If You Sell Beer, Wine and Spirits You Can’t Afford Not to Implement Point-of-Sale (POS) Marketing Technology
In The News
OnTrak Software is a Cincinnati, Ohio based company; so we’ll be using Ohio data to guide and support my remarks in this week’s blog.
According to www.cleveland.com - February, 2015:
“Sales of liquor set a record in the Buckeye State in 2014 as Ohioans continued a pattern of drinking higher-quality alcohol, according to the Ohio Department of Commerce. Buyers spent a record $949 million on spirituous liquor -- intoxicating liquor containing more than 21 percent alcohol by volume -- in retail purchases by consumers and wholesale purchases by businesses, such as restaurants and clubs. Total Ohio Liquor sales were $51M above sales for 2013, which also was a record year.”
The same website also reported in June, 2014:
“Ohio's grape and wine industry continues to grow and now has an economic impact on the state of nearly $800 million a year, a new report says. The report, prepared for the Ohio Grape Industries Committee, found there were 175 wineries in Ohio in 2012, an increase of 41 percent from 2008, when the previous study was released.”
To see the full report, Click Here >>
Also, according to the February 11, 2015 edition of CityBeat: Cincinnati’s News and Entertainment Weekly Newspaper, Cincinnati’s Winter BeerFest 2015, held at the Duke Energy Convention Center, will showcase almost 250 different beer related businesses – most of them breweries – featuring “1,000,000 ounces of craft beer!” The paper proudly identifies some 365+ craft beers, mostly from Ohio (and regionally) and also announces greater Cincinnati’s 8 newest nanobreweries.
“In Ohio, 163 breweries support almost 83,000 industry-related jobs, for a combined economic impact of $10 billion; and the number of breweries is growing. The state is among the top 10 in the country for both highest economic impact and most breweries.” – Dayton Business Journal, January 22, 2015.
Getting the Message to the Buyers
Clearly, if you’re a lover of beer, wine and spirits, Ohio is a great place to fall in love. But, besides these eye-opening statistics, I find it almost mind boggling to think how the suppliers and distributors ever expect to get their products known outside of the several “fests” (Cincinnati does have an annual wine festival as you probably imagined).
With a significant and growing number of small breweries and wineries, you just know there isn’t enough in the marketing kitty for any TV spots. So we know that these businesses will be turning to point-of-sale marketing in order to turn shoppers into buyers.
An Evaluation Process for POS Marketing Technology
It only seems logical that Point-of-Sale (POS) marketing planning and execution will be made easier and more efficient with POS marketing technology.
We’re biased, so before I suggest that we have the answers for you, let me first propose that you identify what your needs are related to a POS marketing initiatives.
Compile a list of your top 3 to 5 POS marketing challenges which will then allow you to create a list of “needs” you expect POS marketing technology to address.
With this list of needs in hand, ranked in order by highest benefit or value, your are now ready to begin your POS marketing technology shopping.
Efficiency and Effectiveness of POS Marketing
If you’re looking to improve your POS marketing’s efficiency, just remember it is important to first understand that you need to be effective in your utilization of POS marketing materials. If you are ineffective with your POS, any POS marketing technology will only allow you to more rapidly implement your ineffective POS campaigns.
Of course, it is also possible that you’ll use POS marketing technology to measure the effectiveness of your POS initiatives. Once you’ve become more effective, you’ll be able to focus more on improving the efficiency of your POS efforts.
In short, POS marketing technology that enables the tracking, measuring, managing and reporting on all or most aspects of your POS campaigns will help you get your shopper marketing materials to your retail customers without error and much quicker than you could prior to the adoption of such technology. And, if the technology helps with the measuring of the effectiveness of your POS, you’ll be in a much better competitive advantage position versus your competition.
As a beverage alcohol supplier or distributor, you should know that most of your peers are probably just as ineffective and inefficient as you are with respect to POS marketing. It has only just recently been acknowledged – see our previous blog – that at-retail or shopper marketing is just as important as other marketing initiatives. What these facts should signal to you is that now is the time of opportunity to gain competitive advantage – affordable competitive advantage.
Now is the Time for POS Marketing Technology
Beverage suppliers and distributors – specifically the leaders – who recognize the tremendous opportunity that now exists to adopt POS marketing technology, will ultimately be those who will gain the greatest success. If you haven’t yet considered adopting POS marketing technology, now is the time. The technology is the best it’s ever been, it’s affordable and, frankly, you can’t afford not to adopt it.
If you’d like to take a look at the state-of-the-art in POS marketing technology that will help you track, measure and manage your POS initiatives, we’d be happy to schedule a demonstration of one or all of our products. This could be your first “best idea” of the New Year.
It only takes an hour.
To learn more about our POS Marketing Technology you can schedule a demonstration by clicking this button.
In-Store Point of Sale (POS) Marketing Displays Help Score Actual Sales - Wall Street Journal
“A Super-Bowl Ad Is Just Half the Battle: In-Store Displays — the Bigger the Better — Help Marketers Score Actual Sales”
Posted January 30, 2015 by – Nathalie Tadena, WSJ, January 30, 2015 - Link to article below.
This Wall Street Journal article marks first time I’ve seen a reference to the “equality of importance” of point-of-sale (POS) marketing. The key word here is: Equality as in “as important as” something else. Quoting from the article:
“It is equally important, ad industry executives say, to make a splash at retail stores with elaborate displays that stand out to reinforce a brand’s message and — fingers crossed —actually lead to a purchase.”
OnTrak Software Perspective
Our opinions have come a long way from 2005 when we implemented our first SignTrak customer. As you may know our SignTrak product is an on-line application that allows beverage alcohol companies to track, measure and manage one of their largest expense category - In-store marketing materials.
Typically this is referred to simply as printed POS. (We also have a product to track Permanent POS - PermaTrak)
Back in 2005, we knew POS marketing was very important. We also knew it was a significant expense item for beverage alcohol companies. But based on the actual spending at the time, we knew that traditional marketing (broadcast and print) still commanded the lion’s share of marketing spending by the big beverage companies.
We also were as certain then – as we are now – that shoppers actually buy consumer packaged goods (dominated by beverages) almost exclusively in stores, not while watching TV ads, and not even while watching Super-Bowl ads.
Yet, we also knew that Big Beer was spending considerably lesser amounts on POS than on TV spots, other broadcast media and print.
Ten years have passed and what certainly appeared to us, at the time, to be obvious has indeed come to pass:
Ad Industry Executives are proclaiming it is equally important to market at-retail because that is where marketing can actually lead to a purchase.
We have always believed that POS and traditional media advertising are indeed equal.
But our experience says that more emphasis needs to be place on the side where most CPG purchase decisions are ultimately made – At the point of sale! – The actual place and at the point-in-time where shoppers actually can become buyers.
Who knows, maybe next it will be written that beverage marketers should adopt software tools to track, measure, manage, verify, correlate POS to sales, and recover the costs of POS initiatives with supply chain partners.
We just did.
Wall Street Journal Article
Please click on here on this Wall Street Journal - A Super-Bowl Ad Is Just Half the Battle link to read the entire article.
Take a look at our suite of Internet applications that were designed by our customers to track, measure, manage, verify, correlate and recover POS marketing expenses
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Will 2015 Be the Year of POS Marketing Technology Adoption?
2015 Prediction Blog
If you’re a beverage alcohol supplier or distributor, there’s a good chance you subscribe to Beer Business Daily or Wine and Spirits Daily. These publications deal with a broad spectrum of subjects and often provide “inside baseball” type insights about overall market trends affecting the beverage alcohol market - And for suppliers and distributors information on mergers and acquisitions.
Since you almost certainly have access to any number of these types of publications, I’ll focus this “2015” blog on subject matter that is within our sweet spot here at OnTrak Software - At-retail Marketing Analysis and Technology. Point-of-sale (POS) marketing and promotional materials include such things as temporary and permanent signs and displays, and other POS-centric items such as food and beverage menus and product sampling.
I’ll also discuss the benefits of tracking, measuring and managing your POS’s performance and determining POS campaign’s ROI.
Putting Consumer Goods In Perspective
We’ve established in previous blogs the ever-growing reliance, spending on, and sales success that certain consumer packaged goods (CPGs) enjoy due to POS marketing initiatives. Let’s put “CPGs” into some perspective: As of 2013 the US-only beverage market had grown to over $1.4 trillion (see Note 1). It should come as no surprise, that out of all of the US’s $2+ trillion CPG market, the beverage industry relies most heavily on POS marketing to persuade retail shoppers to become buyers. It should not be surprising that billions of dollars annually are spent on the creation and placement of POS promotional materials in the beverage industry (overall, marketers spend about $60 billion a year in the U.S. alone on at-retail marketing initiatives).
What's Ahead in 2015?
With the above as a backdrop, here is our take on what 2015 has in store for CPGs – primarily the beverage alcohol industry – and Point-of-Sale Marketing Technology:
Software tools that can track, measure, manage and correlate the key data points of supplier’s POS initiatives to product sales will continue to grow in importance for POS marketing. Here’s why:
Shoppers will expect and seek advertising and promotional messages less and less from traditional media outlets and more and more at the point-of-purchase – that is, while they are shopping.
Shoppers will increase their reliance upon POS promotional materials to provide them with product information, pricing and persuasive content – especially for beverages, where the trend continues to be “sell less of more” (see Note 2).
For example, according to the NBWA, US consumers now have over 13,500 beers to choose from with more products added every year.
2. Accelerated Adoption
Because of the availability and affordability of such POS marketing tools and technology, we believe the beverage alcohol supply chain will step up their adoption of platforms that provide workflow management, including ordering, production and placement tracking. Additional capabilities will be increasingly required as suppliers demand greater accountability from distributors. Such things as:
Business intelligence tools to correlate sales to retail marketing campaigns and materials; or,
Reporting and analysis tools to take a look at you marketing campaigns, buy customer, supplier, brand, POS types, and many other data element, to determine if you are making good POS business decisions; plus,
Visual verification capabilities to demonstrate POS placement compliance.
3. It’s All About the Data
We believe that for [especially beverage] suppliers and distributors, capturing POS marketing data, measuring it and producing actionable outputs from it will become a bigger deal in 2015 than ever before. Beverage alcohol distributors in particular will adopt POS marketing initiatives data-capture and analytics to gain or retain competitive advantage.
An exciting opportunity exists for beverage alcohol distributors in that they will be able to provide their individual customers with information regarding the products marketed at retail via certain POS types. By correlating the sales trend data from their order entry software to their shopper marketing initiatives, distributors can inform their customers of hot selling products they may otherwise be unaware of. Distributors who correlate sales data to shopper marketing data can increase both their top line as well as their customers’.
This has the possibility to shift the distributor’s role from simply inventory replenishment or order taking to sales and account marketing management.
In addition, distributors can rapidly adjust their promotional materials which positively impact sales, and avoid the need for continuing to create costly campaigns that produce lower sales results. Why continue to produce campaigns that produce little or no results?
4. The Need for Speed
In sum, 2014 saw more beverage distributors adopt at-retail marketing tools and technology to track, measure and manage POS and achieve increased sales and a positive ROI.
In 2015, we think even more distributors will embrace these tools to gain or retain competitive advantage and manage the ever increasing expenses associated with their at-retail marketing, including their graphics design and printing requirements.
In 2015, we also expect a further shift away from traditional media marketing. We do expect marketing via social, local and mobile to play increasingly important roles for both beverage alcohol suppliers and distributors. It will be important to determine the effectiveness and efficiency of the convergence of social, local and mobile (SoLoMo) in creating additional demand. But for many CPG’s POS promotions will remain the go-to tool to actually increase sales.
For distributors that will adopt and manage POS Marketing Technology, 2015 will be a year of growth opportunities. For market leaders to remain in the lead, it is especially important to adopt not only POS marketing automation technologies but also tools that will enable performance measurement and focused responses to POS marketing analytics.
It's time to get started, and get started fast. Good luck.
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Note 1: According to Forrester Group (@ www.forrester.com): Consumer packaged goods (CPGs) generate revenues over $2 trillion annually in the US alone; globally the revenue numbers are even more impressive. Coca-Cola by itself, for example, is said to have a $70 billion global brand.
Note 2: According to Chris Anderson, author of “The Long Tail”, Hyperion Publishing, 2006: “The theory of the Long Tail is that our culture and economy is increasingly shifting away from a focus on a relatively small number of ‘hits’ (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail.” “The Long Tail book is about the big-picture consequence of this: how our economy and culture is shifting from mass markets to millions of niches.”
Deploying POS Marketing Programs Without Measuring Their Results, is Like Driving Without a Speedometer
I love to cook!
Over the recent holidays, I attempted to cook several dishes with which I had no previous cooking experience. Believe it or not, I had never cooked a bone-in rib-eye roast. “What could go wrong,” I thought to myself. Well, let me tell you this – I cooked my beautiful roast by time rather than temperature, and I seriously overcooked it. I didn’t even come close to my goal of creating a medium-done roast. Perhaps not a total disaster – after all, the veggies were pretty good – but very close to a total disaster.
What Happens When You Avoid Measuring
My problem? I didn’t bother to measure the temperature of the meat until it had been in the oven for nearly 90-minutes. And, despite cooking the roast for less time than my cook book recommended, I guess I should not have been surprised and disappointed at the outcome.
Of course, a search of the Internet offered virtually no sympathy. In fact, I was pretty much told I was a fool:
"The idea that you would rely on intuition to judge something you are terrible at judging makes very little sense. . . . Why don't you blindfold yourself too? “Cooking without a good digital thermometer and a good temperature guide is like driving without a speedometer.” – http://amazingribs.com
At the point of intersection, between my overdone feast and the Internet site’s lecturing me, my thoughts turned to the similarities between the prospective customers we at OnTrak are striving to win over and my shortcomings as a chef.
What occurred to me, staring at nearly four pounds of overcooked meat, was that virtually all beverages sold at-retail do receive at least some point-of-sale (POS) marketing materials. These materials are typically offered, created and placed at the retail location based on the “intuition” of the supplier’s or distributor’s representatives.
POS marketing initiatives, like my attempts to cook a roast, are frequently carried out like “cooking without a thermometer” or “driving without a speedometer.”
POS and the Beverage Industry
Here’s what appears to be happening with respect to POS marketing – specifically for beverages:
Suppliers and distributors are generally the most likely group to order and place POS marketing materials. At a minimum they budget certain amounts for at-retail marketing material spend. Distributors, with their own in-house graphics and printing capabilities, create local POS materials to coordinate with a brand’s national campaign images and content. However, little POS planning (beyond a budget per customer, rep or brand) actually takes place. Almost no research is carried out to determine what POS type and content has proven successful. And, there is no work done to see what is being done at-retail by competitors
What seems to be happening all too frequently in the retailer’s aisles is that POS materials (signs) are created, delivered and placed by distributor and supplier reps. Then they are generally ignored until new or replacement POS is “due” for whatever reason.
Today, based on our market observations, virtually none of the valuable POS and sales data collected by POS tracking systems is used to evaluate the effectiveness of the POS. There is little or no correlating of the cost of POS and resulting sales impact during the period of time the POS was on display.
POS Marketing Technology Systems
These types of systems are growing rapidly in popularity as evidenced by the number of new customers we add every year. But these systems seem to be used primarily to improve the accuracy of POS materials ordering and to shorten production time which leads to improved speed to market. These benefits are quite valuable, to be sure – and they do more than pay for the cost of the systems.
But the true power of today’s POS management systems comes from the data they collect and the reporting tools they provide.
In short, the value of OnTrak's POS Marketing Technology Systems is in the information they can provide.
POS Technology Systems can help answer questions like this:
If POS Marketing really is a key driver of sales – and requires tracking, measuring and managing to get the most from it – what can we/you do to deliver improved return on investment (ROI). That is, what can we to do with our POS marketing initiatives to win at retail?
Knowing what POS marketing initiatives work best, when they work well, and how they compare with different approaches can be the key to winning or failing at retail.
Just as my relying upon “intuition” and my lack of timely temperature measurement ruined my beef roast, beverage marketers will only gain a small benefit by automating the front-end POS ordering and processes. The real benefit will come through measurement and the subsequent management of the POS Marketing Process. It is critical that beverage marketers consider the strategic value of using POS data correlated with sales data to help improve the effectiveness of at-retail marketing and achieve greater sales increases.
To learn more about our POS Marketing Technology, please click this button.
Adopting Point-of-Sale (POS) Marketing Technology – Taking the First Step
Recent Prospect to Customer Experience
In 2013 we conducted a product demonstration of our software to one of the largest beverage distributors in the United States. This distributor operates in several states and is predominately a beverage alcohol distributor with 30% of their business in non-alcohol beverages.
By third quarter 2014, we had finally sorted out what they wanted; how we would deliver it, and began the steps of moving them from prospect to customer. During that one year effort we convinced our prospect that we could bring solutions that would address several of their POS marketing issues. But we learned a lot in the process.
This distributor is a leader in adopting and embracing technology that will help them grow their marketing and sales capabilities and capacities. Additionally we learned that they use technology to gain a cost advantage. What they save by adopting technology can be invested in other marketing and sales initiatives. When they contemplate a new system, one of the key components examined during the selection process is the potential ROI.
Working with our customers is often like being taken to school on becoming more effective and more efficient. Not only to allow change, but actually to push an organization to change in ways that will “move the needle clockwise” and move the organization forward.
Our new customer has demonstrated the growing importance of POS marketing in the beverage industry. Likewise we’ve learned that “POS growth” has happened so quickly that it has become virtually unmanaged. Their concern is that if something isn’t done to get it under control, it may become practically unmanageable. We’ve heard this “trend” expressed with greater frequency and urgency these past few years especially by distributors with over $100M in sales and now with increasing volume from even smaller distributors.
The Importance of Tracking POS
Simply put tracking, measuring, managing and determining the ROI of at-retail marketing initiatives – custom/temporary printed signage, and inventoried permanent POS items – has become a priority for beverage manufacturers and distributors. Of course, retailers want the most effective POS programs put in place, but are somewhat less focused on the ROI of POS programs since the marketing materials typically come to them at no or virtually no cost.
It is true that more and more beverage companies are investing or planning to invest significantly in at-retail marketing and promotions. Research firms like POPAI, Path to Purchase, and Consumer Goods Technology, who study the deployment of shopper marketing initiatives, believe at-retail marketing point-of-purchase initiatives are steadily increasing and are likely to increase sharply in the next year or two and beyond. At the same time, studies have shown less than 50% of companies track POS placement or measure POS marketing’s ROI.
With nearly three-quarters of beverage suppliers stating their belief that the primary objective of POS marketing is to increase sales first and strengthen brand recognition second, it’s no wonder traditional media outlets essentially ignore such objectives and continue to insist on the importance of the “number of eyeballs” that were exposed to the brand’s message rather than any direct correlation to sales. Of course, an increase in sales is exactly the “sweet spot” POS promotions occupy.
In support of the notion that POS’s sweet spot is the increase in sales, let’s examine something we learned from reports coming out of the recent Beer Insights Seminar (BIS) held at the Waldorf Astoria in New York.
According to those in attendance at the BIS, a prominent Beer Industry consultant, Joe Thompson, remarking on the waning effectiveness of traditional media marketing said:
“The next step: Influencing the consumer at the store level. I think that's the key to the distribution system moving forward." Continuing, Thompson said: "[We need] More and more local [marketing] . . . TV has less influence, and the wholesaler is in a position to do a bang-up job of marketing to consumers in their market [at retail].”
Source: November 12, 2014 “The Tech Effect,” Beer Business Daily - https://beernet.com
Conclusions and Recommendations
Until we have an ‘app’ that actually pours beer, or other beverage, from a smartphone in real time, influencing the consumer at the store level is a great use of funds. TV advertising of items that an "unplanned purchase" component, is a waste of billions of dollars of potential influence. With increasingly fewer and fewer audience members actually watching TV advertisements, it merits mentioning that none of them have the ability to instantly buy a 12-pack of beer or cola while sitting in front of their TV's watching a “TIVO’d” program.
If you really want someone to see and be influenced (to buy) by an ad about your product, TV advertising is becoming more of a risk than ever before. Almost half the population simply doesn't watch TV commercials; and, the rest hop on their smartphones to catch up with the burning issues that have come up in the last 5 minute aired commercial package.
If your goal is to increase sales then POS marketing is the answer – particularly if you’re a beverage distributor. In fact, POS marketing may be the key component of your marketing approach.
To get the most out of your POS marketing, it is now important for you to invest in tools to aid in tracking, verifying, measuring and managing your POS initiatives. Doing so will foster competitive advantage. Although it is likely the larger enterprises will lead the charge, smaller companies will only be able to survive, grow and prosper by making similar, proportionate investments. And it is not too early for any size enterprise to begin thinking about making such investments today.
However, these investments, by themselves, will not provide significant ROI without top management’s investment in the processes and discipline required to integrate POS marketing into the overall enterprise.
POS marketing technology software provides the tools to build a measurable POS marketing function within your organization.
Beverage suppliers and distributors should put POS Marketing Technology on the fast-track; and, they should also develop their people to be the most competent ruthless POS marketers possible.
POPAI - http://www.popai.com/
P2P - http://www.p2pi.org/
CGT - http://consumergoods.edgl.com/
Beer Business Daily - https://beernet.com/
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POS Marketing Technology – How to Drive Down Your Point-of-Sale (POS) Costs and Beat Your Competitors
I was standing in the TSA queue at O’Hare airport within the last couple of weeks and way up high on the terminal wall I could see a prominent 20’ x 12’ sign with the message:
WORKERS LOSE UP TO 70 HOURS A YEAR
WAITING TO BOOT AND LOAD APPLICATIONS.
Seeing this message, reminded me:
For nearly 9 years, those of us at OnTrak Software have been amazed at how many minutes per day sales and marketing people spend in configuring, ordering and following up on their POS signage and other marketing materials.
The Real Cost of POS Placing and Tracking POS
Based on information our customers provide us, sales and marketing people “lose” a minimum of 44 hours per year, per person placing and tracking POS material orders from their customers to their internal printing facilities. This is because most beverage alcohol distributors use a manual system to order and track POS, and not a suite of POS marketing technology like OnTrak.
Additional time is lost in rework and replacement, to say nothing of the cost to the retailer in lost incremental sales while incorrect POS materials are removed, reworked, redelivered and replaced. When POS materials have to be reworked often several prime selling days are lost. Products are on the retailer’s shelf without the benefit of being marketed at-retail via the promotional materials that typically provide the last “persuasive push” to turn shoppers to buyers.
Quantifying the Components of POS Costs
Salary – With a conservative average cost of $36/hour, the lost time spent inefficiently ordering POS alone amounts to nearly $1,600 per rep, per year. For a supplier or distributor with 200 reps, the “lost time” amounts to nearly $320,000.
Errors and Reworks – For that same supplier or distributor with 200 reps, if each rep makes one ordering error per month, the rework costs add up to an additional $450,000. Based on a rework time of 1.5 hours per rework (according to our customers), the number of hours lost just to get the right POS to the customer swells to about 62 hours per rep, per year. That’s up 18 hours per year, per rep from the 44 hours mentioned earlier.
Additional Time – Production time can also be lost in locating and loading the raw graphics files that match the supplier’s graphic templates. On average, it requires about 15-20 seconds to locate the raw graphic files based on templates referenced in POS production orders. If 30,000 signs using graphics are created annually, and the time spent in locating the raw graphics for these signs is cut from 20 seconds to 10 seconds each, the savings is 300,000 seconds or over 83 hours per year. Some of OnTrak’s customers produce nearly 10 times as many signs as our example – about 300,000 signs per year. To say the time (and therefore cost) savings are impressive is probably an understatement.
Using POS Marketing Technology to Achieve Significant Savings
These areas of improvements in time, materials and costs amount to substantial, attention getting savings. All this is possible with the deployment of an automated POS promotional materials tracking system. When your reps are freed up of this time spent on ordering, tracking and reworking POS, they can spend more time selling, and generating incremental sales.
For many beverage distributors, hourly sales in the thousands to tens of thousands of dollars are the norm and easily determined with even basic sales analysis tools.
Using our example 200 sales rep beverage supply company, and our expectations of up to 62 hours per rep, per year able to be “reclaimed”, it is simple multiplication to see the potential top-line impact of an additional 62 hours per year spent in selling by each and every one of the reps.
If a typical rep sells an average of $2,000 per hour in product, and is able to work selling products 62 hours more per year, the potential annual incremental revenue per rep would be $124,000. In our example of 200 reps that would be a potential reclaimed top line revenue of more than $24.8 million.
Apply your numbers to this example and you can quickly calculate the significant saving from investing in a POS Tracking software solution. Even if you would expect less than 100% of the hours saved to be spen in making additional sales, the potential incremental revenue you could gain is impressive.
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An Automated Point-of-Sale (POS) Tracking System Makes Your Sales Reps Look Good!
If you are a supplier or distributor of beverage alcohol, an on-line, Point-of-Sale (POS) tracking system can and will help your sales organizations improve their performance more than ever before.
This is true today due to the on-going acceleration of competition for not only market share but also for actual market size.
The Distributor’s Sales Function in the Beverage Alcohol Market
We have lived through a fairly prolonged period of essentially zero growth in the overall beverage alcohol market, but 2014 data seems to signal the return to at least modest growth in the total beverage alcohol market - notably beer and other malt beverages. We’ve also seen some double-digit growth in certain categories like craft beers and imports.
There has been a continued erosion of loyalties between retailers and the distributors. Part of the reason for this erosion is the accelerated turnover of Sales Reps within beer, wine and spirits distributorships. Of course, there has been similar turnover within the distributor’s customers which decreases the retailer’s need to have a “relationship” with the distributor beyond the mandatory “order taking” function.
Should this continue on the current path, it won’t be long before the “ordering function” gets transferred to an on-line function via the Internet.
The fear is we may be reaching the end of an era.
A distributor’s customers tend to buy on price alone, if given a choice. The salesperson seems to continuously do less and less actual selling and more and more inventory replenishment.
Look at it this way:
A retail customer will most likely buy from your competition, especially if the competition’s price is $2.00 less per case. The risk to the retailer in choosing one versus the other is fairly slim since retailers know that beer drinkers are quite willing to buy either Bud Light, Miller Lite or Coors Light based exclusively on the per-case price. Craft beers, so far, seem fairly immune to this phenomenon.
How Do You Track POS Today?
If you’re like the majority of distributors, you don’t track POS at all. Often sales reps when trying to get a beverage order handle POS like this:
The salesperson offers up some appropriate POS materials (signs, for the most part) to the customer to “sweeten the deal”. The rep is trying to overcome the retailer’s objections about increasing the sales order-size or winning additional “shelf space”. So how about some “free POS”.
I’m sure you can imagine your rep offering paper and/or permanent signs, displays or other point-of-sale materials to encourage the retailer to accept additional cases of both the usual and perhaps new products, too.
Typically the POS order is hastily written down on a piece of paper (including napkins) or entered into a free-format text box at the bottom of the beverage order-entry screen. The customer is trusting that the POS from the distributor will be helpful in convincing his customers to convert from being shoppers into buyers. Your rep then thanks his customer for the order and moves onto the next customer, repeating the process.
In most cases tracking and reporting on what happened never occurs.
What’s a Distributor to Do?
As a distributor owner or marketing executive you need to call upon every system, every tool and every approach you can to gain, grow and retain a competitive advantage. When your reps are in the market, they should be equipped with the latest and greatest weapons of beverage sales and marketing.
You already know that a computerized ordering system is one of your weapons in enabling the sales function. Now you need to bring another weapon to bear in that critical moment when your sales rep works to increase his average revenue or case equivalent sales per customer.
Now is the time to take a look at POS Tracking Software. What you do next could have a huge impact on what you can actually “sell” to your customers.
The Case for POS Tracking
Based on our 7-years of experience working with beverage distributors, your reps’ signage requests are, on average, incorrectly translated into a sign or display that has to be re-worked. On average each rep will generate at least one reworked sign order per month.
That is unless you have a system that helps you track and manage your POS.
We have found that the cost of a sign or display re-work averages between $35 and $50. However, the real cost of a re-work is much higher due to the fact that a sign that has to be re-worked usually reaches your customer days after your competition’s latest and greatest POS material has been put up at-retail. So, having a lot of reworks does erode the market share for your brand or product. What does that cost you?
Poorly Managed POS Can Negatively Affect Sales
It may be overly dramatic to suggest one of the possible consequences of not having a point-of-sale marketing tracking and management system is the loss of customers; but it is completely without exaggeration to suggest that you are very likely to lose sales without a POS management system.
Sales efforts are now fully and permanently intertwined with POS marketing. Your beverage alcohol sales team achieves its peak results when the POS function is tracked, measured and managed – and that is only possible with an automated system.
I suggest that now is the time to apply the same careful thought to your POS marketing tracking, measurement and management that you did many years ago when you began to consider automating such functions as order entry, inventory, warehouse management, truck maintenance, logistics and accounting systems.
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A Concluding Suggestion
If you are a distributor of any consumer goods sold at-retail, I urge you to find out whom, amongst your competitors and suppliers are members of Point of Purchase Advertising International (POPAI) or The Path to Purchase Institute (p2pi) and explore membership for your company.
If you are a point-of-sale practitioner, likewise I urge you to look into POPAI's MaRC (Marketing at-Retail Certification). This is a certification and continuing education program aimed at keeping individuals current on point-of-sale technology, methods, and research as it applies to in-store marketing (POS).
What Is Your Return On Your Point-of-Sale (POS) Promotions Management Investment?
Articles and books on the subject of retail marketing often state that point-of-sale (POS) promotions are to be used to create or increase brand awareness.
I can’t think of any consumer packaged product (CPG) that doesn’t use POS to some degree.
The amount of money spent promoting products in the retail environment is staggering. Currently, over $21 billion is spent on promotions at-retail in the US alone; and that amount is growing between 5-7% annually.
Here is another staggering data-point:
Only about 50% of retail promotions are effective.
A recent Boston College Study on Trade Promotions Management put it this way:
“Studies show that between 50-90% of promotions are not profitable. Many companies are not performing any post analysis to determine which promotions are profitable. Without this analysis, the same unprofitable promotions are run over and over again.”
Assuming you agree with the statement that “POS promotions are . . . used to create brand awareness”, I would like to suggest you consider the following:
The broader goal of POS is – or should be – to increase sales.
Brand awareness may lead to increased sales but it will be more difficult to measure the sales increase provided by your POS when its content provides no direct benefit or incentive for the retail customer to buy.
Hopefully you will agree that POS placed without even the outline of a strategy to increase sales and, in some cases, without even a clearly stated goal to “create or build” awareness of your brand, is a poor use of marketing dollars.
Suppliers and distributors must set retail marketing/promotional objectives, execute, measure and analyze results and adapt the campaigns with the goal of increasing POS marketing’s impact on increasing sales results.
It is our belief that you should plan as many of the factors involved in your POS initiatives as possible, not overlooking the following:
Direct POS acquisition or development costs
Placement cost, opportunity costs and timing
Recovery dollars available from manufacturers and suppliers to offset costs
Post promotional sales analysis, including a comparison of sales ‘before and after the promotional initiative’
In short, if you track the costs of your POS promotions and can correlate these costs to sales during the promotion period, you will have a much clearer idea of how effective and efficient your promotional initiative was.
You will then have information about what to do in the future with respect to your retail promotions.
Data collected, complied and analyzed about your POS campaigns creates this information. And, an informed CPG marketer has the resources – the power of information – to create POS programs that will increase sales, customer loyalty, revenue and profit.
Before you dismiss these notions as impractical due to the lack of marketing technology tools to help with the tracking, measuring and correlating of POS costs to outcomes, please take comfort in the knowledge that OnTrak Software solutions have been providing the technical tools required to track, manage, measure and verify the costs, impact and effectiveness of POS campaigns since 2005.
To learn more about our POS Tracking Solutions please click the following button:
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To download the Trade Promotion Management Study, click this link:
POS Marketing Reality - Is It Your Perception or the Actual Marketing Data?
The subject of this blog is to focus on the importance of POS (Point-of-Sale) marketing data and the analytical tools that allow you to track and measure your POS Marketing investment based on real data, and not someone’s perception of what’s going on at-retail.
A Trip Down Memory Lane
Let’s take a trip down memory lane – Mostly focusing on the days before POS marketing data and supporting marketing technology was generally available.
There are several brand name products which may call up certain emotions – Mostly nostalgia if you are of a particular age group, and the brand had a clear market dominance.
If the brand was very well-known, you may still have the ability to recognize its name or slogan.
Let’s try an experiment using some recognizable phrases: (see Note 1 for answers)
“When you’re out of ________ you’re out of beer!” - Fill in the blank.
“A little dab’ll do ya.” - Refers to what brand or product name?
“For all you do this ______ for you.” - Fill in the blank.
“I don’t always drink beer, but when I do, I prefer ___ ______.” - Fill in the blanks.
“They’re GRRRRRRREAT!” - Refers to what brand or product name?
“________ . There is no substitute.” - Fill in the blank.
“_ _ _ _ _ _ _ . . . ________ makes the very best . . . _________.” - Fill in the blanks.
It has been said that a “brand” is perceived based on about 5% to 10% memory, and 90% to 95% advertising, promotion, and marketing.
Little of the perception of a brand, at the points-in-time suggested by the above phrases, was measured. It’s only in the last few years that real marketing data has been collected about POS Marketing. And only very recently has that captured data been analyzed in order to determine the return-on-investment of promotional events.
Many brand names, and even more product names, come and go only to be replaced with new names. I wonder if the brand names of Plymouth and Oldsmobile or Schlitz are widely remembered, or today’s brands will suffer the same fate. And does it matter?
I'm bringing the subject of “brand recognition” because it has become increasingly difficult for Consumer Package Goods, including beverage suppliers, to bring new products to market via traditional electronic and print media. The clutter of TV channels, print outlets, and the Internet has made it all but impossible to gain sufficient exposure to introduce, build and sustain brand recognition and perception - And “perception is reality.”
You Can’t Manage What You Don’t Measure!
Here are some obvious questions at this point:
“What is a viable – and affordable – alternative to the spending on TV and Internet content?”
“What type of marketing approach can we take that can actually track and measure?”
“How can we collect the data to allow us to track and then analyze the effectiveness (ROI) and costs of our marketing initiatives?”
Lucky for you, there are analytical tools available that will help you to correlate you POS Marketing investment to any incremental sales results. Once again, why is this of such importance?
Here’s why. According to a brand new KPMG International survey as reported by Consumer Goods Technology, released July 28, 2014 (see Note 2):
“More than any previous year, the focus of executive attention has shifted from economic uncertainty to data, technology and the supply chain.” Additionally, “56% of consumer goods and retail business leaders cited data analytics as being important to their firm’s strategy, making it the highest-ranked strategic area in the survey.” Finally, “The survey results reveal that improving capabilities in the area of data analytics is the number one strategic priority for executives in the consumer space in 2014," comments Willy Kruh, global chair, Consumer Markets KPMG International.
From our perspective, the fact that analytics is the “number one” priority for executives in the CPG space is exciting news. The reality, however, is that there are also some studies that suggest these same executives lament the lack of tools to actually accomplish the tracking, measuring and correlation of marketing initiatives to sales.
At the risk of being a broken record:
OnTrak has web-based marketing technology available right now that is specifically designed and developed to provide CPG and beverage distribution companies the following capabilities:
Configuring and ordering POS marketing materials
Tracking these orders through production and placement, with visual verification of the placement
Providing the analysis of what POS materials correlate to the largest sales increases
Determining the ROI achieved based on the costs of a particular POS campaign
If you are a CPG or beverage executive looking for these capabilities, then take a look at OnTrak Software.
Our name says it all – Our marketing technology will keep you OnTrak.
To learn more about OnTrak and its Point-of-Sale Marketing Management solutions, please click the following button.
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Note 1: 1) Schlitz; 2) Brylcreem; 3) Bud’s; 4) Dos Equis; 5) Kellogg’s Frosted Flakes; 6) Porsche; 7) N E S T L E S, Nestles, chocolate
Note 2: “Global Top of Mind Survey” - KPMG International; the survey was conducted by Oxford Economics on behalf of KPMG and The Consumer Goods Forum during April 2014.
Getting Started: Tracking and Measuring Your POS Marketing Activities
“That was then, this is now.”
I'll bet you've heard or read this phrase forever!
It's usually associated with economic, social and political opinion and fact. Elected officials, managers, educators and historians rely on this 6-word phrase to explain changes in their approaches to issues and problems of all sorts.
What this phrase suggests is that we now have new information upon which to base our actions or conclusions regarding any number of subjects - Something like “According to US Government data as of 2012 . . . .”
We certainly could conclude that 2012 data is new enough for us to consider it as sound – or at least “sound enough” for us to base our behavior upon. We’ll see.
For more than a decade, “the” data point used to describe why at-retail or POS marketing was so valuable has been:
The POPAI Perspective
The 70% number came from POPAI and was based on their 1995 study of shopper behavior. That was then, this is now.
In 2012, POPAI released a new “Shopper to Buyer” study, and the 70% number was updated to 76% based on new data. Considering the length of time between the original and the 2012 study, a 6% increase in at-retail decision making was not all that surprising. But, in 2014, a follow-on POPAI study (2014 Mass Merchant Shopper Engagement) was released showing the number had again grown by 6% taking the at-retail conversion from shopper to buyer decision number to 82%.
You may or may not be inclined to agree with POPAI’s “82% conclusion” – but their study methodology, sample size and academic rigor is impressive. What really got my attention was that the 2012 and 2014 studies show just how quickly the CPG retail shopper has changed. The studies show how much today’s retail shoppers rely on point-of-sale materials to help them make buying decisions. Part of the reason for this, the 2014 study noted, is that shoppers at mass merchant retail stores spend very little time pre-planning their purchases.
“The Mass Merchant shopper is more often reminded by something in-store when purchasing an impulse non-grocery product.
This likely is a result from the lower rates of overall planning and calls out the need for in store [POS] signage and displays to remind the mass shopper what he/she needs.”
Calculating the ROI of POS Marketing
The real question is what is the return on investment (ROI) for your at-retail signage and displays? To determine this, you’ll need to correlate sales changes to the cost of placed POS signs and other materials to evaluate their effectiveness. Once you have the cost of the POS materials and the change in sales data in hand, you can determine if the ROI calculated was greater than 1:1.
There are several formulas that you may elect to determine the ROI of your at-retail marketing. Often the simplest formula is the best in that the simple formula will typically provide you with the answer to two basic – yet very important – questions:
Is my POS marketing campaign (sign or display) working to convert shoppers into buyers?
Is the cost of my POS marketing campaign justified (is there a positive ROI)?
One of the most basic formulas you can use is:
If needed, you can modify this formula to measure the ROI of the incremental sales attributed to a particular marketing at-retail initiative:
The components for calculating your POS marketing ROI can change for different customers and different products; but with POS ROI calculations and measurements, you can focus on at-retail marketing programs that deliver the greatest sales increases and the best ROI.
Finally, as noted in basic question #2 above, ROI will help you justify marketing investments. Since marketing is an investment to increase revenue, you can, by focusing on ROI, help your company grow.
What About Beverage Alcohol Companies?
Based on our experience with hundreds of our customers and prospects, if you’re a beverage alcohol supplier or distributor, there is a reasonable chance that you don’t capture the costs of your POS marketing investments and that you don’t measure the ROI.
There is also a good chance that you have an overall sense that POS marketing works, but you’re not sure what campaigns really are most effective or not at all effective.
The fact that you are here at our website, reading our blog, suggests that you know there’s room for improvement and benefit if you begin to track and measure your POS initiatives. You’ve arrived at a “That was then, this is now” moment.
A Good Place to Start
Assuming you currently do not track and measure any of your POS marketing programs, a good place to start is to collect the data required for you to calculate the ROI on your POS marketing investments. You can then review the information over time to make better POS marketing decisions.
Then as you get more data and become even more comfortable with the measurement process, you’ll find your POS marketing campaigns will continue to improve, your ROI will improve, and your at-retail marketing program costs will be reined in, made more efficient or both.
When one of your customers or reps requests what seems to be an expensive sign or display, you’ll be able to predict the merits of spending to create the marketing collateral based on data, not “gut-feel.”
I urge you to begin using POS marketing technology to track, measure and manage one of your biggest expense categories: POS marketing programs. Perhaps you’ll change your thinking once you adopt a system that facilitates capturing, examining and analyzing your POS data.
To learn more about OnTrak's software to help you track, measure and manage your investment in POS marketing and promotional events, please click this button: