One Blog |April 8, 2014 | POS Tracking Software

Correlating an Increase In Sales to Point of Sale Promotions

Mark Fullerton

One of the most powerful — and under-utilized — features available to users of OnTrak’s products is the capability to measure the impact on sales of your POS promotional initiatives. Simply put, it is possible to correlate the sales increase associated with your POS campaigns and use this data to make informed decisions about the ROI or effectivness of certain kinds of POS materials. The value of this data should be self-evident, but what is confusing to me is why tracking this relatively simple correlation — and using the information generated — is rarely done, despite its obvious potential benefits.

Go to a Business Analysis Boot Camp?

As I write this, I find myself glancing at a flyer on my desk commending the benefits of taking a 4-day Business Analysis (BA) Boot Camp. 4-days and $2,500 later, I imagine my BA skills would be elevated to such an extent that I would be able to competently converse with other Business Analysts on a wide variety of subjects, using appropriate BA jargon.

Much as I’d like to immerse myself in this training, I don’t really think it would enable me help OnTrak’s customers begin to embrace using our software tools to not only track POS orders and placements but actually use our software to help them be better brand and product marketers.

The reason for my avoiding the BA Camp? 

Well, using OnTrak’s data and your own sales data to determine POS effectivity and efficiency does not require anything close to a 4-day lecture course.

What are the Tricks of the Trade?

The truth is there really are no tricks and nothing complicated required to use OnTrak’s data correlated with your order management system sales data to determine the probable increase associated with specific promotions.

The following discusses what OnTrak solutions can do and provides some insight into how we do it. Let’s make sure we’re on the same page with respect to what we will be measuring and correlating.

Beverage alcohol suppliers and distributors specifically want to know the sales differences (hopefully increases) between the promotional (POS) period and a prior or pre-promotion period. This correlation is the simplest method of measuring the impact of your at-retail marketing. POS campaign sales are easy to determine since they are the promoted item’s sales recorded during a given POS promotional campaign. 

What may be difficult is determining what data will be used to establish the pre-promotion period’s sales performance. For instance, will we include prior periods for comparison that we know or suspect have significant seasonal swings; or, will we include relatively new items where there is little sales history to compare to?

If you elect to use this straightforward Before-and-After (B&A) measurement approach, you must accept the fact that there will always be products that fall outside the realm of accuracy and believability of this method of measurement. For established, non-seasonal products, however, the B&A method will provide you with most of the answers you will need to determine what POS initiatives will most likely provide the greatest increase in sales.

Of course, college level courses in probability, statistics and operations research can suggest formulas to refine and sharpen the measurement of the accuracy of your POS campaign’s impact on sales; and, there are instances where more certainty may be required. If and when you need greater accuracy, you should consider applying more advanced formulas to the task.  However, what is often most desirable and valuable to suppliers, distributors and retailers is finding the answer to the basic questions pertaining to POS.

What POS promotions work to provide an increase in sales (and how much of an increase) and what doesn’t work?

Should you require more refinement than the B&A approach described above, you may want to consider using a method that averages all of the prior year’s months together after eliminating the promotional periods. However, if the products you are measuring are promoted over 50% of the time, you may want to directly correlate prior promotional periods to your current POS promotions to determine the impact on sales of different kinds of POS or POS placement.

Regardless of the method you deploy for measuring the impact of your POS initiatives upon sales, we’re confident you will find confirmation that retail market campaigns can and do deliver increased sales. Over time you will discover how your sales results can be improved and adapt accordingly. Your only requirement is to start measuring and stick with it.

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