The Key to a Point-of-Sale (POS) Marketing Tracking System: Business Intelligence!
If you’re a wholesale distributor of beverages and an OnTrak application software user, I’m going to assume that by now you are either an expert or well on your way to becoming an expert in POS tracking.
This includes the accurate and efficient capturing your POS promotion orders from your sales reps in the trade, and approving, assigning and producing your orders once they have been accepted.
I’m also going to assume you’ve become quite adept at creating ad hoc reports requested by distribution sales management and your supplier’s sales managers.
Now, I’d like to take your expertise to the next level.
POS Business Intelligence – What Is It!
I’d like to offer you suggestions on increasing the value of your POS marketing campaigns by using the data stored in the OnTrak applications to create POS Business Intelligence
POS Business Intelligence can take the form of a report or a screen view that causes someone in your organization to take action to achieve a certain, hopefully beneficial, sales outcome. If you’re like most system’s users, much of the reporting and other information that comes from just about all application software is of the “good to know” variety. This isn’t meant to suggest that data that is used to provide confirmation of an event or fact, or produce invoices and other outputs, like picking tickets, purchase orders and shipping manifests, is without value.
Rather, it is meant to suggest that systems like MenuTrak, PermaTrak and SignTrak, can be used to generate information that can help you increase your productivity (sales or ROI) and decrease the potential negative (out-of-stock items) of your POS initiatives.
Beverage distributors, especially those who both create their own temporary POS and buy permanent POS promotional materials, face a unique challenge – and likewise have a unique opportunity. A challenge and opportunity that their suppliers may not typically see with respect to POS promotional campaigns.
POS Promotions Work
As you know, POS promotions work. If your beverage distribution organization creates and places signage – or other forms of POS including menus, tap-pulls, lit or moving permanent signs, etc. – history suggests sales of the items being promoted will most likely increase. And, if your POS informs shoppers of a sale price, increased sales are a virtual certainty.
Most beverage distributors manage thousands of SKU’s these days; and they also must constantly manage multiple POS promotions. Even though distributor route accounting systems (RAS) usually have some form of inventory management application, retailer stock-outs can occur and are more likely when items are promoted at-retail, using POS signage.
Due to the effectiveness of most POS materials, when items are promoted at-retail there is a chance to make extra profits or a chance to lose potential sales. The question is: What can you do to facilitate the former and eliminate the latter?
Tracking and Managing the Impact of POS Promotions
The answer to that question requires that you have a system in place that allows you to track, measure and manage your POS activities. POS promotions typically create special selling situations and the potential for out-of-stock situations. These stock-outs, or lost sales, can be mitigated by correlating historical POS promotional data available in OnTrak applications, with the sales data collected and stored in most route accounting systems’ data bases.
Distributors are uniquely positioned to know where, at individual customers, the POS materials have been placed, and by reviewing historical data will also know the likely impact of a certain type or style of POS and the impact of the message conveyed. Using the data from the POS management system correlated with sales data from the RAS system to forecast “demand during a promotional period,” stock-outs can be substantially reduced or eliminated, thus improving the quality of future promotion period forecasts.
One OnTrak customer determined that there was a measurable improvement in sales when they shifted their POS promotional approach from “several small” to “fewer large” signs. Now, when they plan for a POS campaign, they know “bigger is better and less is more” in terms of the impact on sales.
They use key OnTrak data elements correlated with data from their RAS to determine the required product order quantity, for each customer where there will be a POS promotion, based on historical information. In other words, they use OnTrak POS data correlated with sales data collected during the promotional period from their RAS system to create Business Intelligence. In their case, the actionable information has substantially reduced the number of stock-out’s their retail customers experience.
Naturally, the reduction of stock-outs increases both the retailer’s and the distributor’s sales and profits; and sales forecasting accuracy is improved for subsequent POS promotions. Of course the increased sales will be noticed by the distributor’s suppliers. Beyond the obvious benefits to all members in the supply chain, additional benefits accrue to distributors. Since suppliers are often co-opting promotions, or paying some or all of the distributor’s costs, the reporting capabilities provided by the OnTrak POS management system can assure them that they are receiving full value for their promotional spending.
By now, it should be clear that the “secret sauce” that will improve the productivity of your POS initiatives is the data that is used to create actionable information – reports using the distributor’s RAS sales data correlated with POS promotional data stored in every OnTrak application. Because distributors using virtually any RAS system and at least one OnTrak application can better forecast sales increases attributable to POS campaigns, out-of-stocks can be virtually eliminated and the most effective POS campaigns can be employed repeatedly and adjustments can be made as needed.
Improving Relationships with Retailers and Suppliers
Using OnTrak’s applications can increase the retailer’s confidence in the distributor’s sales forecast making it more likely that the distributor can increase the retailer’s order quantities to avoid stock-outs. Suppliers, too, will have increased confidence in the effectiveness of their distributor’s POS initiatives making it considerably easier to pay the distributor’s POS cost recovery claims.
Using a combination of distributors’ RAS sales data, correlated with their POS promotions data to create POS Business Intelligence – in the form of suggested retailer item order quantities – can help reduce stock-outs during promotional periods thus increasing both revenues and profits. Also, such actionable information can take much of the guesswork out of POS campaign planning.
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Point-of-Sale (POS) Marketing First – Every Other Marketing Type Second
Several of the blogs we’ve posted here have suggested that traditional marketing channels should be led by the marketing at-retail channel – also known as the shopper or point-of-sale (POS) marketing channel.
A growing body of evidence suggests that the most effective – and we believe the most efficient – marketing should begin with POS marketing. That means POS or shopper marketing spending should come first, followed by traditional media marketing spending.
Some ad agencies and marketing insiders long ago declared that POS Marketing should only be considered to be in-support of traditional media buys. Today that simply is no longer the case.
Media fragmentation alone – hundreds of TV channels and perhaps millions of web sites – has driven up the costs and increased the difficulty of targeting messages to a specific market. Today, non-traditional media, referring to mobile, social and perhaps most importantly POS marketing initiatives are the media types that have the greatest influence on shoppers becoming buyers.
Beverage Alcohol Industry
Beverage alcohol shoppers become buyers at-retail, not while watching TV or surfing the net or reading magazines and newspapers and certainly not when driving by billboards and other road signs. But, for some reason, marketers spend disproportionately higher amounts on traditional media advertising than on POS marketing. Considerably less could be spent on marketing if more of it was placed where the actual buying occurs. Further, the return on investment for POS marketing would likely be significantly higher.
I would go so far as to say that since the non-traditional media types – especially POS marketing programs – are today the most powerful drivers of sales available for beverage alcohol, POS should be the foundation upon which all other supportive (i.e., traditional) marketing should be built. The focus of a marketing program that has as its primary goal “increasing the top line” should begin at the place and time where shoppers make buying decisions. It should not – as is current practice – end there.
Now, I’d like to make what may seem perhaps a radical suggestion for beverage alcohol suppliers and distributors:
Think: Lead with POS Marketing – Everything Else Follows.
Unfortunately, POS is often referred to – by beverage alcohol marketers – as something they feel they must do because their competitors do it, rather than something they must do to gain a competitive advantage or to increase their top line. The reality is that POS marketing is actually the “X-factor” that converts a shopper into a buyer.
Over the last few years, “Lead with POS” or “POS First” actually has become the battle-cry for a growing number of at-retail marketing thought leaders, such as POPAI, the Path-to-Purchase Institute and Consumer Goods Technology (CGT), among numerous others. But, to be realistic, a POS first approach seems to have remained more in the realm of marketing theory than in actual marketing practice – despite the steady annual increases in spending on POS marketing materials and promotions.
Current research still demonstrates that beverage marketers continue to invest in POS marketing often as an afterthought. A necessary evil it is called by some, or as an add-on to more traditional media spending. For some reason, marketing executives and other practitioners apparently need more convincing to adequately fund and support the POS initiatives that actually help guide the shopper’s steps to the decision to purchase a specific brand or product.
Other than POS marketing, only word-of-mouth is even close in its ability to almost literally cause a shopper to make a buying decision. POS marketing, when done correctly, is always within sight at-retail – the place beverage shoppers go to research and decide to buy your product or someone else’s.
In support of this, a combined 2012 POPAI Study determined 76% of purchase decisions are made at-retail. Even those who discount this percentage agree that marketing at-retail is not something you want as an afterthought, rather POS marketing is something you need in order to win at retail (Note 1).
Grocery Manufacturer’s Association Study
The truth is that “POS first, traditional media last” should be the standard beverage alcohol supplier’s or distributor’s marketing approach. According to Grocery Manufacturer’s Association (GMA) Studies conducted by major accounting and consulting firms over the past few years, even most shoppers believe POS is one of the most important factors guiding their “conversion” from shopper to buyer. Indeed, some of our brand-name beverage alcohol distribution customers believe without POS marketing, their primary brand’s market-share would decline.
Our current viewpoint is that merely leading with POS may not be sufficient for on-going competitive advantage and retail sales success. We now believe that to be successful, beverage suppliers and distributors must think beyond POS first campaigns and start to think almost exclusively about POS marketing as a complete foundation for the next generation’s shopper journey.
Here’s what this means: Today, Shopper or POS marketing, regardless of the budget available to those who conceive and create the end product, is either left unmeasured or is measured as part of the overall marketing budget’s dollars for eyeballs metric touted by advertising agencies.
POS marketing is rarely held up to any scrutiny or accountability, and its ROI is rarely measured. In most beverage alcohol distributors there is rarely much evidence that POS marketing is a core business practice, despite the belief that if POS marketing were to cease, sales would suffer. There needs to be both recognition of and action taken to raise the level of importance of shopper marketing within the organization.
Often, the sign shop manager working for a beverage alcohol distributor is provided virtually no marketing education and often has the job because of a skill or interest level in a graphical production software package. As a result, POS marketing strategies for the most part don’t exist. What does exist is a very expensive production facility staffed by individuals who are either not at all focused or only focused at the periphery on the point-of-connection between the brand or product and the shopper.
Our suggestion: Empower (educate, train, involve in marketing management and sales) your POS marketing materials developers broadly in every aspect of the point-of-connection between your products and the “fourth-tier” – the shopper.
Your beverage alcohol POS marketing materials developers need to collaborate with marketing and sales management and with their company’s suppliers thus helping the sales organization with capturing marketing share and increasing the top-line. Clearly, just investing in POS promotional materials as a defense against your competition is not enough. Today POS or Shopper Marketing is a key driver converting shoppers into buyers.
Adopting POS marketing technology that tracks, measures and manages POS materials can be very beneficial, ensuring the move to POS first and enabling the adoption of Shopper Marketing as the foundation upon which you build all of your marketing initiatives (Note 2). Doing so, too, will create and maintain an advantage over your competitors who have not yet become aware of the benefits that accompany a POS first strategy.
We live in the shopper’s world, a POS world – we urge you to be guided accordingly.
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Note 1: “The Shopper Marketing Revolution,” Toby Desforges, Mike Anthony, RTC Publishing, Copyright ©2013
Note 2: OnTrak offers point-of-sale (POS) marketing technology products that can be accessed if users have a connected PC, Apple or Android Internet browser, a user-id, password and a valid subscription. Our products help beverage alcohol distributors track, measure, manage and verify the ordering, fabrication, and placement of POS marketing materials – such as signs and displays. Additionally we collect large amounts of data that will permit our customers to correlate POS marketing initiatives (and costs) to product sales to help determine what POS is the most effective and yields the highest ROI. More information about our products is available right here on this very website.
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
For more information on our POS Tracking Software, please click this button:
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).
Point-of-Sale (POS) Marketing Technology - The Need for Change Starts Now
According to National Beer Wholesalers Association (NBWA) data, the brewing industry contributes $247 billion to the US economy. This represents more than 1.6% of the total US GDP.
Malt beverages, as you know, are distributed by the over 3,300 NBWA wholesaler members. Today, these wholesalers distribute more than 13,000 different brands of beer. These brands reach the consumer via a three-tier system consisting of:
– Tier 1 - Suppliers
– Tier 2 - Wholesalers
– Tier 3 - Retailers
All three tiers want to sell as much as possible downstream, ultimately to the retail consumer, and to do so they long ago adopted a marketing and promotional approach that has proven largely effective in persuading consumers to buy the brands they sell – Marketing at the Point-of-Sale.
The Big Beer Challenge
As the proliferation of brands continues, it has been difficult for most “Big Beer” brands to increase sales and hold onto market-share. According to a Beer Institute finding in 2013:
“Malt beverage consumption (per capita) dropped by nearly 20% since 1981.”
Big Beer’s brands are primarily sold based on the retail price offered to shoppers. For example, consumer may be increasingly likely to consider all light beers brands interchangeable, especially when one of them is being heavily promoted at the point-of-sale.
Crafts and imports may have some price sensitivity but still have been able to keep retail prices relatively high. This provides each tier higher margins even though case volumes are substantially lower. Nevertheless, crafts and imports have continued to enjoy double-digit growth, while Big Beer sales have actually declined slightly.
Today, Big Beer has little to worry about as crafts and imports still represent just a fraction of the total malt beverage sales. However, Big Beer’s longer term threats are far from benign. According to the Beer Institute, increased beverage alcohol competition is seen as a significant issue overall.
As well, according to an August 2013 USA Today Study, Big Beer brewers like Anheuser-Busch and MillerCoors are facing no fewer than six challenges:
Bye, Bye Light Beer - Drinkers are shifting away from the premium lite segment
Taste Test - Light beer drinkers' taste buds are changing
Downward Spiral - Twenty years ago, beer was the alcohol beverage of choice. Today, beer has lost ground while wine has gained
Young Winos - Those drinkers under the age of 30 who prefer wine as their first choice have nearly doubled, while at the same time, those who say beer is their go-to drink have dropped from 71% to 41%
Male Loyalty on Decline – Men's drink of choice, beer, has been on the decline, and women, too, are less likely to reach for a beer
Poor Earnings Reports - All of the preceding challenges are the root causes for Big Beer’s recent poor earnings reports. While brewers have been able to offset greater losses with higher profits, their forecasts are continuing to suffer.
What Can Be Done?
In response to a market not used to decline, beverage alcohol suppliers and especially beer wholesalers now need to reexamine their marketing approaches, particularly their point-of-sale (POS) marketing practices, in order to regain market share and gain a competitive advantage.
Surveys that are available on the web from a wide variety of research and marketing companies have identified key retailer demands from the up-stream suppliers and distributors.
At or near the top of the retailer’s needs from suppliers are promotions and promotional materials designed to both attract shoppers and persuade shoppers to become buyers. More and more retailers expect suppliers to help them make it easy for shoppers to locate, choose and buy the supplier’s products.
Retailers are demanding POS signage that contains high-impact graphics to be placed in the “pocket” – that sweet-spot placement most likely to catch the eye of the shopper as they enter the store or aisle where the products are on display. A place that Anheuser-Busch aptly calls the Point-of-Connection.
However, more than high-quality production values and smart placement of promotional materials, it is important to deploy marketing technology (software) with features that track, visually verify placement, measure and manage your retail marketing campaigns for maximum ROI.
Have you heard the term Attribution Marketing?
Attribution Marketing is the process of identifying a set of user actions or events that contribute in some manner to a desired outcome – for example, converting a shopper to a buyer – and then assigning a value to each of these events to help determine which event was most influential.
The process promotes an understanding of what combination of events influenced individuals to engage in a desired behavior – like buying your product. This behavior as noted is simply referred to as a “conversion”.
Although typically applied to on-line marketing, I think Attibution Marketing likewise applies to POS marketing initiatives.
For more information click here >> Attribution Primer by Brendan Riordan-Butterworth
Why POS Marketing Technology is the Answer
Without marketing technology the goal of POS attribution marketing – getting someone to buy your product – is difficult to accomplish. Beverage alcohol suppliers, until recently, have rarely adopted any marketing technology tools; instead they relied on traditional media buys which did, at least, provide the promise of “X” number of viewers for “Y” dollars, but little else.
The goal of traditional media buys has always been to introduce a brand to an at-home audience or to otherwise sustain or increase brand awareness of the viewers at-home. Said another way, the market exposed to the message by traditional media is not at the retailer where they could actually buy the product being advertised.
With over 13,000 beer brands in the market, deploying traditional media buys is both impractical and unaffordable, especially if the goal is to regain, sustain or increase sales and market share.
Only POS marketing technology offers the possibility of informing the shopper of the availability, desirability (the “why to buy”) and price of the product at the exact time and place the shopper is able to become a buyer of your beer brand, or other consumer packaged goods.
Standardizing on a marketing technology tool across the downstream elements in the distribution channel will provide suppliers with the data to examine and analyze individual retail outlets. This approach enables the next steps: The aggregation of local outlets performance into local groups; next, further aggregate local groups to create a regional level picture; and finally aggregate regional groups into an overall national picture. The local into regional and regional into national aggregation can, of course, be reversed if it becomes necessary to drill down into the performance of one region, local group or another.
Beverage alcohol is big business and big business needs big data. Deploying marketing technology at every level allows Big Beer to address many of the near and long term challenges it faces.
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