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
How To Prove The Productivity Gains of POS Marketing Using OnTrak Software
In this blog post I’ll be talking to you about our SignTrak product, which is used by beverage alcohol beverage distributors to track, measure and manage their investment in printed point-of-sale (POS) signage. However, all of the discussion, examples and conclusion in this blog apply equally to all our products: MenuTrak (for custom beverage menus), PermaTrak (for permanent signs and displays, and SampleTrak (for beverage sampling).
Recently, we were invited by one of our larger customers to their corporate offices to discuss the gains in efficiency and productivity provided by SignTrak, now that they have been using the software for about two years. To paraphrase our customer, “We know we’ve had productivity gains, and we know our POS ordering and production activities are more efficient, we just are unable to prove it.” Essentially what our customer wanted was some help in overcoming what has been, for several decades, loosely referred to as a productivity paradox.
Improvements Through Automation
Most companies undertake automation initiatives with the belief that a particular task will be made more efficient for the enterprise by the “improvements” associated with automation alone. “Improved” can have several meanings. Here are some that come to mind. Which one did you think of first?
Improved POS effectiveness
Faster speed of execution and production
Lower costs of production
Reduced errors and reworks
Some or all of these characteristics
Each one of these benefits is possible; but why is it that so many companies have difficulty in actually quantifying them?
The Before and After Analysis
In our experience, the culprit that prevents the quantification of benefits of an automated system is the lack of a “before” automation snapshot. It’s difficult to quantify the improvements of an automated system if there is nothing to compare the outputs of the new, automated system, to. The truth is most companies can’t perform a “before and after” analysis, because while they now have the “after” data, there is no “before” data.
In a moment, I’ll give you a method to “go back in time” before the adoption of an automated application like SignTrak, to demonstrate and quantify the initial improvements that are realized after the adoption of the system.
Objectives of Implementing an Automated System
First, however, let’s list some of the objectives our prospective customers tell us they are trying to achieve with SignTrak:
Reducing POS ordering errors
Reducing POS delivery time to market
Reducing POS ever escalating costs
Increasing the recovery of available supplier co-op marketing allowances while improving supplier relationships
Making critical information available for better POS business decisions
Improving communications among sales reps, POS production personnel, warehouse inventory personnel, and marketing and merchandising personal
Our view is that SignTrak helps our customers better achieve their objectives.
Collecting the Data
Now we need to determine some method to quantify the benefits attained of adopting SignTrak – assuming the absence of “before-SignTrak” data.
Most of the initial benefits that can be attributed to deploying SignTrak come from error reduction which, in turn, reduces “reworks” (which lowers the overall costs of POS). Additionally, SignTrak improves the accuracy of communications which leads to greater productivity, for both the reps and the sign makers, by reducing the amount and frequency of phone calls, emails and text messages between them. Reworks, too, are typically slashed by 90-95% due to more accurate communications.
Here is an example of what you’ll need to build your “before SignTrak” picture, if you’re already using SignTrak:
The recollection (by sign shop personnel) of the frequency and average duration of calls, and other like communications, between the reps and the sign shop personnel; both before SignTrak and after SignTrak’s deployment
Armed with the above and other data, available from your back office system, you can determine any number of pieces of information that will go far in quantifying the value and ROI of SignTrak. Let’s elaborate.
A Case Study – Hypothetical Beer Distributor
Assume you are a 6-million case beer distributor who employs 30 sales reps. A sales rep works a total number of about 1,920 hours per year, which is 57,600 “rep sales hours” per year. This means that every sales hour worked yields average sales of about 104 cases of product.
Your sign shop and graphics personnel tell you that they spend an average of 5 minutes per day talking with each rep about their POS orders. That’s a total of 150 minutes per day or 12.5 hours per week devoted to clarifying POS requirements. That means your sales and sign shop personnel spend over 650 hours per year, or more than 16 weeks, on activities that are not direct sales activities.
The cost of all of this “lost selling time” is potentially 62,400 case equivalents. Assuming a revenue number of $13 per case equivalent, this comes to over $800K in lost revenue. In addition, we can estimate the time savings per-rep, per-day due to the improved communications. SignTrak gives each rep about 3 minutes (a reduction from 5 minutes spent clarifying POS requirements to 2 minutes), which equates to an opportunity cost reduction of 360 hours per year or 37,440 case equivalents. If the reps use this time to sell, then there is the potential to increase sales by 104 cases per hour on average. In revenue terms, this equates to nearly $500K of potential top-line gains at $13 per case.
Finally, the sign shop tells you they have about 15 reworks per month. This translates to at least some customer dissatisfaction, but quite possibly additional loss in case sales. If POS is placed in the trade one or two days later than planned, it could affect sales a few percentage points. Of course there are materials and labor costs associated with reworks too, and if the sales rep feels obliged to come out of the trade to retrieve the corrected signage, there is also the opportunity cost of the time, to and from the account, which again can be equated to lost case sales.
Clearly this is an example based on a hypothetical SignTrak customer; and your circumstances – annual case sales, number of reps, amount of time spent on the phone clarifying POS requests, reworks, average case revenues, and so on – will undoubtedly vary from the example presented here.
But hopefully you can see the spirit of the value that can be realized by using SignTrak even if you don’t have a “before and after” measurement.
Real Customer Results
In several of our clients, such after-the-fact calculations pointed to an EBITDA (Note 1) increase of about .25% (one-quarter of a percent) as a benefit of implementing SignTrak. Other beer distribution customers have determined the value of SignTrak to be in a decrease of their costs of one-half cent per case delivered.
While it is true that “Your mileage may differ,” we find that a subscription to SignTrak typically returns at least $2 for every $1 spent on the subscription. Where else can you find this kind of ROI in these days of ever leaner and meaner beverage alcohol distributor operations?
For more information about OnTrak’s POS Tracking software products, please click this button:
Note 1: EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization
You Deserve More From Your POS Marketing Investment
POS – Competitive Advantage or “Black Hole" of Expense
When we ask beverage alcohol distributors for an opinion regarding their at-retail or point-of-sale (POS) marketing activities in the context of their overall business operations, it is not uncommon for us to hear that POS marketing is considered necessary, yet the processes of ordering and producing it are widely disliked.
OnTrak customers and prospects alike have told us they consider POS marketing to be a competitive tool or weapon; and, that it is vital in the battle of getting their products noticed in an over-crowded retail space. However, these same companies will often tell us that they believe their POS marketing spending is out-of-control and that they really have no way to know what really happens as a result of placing signs and other marketing collateral in the retail environment.
Beyond a somewhat vague notion that POS materials are not optional, beverage distributors, often simply create and place their POS in the marketplace and hope for the best. Often these companies adopt an OnTrak product, SignTrak, for example, and only use it to track POS orders and production therefore limiting the benefits to reducing re-works and speeding time to market.
Elimination of Errors Is Not Enough
Rework reduction alone often pays for the subscription to an OnTrak product – and that is, of course, a good thing. But, wouldn’t it be beneficial if you could not only keep track of the POS you have placed, and also measure its effectiveness and then use this information when placing POS materials in the future?
Think of it this way, when placing a bet at the roulette table, wouldn’t it be great if you knew, in advance, what the winning color and winning number would be? You’d be able to place a winning bet every time.
Unlike traditional marketing (broadcast and print), which is typically measured by estimating the audience numbers, POS marketing can actually create a measurable sales increase. Once you begin measuring or correlating POS placement to sales, you’ll be somewhat in the position of the gambler above who knows the winning number and color at the roulette table.
POS Costs vs. Sales Impact
Correlating POS marketing to a sales outcome is comparatively easy to measure and report on, whereas a TV ad for a particular product does not typically have a measurable relationship pertaining to a sales outcome. We know how many households may have seen a particular TV ad last Tuesday night, for example; what we don’t know is if this TV ad influenced or is in some way correlated to a sales outcome on Wednesday.
Increasing the Odds of Success with OnTrak
OnTrak’s products increase the odds of sales success in the process of POS marketing by measuring the effectiveness of your at-retail promotions. Of course there is some work that has to be done to be able to correlate a particular POS initiative with sales.
It is worth the effort, however. Studies have shown that companies who monitor POS spending by customer account can increase their market share simply by either increasing the frequency of at-retail marketing events or by increasing the size of the message. One large OnTrak customer says that by using SignTrak’s reporting capabilities, they have learned that when it comes to at-retail signage, “bigger is better and less is more.” No longer do their marketing initiatives focus on “wallpapering” the retailer rather, they now concentrate strategically placing one or two larger signs with a branding and/or pricing message.
Once adopted, the above approach requires your at-retail representatives and merchandizers to utilize analytics to help them with more effective POS marketing decision making which in turn will help drive sales growth. The good news – especially if you’re an OnTrak customer – is the data needed to drive your analyses are captured by our products. The Detail Report Writers found in each of our products automates much of the process of analyzing what POS is most effective by customer, brand and product.
For more information about our POS Tracking Software, please click this button:
POS Marketing - The Right Place at the Right Time
The Impact of “Smart Technology”
Have you bought a new “smart” TV, or Blu Ray player recently? Did you give or get an iPad, Kindle Fire HD, or other similar device for Christmas? Is your mobile phone classified as a “smart phone”? How much TV (broadcast or cable) do you watch live vs. DVR’d?
Unless you’ve gone “off the grid”, you probably know that the first three questions, if answered in the affirmative, suggest your “TV viewing” habits are shifting or already have shifted. The shift to using ‘smart devices’ for content viewing has been going on for a few years, but in the last couple of years has really picked up steam. In fact, last year was TV’s worst year in a long time, perhaps ever.
Here’s a sobering fact: with but a few exceptions, there has been nothing but negative growth on broadcast and cable TV for almost three years. Research has shown that the decline in subscriptions to cable TV – since 2010 – has exceeded 5 million people.
We are experiencing a period where there is a shift to mobile devices and ‘digital viewing’ and away from traditional broadcast and cable TV. These digital devices (including smart TVs) allow the audiences to watch whatever they want to watch, whenever they want to watch it. Typically, too, the on demand programming allows viewers the ability to watch 60 minute TV shows in about 45 minutes since most and sometimes all of the commercials are cut out of the on-demand versions of programs.
Other technologies such as pervasive and free Wi-Fi are also contributing to the decline of TV viewership – as almost anything can be watched anytime, anyplace and, as mentioned above, often commercial free.
The Impact on CPG Advertising
As if the declining reach of broadcast and paid TV signals isn’t enough bad news for Consumer Packaged Goods (CPGs) suppliers and manufacturers (who have relied upon ever increasing TV viewership to promote their products), consider that studies have shown that most people prefer commercial-free content when watching “TV” programs – even if they have to pay a small fee to watch content without commercials. Clearly this reality will impact advertisers’ willingness to pay for advertising – especially since the consumer perceives the quality of paid, commercial free content is superior to the content delivered for free but with commercials. Finally, it should be noted that the age group that has increasingly stopped watching “commercial-TV” (free TV) in favor of Internet or Digital Content video is the most highly coveted group, the Millennials (people born since 1980).
Yet, even in the face of the facts – that traditional broadcast and cable TV are declining in both reach (audience size) and richness (impact) – advertisers are still being steered into purchasing TV commercials as if they were both the most efficient and most effective marketing approach to persuade an audience to buy manufacturers’ CPGs. Of course advertisers are encouraged to purchase TV commercials because there simply isn’t alternative media that can put advertisements in front of as many potential customers – or so it is claimed, as if potential reach alone was justification for spending what often seems like governmental sums for a handful of 30-second commercials.
The Point-of-Sale Advertising Alternative
CPGs of all stripes are anxious to find ways to reach consumers where and when the marketing message will likely have the most impact and influence on their buying habits. Despite some advertising agencies apparent vested interest in selling, producing and scheduling TV commercials, those agencies who place their clients’ interest first know that the best way to “move markets” is to place marketing messages and advertising campaigns where the customers are at their most receptive – at the point of sale (POS).
POS marketing (often simply called “POS”) is currently in the most fortunate position of being in the ideal place and time for a broad variety of brands and products. Indeed, POS is where the customers are at the time and place when they are shopping and ready (and wanting) to buy. For somewhat obvious reasons, beverages jump to mind first as a category of CPG’s that will benefit most from POS materials. That may well be true, but many other items including electronics, food items, most household products and even autos are examples of items that are excellent candidates for POS marketing.
Increasingly suppliers, wholesalers and retailers are discovering that rather than spending large sums on traditional media buys, POS spending is proving itself to be able to attract more shoppers when they are ready to become buyers.
From our perspective, when it comes time to actually measure the impact of a marketing campaign, traditional media buys are typically limited to the metric “CPM” or cost per thousand impressions or views. Essentially this measurement assumes that what is needed to determine the impact of traditional media advertising is the reach (how many people in the market saw the advertisement) of the message. Often the time between when a TV commercial is run and any subsequent reaction is possible, let alone probable, is too great to form much, if any, correlation between the advertising event and a sales bump.
POS marketing, in contrast, can be measured much closer to the time of placement to determine the impact of the message and effectiveness of the POS type. Using software tools, POS marketing materials can be tracked, measured and managed to determine the correlation between the POS placement and sales increases and to allow for the calculation of ROI.
The decline of conventional media and ultimately the inevitable decline of traditional media marketing continue to elevate the importance of POS marketing. POS marketing management tools available today, such as those offered by OnTrak, enable CPG suppliers, distributors and retailers to optimize their marketing at-retail campaigns for maximum ROI.
For more information on OnTrak’s POS Tracking software, please click this button:
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“YouTube, Netflix, and the Death of Television,”
“The Death of TV: 5 Reasons People Are Fleeing Traditional TV,”
“Delivering the Promise of Shopper Marketing,”
“The most important shopper marketing trends to watch,”
“Marketing in the Digital Age; Winning with Data & Analytics,”
“The Impact of Point-of-Purchase Advertising on Consumer Buying Behavior,”