you to manage your marketing and sales goals at the point-of-sale.
It is remarkable to note not only that we have come so far, but also we have a good idea of how far we have yet to go. There remain thousands of companies that rely on point-of-sale marketing who are not utilizing any form of marketing technology as a competitive weapon. This, inevitably, will change.
I’ll end as I began, “If your company isn’t moving forward it’s actually going backwards. . . .” You simply cannot keep going for long unless you keep innovating – especially with respect to your marketing technology.
To learn more about how OnTrak can help you write that next chapter, click the following button:
How Measuring At the Point-of-Sale Helps Convert Shoppers to Buyers
Winning with Point-of-Sale (POS) Marketing
Price is Important
For the consumer goods that most shoppers would consider interchangeable, price is important information, and perhaps the most important information for shoppers to make the decision to buy.
For products like Diet Coke and Diet Pepsi, or competing name-brand light beers, for example, many shoppers will almost always buy the one that is priced lower.
If the “lowest-priced diet cola of the week” changes from week to week (Coke to Pepsi and then from Pepsi to Coke), it should come as no surprise that the ‘on-sale’ diet cola will almost always enjoy a sales increase.
The Purpose of POS Marketing
The purpose of the POS marketing materials for these largely interchangeable, on-sale, diet colas and light beers is to inform the shopper of the promotional price.
Little, if anything, can be gained by attempting to persuade shoppers to buy based on the merits of the brand-name itself, or of the specific diet cola or light beer. The market knows Coke; and the market knows Pepsi. So if Diet Coke is a $1.50 cheaper per 12-pack than Diet Pepsi, that fact alone may provide all of the information and persuasion many shoppers need to make the decision to buy
There are a decreasing number of brand loyalists that will typically buy “their brand” even if it costs more. For them, $1.50 off of a 12-pack is an insufficient pricing incentive to change their minds.
Measuring the Impact of POS
It would be dishonest and inaccurate, at this point, to suggest that suppliers, distributors or retailers should give up on POS marketing and post-campaign measurement for high-volume, price-driven items, like these diet colas and light beers.
Measuring the impact of POS, where the message is price first and product qualities second, is unlikely to be as effective as the measurement of the impact of POS that is working to persuade shoppers to become buyers by informing them of the features and benefits of the product first, and price second.
But don’t underestimate the power of POS to increase sales even if its prime reason is to present a low price message.
How About Beverage Alcohol?
So let’s talk about the behavior of suppliers and especially distributors of beverage alcohol (BA) - One of the largest categories within the over $2 trillion US consumer goods universe.
It does appear that this category, over the course of nearly a decade, has embraced point-of-sale (POS) marketing. They sure spend a lot of money on it!
However, there has been very limited utilization of POS tracking and measuring technologies, even in the face of supplier encouragement. We know that most suppliers offer financial incentives to distributors who invest in POS. That’s because suppliers know that POS works. But in order to get suppliers to pay the distributors, more than a handshake is required.
What suppliers want and increasingly require is information about the impact of the investment: What was spent, where, when, for what brands, and what were the resulting sales?
Can you see why POS tracking and measurement is critical toward providing that valuable information to suppliers?
The Beverage Alcohol Marketing Challenges
Somewhere, last year, I read an article where the statement was made that seems so close to the truth about BA marketing and sales promotions as to cause me to wince:
“No industry works harder at being lazy”.
The applicability of this statement to BA distributors seems to be accurate.
These distributors are the prime source for all POS marketing materials that is placed at-retail, in the aisles, on the shelves, in the coolers, and on the walls. Distributors collectively advertise over 150,000 beers, wines and spirits offered for sale to consumers and shoppers across the country.
However, many of the distributor sales reps, who have no training in effective POS marketing practices, are expected to provide POS marketing materials and develop retail marketing programs for their customers.
This expectation is a good thing.
However, there is generally little thought given to what POS message is desired, beyond low price or a general theme. How do these distributors and their reps decide the following:
What is the overall strategic POS Marketing Plan?
How will the plan be executed?
How will the POS marketing initiatives be measured?
What ROI is expected vs. what is actually achieved?
It is our view that there is little POS marketing campaign planning being done by distributors; Very little POS marketing goal setting, and even less order and cost tracking; And almost no measurement of the impact of BA POS, beyond the vague notion that “it works”.
So if our perception is accurate, then any of the regional suppliers and their distributors, who adopt OnTrak’s marketing technology to accomplish even some of these activities, will gain a huge competitive advantage.
If POS marketing is planned, executed and measured – and done so with the discipline possible with marketing technology software – there is no reason but to believe that even a small distributor can actually gain market share over a large one.
Isn’t it time to learn how OnTrak’s POS Tracking Software can help you accomplish all of this?
Click here to learn more:
OnTrak’s POS Analysis and Reporting Tools – 2014 Enhancements
We Listen to Our Customers
OnTrak’s customers often subscribe to our Point-of-Sale (POS) Tracking Software, first to address the problems they are having keeping track of the ordering, production and placement of POS promotional materials.
As time passes, our customers typically want and need to use the data collected by OnTrak’s solutions to analyze overall POS campaign effectiveness and return on investment.
Now in 2014, we’re pleased to offer our customers a new version of our Detail Report Writer. This version includes updates and improvements based on requirements from our customers – Something we historically do as a normal practice of our business.
The Current Detail Report Writer
The Detail Report Writer is currently included in our products – SignTrak, PermaTrak, SampleTrak and MenuTrak.
The report writer had always been an easy-to-use but powerful tool for our customers to be able to determine:
What types and sizes of POS materials are being produced?
How much is being spent on POS materials and labor?
Where and when was a campaign placed, by customer location?
What suppliers and brands were represented in marketing campaign spending?
What region, territory, sales team or ethnicity shared in the POS marketing investment?
Was the POS actually placed on-time and in the correct customer location, and can that placement be visually verified?
Once sufficient data has been captured by the OnTrak products, and stored in the OnTrak data base, many things are possible.
Queries can be created, saved and run on a scheduled basis (monthly, quarterly or virtually any periodic basis desired), in order to determine not only the answers to the preceding questions, but also numerous other ad hoc queries.
Our Detail Report Writer allows our customers to select the data they want included on the reports and present it on-screen or download it into an Excel spreadsheet. The latter allows the reports to be viewed, printed, attached to an email, or exchanged with other business systems.
The New Detail Report Writer
So far in 2014, we’ve improved and enhanced the Detail Report Writer’s capabilities in SignTrak. This has been driven by requirement from beer distributors. Enhancements will be added to MenuTrak in the third quarter, also based on requirements from wine wholesalers. Requirements for PermaTrak and SampleTrak are currently being collected.
The following represent some of the enhancement in the new version:
Processing Speed: The reporting process has been rewritten to provide more efficient data retrieval and processing resulting in much faster processing and production of reports
Sort Selection Criteria: Two levels of sorting are now available for reporting; and subtotals are provided for both levels
Summary Reporting: It is now possible to have a summary-only report instead of always having to see all order-level data; Summarization is based upon the sort levels, therefore offering a 2-level summary report capability
Scheduled Reporting: Reports can be scheduled to run monthly, quarterly or by trimester (making it applicable to beverage alcohol suppliers and distributors); scheduled monthly reports, for example, will be run in the evening of the 1st day of each month and emailed to a specific email address or group
Selection Filters: It is now possible to select multiple Suppliers and/or Brands; and with a click of your mouse allow the selection of multiple entries from any of the Filter Selection drop-downs.
As was mentioned, most, if not all of these enhancements have been developed in response to customer requests.
All of OnTrak’s POS Tracking Software solutions came to market as the result of listening to the needs of our customers and prospects. It is our passion to develop solutions to fulfill these needs.
For more information about OnTrak’s solutions, please click this button:
How OnTrak Applications Measure the Sales Impact of Point-of-Sale (POS) Promotions
One of our most popular blog topics has to do not just with the tracking features of our point-of-sale (POS) marketing technology applications, but with the measurement features provided in all of our products (SignTrak, PermaTrak, MenuTrak and SampleTrak).
During product demonstrations we show the output of our measurement report writer and query tool, and it is often when the results are displayed on-screen that our prospects seem to be most impressed.
How OnTrak Products Work
To be clear, our products collect dozens of data elements related to POS ordering, production and placements of POS promotions. Additionally, we collect data on when the promotional items (signs, menus, displays, etc.) were ordered and placed; who ordered and approved the materials; and what customers these materials went to – especially those items that have costs that can be submitted to suppliers and manufacturers for marketing cost recovery.
Our systems can produce ad hoc reports that can be configured as invoices to be submitted to suppliers and manufacturers to help in the recovery of marketing expenses.
We can import sales data from a period of time which coincides with a particular POS promotion’s display date. The customer, supplier, brand and sales information can be exchanged between OnTrak and your order management system and that information is used to trace the correlation between sales and POS marketing promotions.
Some OnTrak customers may choose to use a more robust reporting capability offered by business intelligence (BI) providers like Dimensional Insight’s Diver solution – while other companies are satisfied to use OnTrak’s “light-weight BI” query and reporting capability.
Calculating the Impact
Whatever route you choose to determine how you will measure, report and ultimately deploy your POS campaigns, you will be using a formula similar to the following:
Sales Impact of a POS Marketing Initiative
Base (or Prior Period) Demand
Incremental Demand Change During a Promotional Event
”Incremental Demand” can be either a positive or a negative number, see graphic, below:
The above example is for an established, well-recognized by consumer item that is not subject to seasonal demand variations.
We can see that there is an increase of 15% when there is a 2’ x 3’ sign presenting the customer with a lower price / “reason-to-buy” (BOGO)
An item or brand-specific floor sign (without a “reason-to-buy” message), on the other hand, apparently has the opposite impact – reducing sales by 5%. With our new prior period demand for August of 110, we see that even a (relatively small) shelf-strip promoting “buy-one get-one” (BOGO) positively impacts sales by 22%; while an end cap display, without “reason-to-buy” once again correlates to an incremental demand of negative 10%.
Armed with this kind of information, you will be able to determine what will most likely work to stimulate positive incremental demand.
Of course, to collect the data requires that you have both an Order Management System that creates and stores historical demand and a Marketing Technology Tool (OnTrak) that collects various data-elements from the ordering, production and placement of your point-of-sale promotional materials.
As noted, you may optionally want to employ an enterprise BI tool for the analysis and creation of the reports that you will use to effectively and efficiently mount your marketing campaigns to best effect.
Finally, it bears noting that in order to do analysis and measurement you must collect and retain historical demand data by product as well as POS promotional data.
Doing this without marketing technology, like that from OnTrak, makes such analysis and measurement very difficult if not impossible.
OnTrak’s suite of marketing technology tools were built with this purpose -- at-retail marketing analysis and measurement -- in mind.
If you’re looking for more than a POS ordering system, and what you really need is a POS Tracking and Measurement solution, please take a further look at OnTrak.
To learn more about OnTrak’s Marketing Technology, click this button:
How OnTrak’s Marketing Technology Solutions Make Your Shopper Marketing Initiatives More Effective
The Market Speaks
According to data from eMarketer, at-Retail marketing, or shopper marketing, for Consumer Packaged Goods (CPG) companies continues to grow rapidly. In fact global at-Retail marketing spending surpassed $30B in 2012, and nearly 70% of this amount spent was in the US.
According to POPAI, at-Retail marketing spending grows at about 7% per year. That’s not terribly surprising considering that CPG suppliers continue to shift advertising dollars from traditional print and broadcast media. The shift is to the “Time and place where shoppers become buyers”, according to the Path to Purchase Institute – at-Retail, at the Point-of-Sale (POS) or sometimes just called “The moment of truth.”
Of course, the problem that many marketers face is in determining what POS promotions will attract and persuade shoppers to become buyers. In short, if you don’t engage your target consumer with your at-Retail form-factor and message, your strategy will fail.
At-Retail Marketing Technology
OnTrak is a marketing technology company which develops solutions to help beverage distributors track, measure, manage and verify all at-retail marketing and promotional materials, including custom printed signage, permanent displays, beverage menus and beverage sampling events.
As OnTrak’s marketing technology solutions have continued to evolve, we’ve added new features and functions. Today, we’re able to provide our customers with ever better tools to help them track, measure, manage and verify the effectiveness of their various at-Retail campaigns and the compliance of those campaigns to local standards.
The data our software now complies and stores, when correlated with demand data from order entry systems, can now provide consumer package good (CPG) suppliers, distributors and retailers with the information needed to determine the most effective POS type, size, value message and placement. You’ll also be able to have proof positive that at-Retail materials were actually placed (via our verification feature).
What we’ve learned and incorporated into our solutions makes us confident that at-Retail marketing is in fact one of the most effective ways to engage and persuade shoppers to become buyers at the place and time they are ready and able to buy.
Taking Advantage of Marketing Technologies
At-Retail marketing is arguably the most highly-effective advertising and promotional tool for CPGs available today.
The question becomes: “How can you leverage your shopper marketing campaigns to gain maximum ROI?”
The answer is by taking advantage of the marketing technology available to you today that enables you to target “your” shoppers and persuade them to buy your brand.
Here’s where we are today:
We can now track the entire at-Retail marketing campaign life-cycle from ordering through production, placement and replacement. You’ll be able to know when your POS items were placed, displayed and ultimately taken down or replaced – and you will be able to visually verify that your marketing materials actually were placed – and determine what happened to sales as a result.
Of course, historical data compiled and stored by our applications, when correlated to sales data, will provide valuable feedback pointing to the effectiveness of various types of POS displays and signs.
Today, many CPG suppliers and distributors are at the point of ever escalating at-Retail marketing spending. They are looking for Marketing Technology Solutions that will facilitate the tracking, measuring and managing of at-Retail campaign in order to lower costs, increase sales, and get a good return on their campaign investments.
Multiple surveys of CPG corporate marketing and brand managers indicate a very high willingness to adopt an at-Retail Marketing Technology solution, but the perception is that there are few, if any, commercial solutions available.
OnTrak Is The Answer!
There are at-Retail or POS Marketing Technology solutions available. Unfortunately, the software companies that offer such solutions are largely unknown or cannot get sufficient exposure to the CPG market to gain or raise market awareness.
But since you have come across our website and this blog, you are on the right track (no pun intended).
I’ll leave you with the following recommendation:
First - Adopt (at-Retail Marketing Technology)
Next - Require the Necessary Discipline (Make Sure Everyone Uses the Technology)
And Then - Make Good Use of the Right Technology (Let OnTrak help you!)
We certainly hope you’ll consider using our solutions!
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To discover and learn about our portfolio of at-Retail Marketing Technology applications, please click the following button:
POS Marketing Technology: Still Viable for CPGs?
According to eMarketer, the Internet hasn’t demonstrated itself to be a strong place to drive sales and build brands for many, if not most, consumer package goods (CPG) companies.
For one thing, it’s harder for CPG suppliers to see the ROI of e-campaigns, and as a result, significant numbers of CPG marketers continue to rely on proven methods, such as POS initiatives - Initiatives that actually drive direct sales. CPGs spend over “67% of their all-inclusive marketing dollars on retailer trade promotion,” including POS signs and displays.
eMarketer continues by noting that those marketers who focus on at-retail marketing, mostly skip e-marketing (aka digital), and spend less than 1% of their budget on digital.
According to a McKinsey & Company study (see Note 1):
“One global consumer products company, for example, had for years relied heavily on traditional marketing, such as television and print ads. Concerned about the growth of new media [digital], the company decided to research just what was influencing the choices of consumers—and found that only 30 percent of them cited traditional advertising. In fact, in-store interactions [POS marketing] with consumers were more important in communicating the company’s message and driving potential buyers to consider its products.”
Before continuing, I want to assure you this is not an anti-digital post; indeed, it’s not anti-anything.
The message is, however, both pro-POS marketing and pro-POS activities, including the tracking, measuring and managing of these initiatives. These activities, if adopted as part of your overall at-retail marketing plan, can provide valuable information about what POS initiatives, promotions, programs and spending-levels drive sales – in short, if you track, measure and manage your retail marketing, you’ll know what works and what doesn’t.
If you’re like most CPG marketers, you are frustrated by the lack of (software) tools. Tools to provide you with the all-important data-points, including integrated reporting and analysis tools to enable you to deploy the POS materials that best drive your desired sales improvement.
Yet, despite the frustration, we’ve learned from Consumer Goods Technology (CGT) that most CPG suppliers plan to not only continue their funding of POS initiatives, but also have plans to increase POS marketing spend.
CPG suppliers continue to increase their investments in POS marketing because it works – but according to CGT, what is needed to get the maximum out of POS investments are the analytical tools to help predict what at-retail marketing initiatives are most likely to result in the maximum sales improvement.
Collecting and effectively analyzing POS tracking and measurement data does require supplier, distributor and retailer discipline, as well as the regular review of the resulting information. But, there is a payoff: The resulting insights enable the deployment of the most persuasive POS campaigns which naturally drive incremental revenues, margins and profits.
Some POS marketing management software offers CPG suppliers, distributors and retailers a set of tools that simplify the tracking and measuring of the effectiveness of POS initiatives, and provide the data needed to predict what POS campaigns and materials are most likely to increase sales. With such capabilities available to users of POS marketing management software, it should be clear that adopting these tools will provide CPG marketers with a competitive advantage enabling them to gain or retain market share.
The POS marketing environment, in lock-step with the overall marketing environment, is constantly changing and often seems to be as difficult to master as jumping onto a fast-moving train. Indeed, it is almost impossible to accurately describe the speed of change and the increasing need to track and measure the impact (including the ROI) of POS marketing initiatives.
Despite the difficulties of determining the value of your POS marketing (without purpose-built software tools), we find that CPG suppliers, distributors and retailers who do track and measure the outcomes and ROI of their POS efforts, are those who are most likely to triumph over the competition – thus assuring both sales sustainability and gaining growth.
Note 1: Measuring marketing’s worth, McKinsey Quarterly (on-line), May 2012, by David Court, Jonathan Gordon, and Jesko Perrey, www.mckinsey.com/insights/marketing_sales/measuring_marketings_worth
Point-of-Sale (POS) Marketing - The World’s Oldest Profession?
Now that I have your attention – wait. Please give me just another minute before you “hang up” – with what may seem a bit of a tease:
Marketing is simultaneously one of the oldest professions in the world and one of the youngest academic and practical “disciplines”.
OK, marketing is the second oldest profession in the world, if you must know.
Peter Drucker Says:
But, even the practitioners of the “oldest profession” have to rely on marketing to enable them to better purvey their – um – “wares”. According to Peter Drucker:
“Marketing is so basic that it cannot be considered a separate function. It is the whole business seen from the point of view of its final result, that is, from the customer’s point of view… Business success is not determined by the producer but by the customer.”
Winston Churchill Says:
While I’m quoting the heavy-weights of the past 100 years, Sir Winston Churchill said:
“Advertising nourishes the consuming power of men. It creates wants for a better standard of living. It sets up before a man the goal of a better home, better clothing, better food for himself and his family. It spurs individual exertion and greater production. It brings together in fertile union those things which otherwise would not have met.” [Sic – During Churchill’s time “man” as used in his quote was not politically incorrect]
Consumer Reports Says:
Again, I ask for your indulgence as I promise I will at least generally tie the above quotes to the concepts that interest us all here in “Point-of-Sale Marketing-land” while I quote from a considerably more contemporary source, the June 2014 issue of Consumer Reports:
“Everybody has an ad come-on they love to hate.”
The headline teaser-article, “Ad Tactics that Bug Americans the Most” is short on text and long on graphics categorizing and quantifying (via the Consumer Reports “GRIPE-O-METER”) the percentage of Americans who are annoyed by 18 marketing practices. Getting permission to show you the Grip-O-Meter would probably be difficult, but I think it will be OK to tell you that according to Consumer Reports:
Of those American’s surveyed, the following partial-list represents marketing tactics that annoy (by percentage and type of marketing practice):
- 71% - Fake official-looking mail, like mock bills
- 70% - Ads for cure-alls with exaggerated claims
- 63% - TV Ads that seem louder than regular programs
- 50% - Fast-talking disclaimers on TV or radio ads
- 44% - Asterisks tie to tiny disclaimers in magazines, etc.
- 42% - Infomercials
- 38% - Ads for personal or sensitive medical conditions
Later, in the magazine is a photo-story depicting ads that annoy and amuse as part of a special Consumer Reports feature called “Selling It”.
After reading the text, reviewing the graphics and studying the photos of annoying, dumb and perhaps confounding ads, one, probably unscientific, fact bubbled to the surface:
Of all of the statistics Consumer Reports gleaned and of all of the pictures they used to underscore their point, only one annoying or confounding ad or promotional piece was a Point-of-Sale ad (sign, display, etc.); and, I’m pretty much convinced that the picture of the 2-quart Coke display with the back-drop signage proclaiming “Effortless Meals” was not so much annoying POS rather than misplaced POS or misplace product.
Now For The Wrap Up
Marketing, according to some, is the second oldest profession in the world. In a place and time where the consumers of marketing content have perhaps become as savvy or even more savvy than the producers of said content, we have either arrived at an “a-ha” moment or an “I told you so" moment.
Organizations like POPAI and the Path to Purchase (See End-note) may feel justified in proclaiming they “told us so”, as early as the mid-1990’s, when their studies demonstrated that 70% of all buying decisions are made at the point-of-sale.
Or perhaps they will be more gracious and nurturing and say we have more evidence of an “a-ha” event when we review the data that indicates TV viewership is down; TV viewership in the critical age-group known as the Millennials is way down; and that consumers will do just about anything to “hop” (or skip) over commercials on TV with their DVR’s.
Then couple these data-points with a Consumer Reports marketing study that finds consumers are annoyed by just about every kind of ad – TV, web and print – in existence, except for Marketing at-Retail advertising (aka POS Marketing).
It may be time for the practitioners of the second oldest profession in the world to go back to school for an update, and learn the impressive power of POS marketing; and learn that POS marketing programs, when tracked, measured and managed can be strongly correlated with sales results. Maybe it’s time to move on, or at least put POS marketing in its place – which some would say is first place.
If a key goal of your marketing initiatives is to encourage sales increases by tracking, measuring and managing POS materials, then POS Marketing should be your Newest Profession.
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To learn more about OnTrak's POS Tracking Software, please click this button:
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POPAI - The Global Association For Marketing At Retail: www.popai.com
The Path to Purchase Institute: www.p2pi.org
Consumer Reports, June 2014 issue p 11, pp 60-63: www.consumerreports.org