One Blog |September 16, 2014 | POS Tracking Software
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:
- “70% of all buying decisions are made in the store, in the aisle, while the shopper is at the place and time where he/she can convert from shopper to buyer.”
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.
- “Since mass merchant shoppers spend less time conducting pre-store research and frequently walk in without a list, it is not surprising the in-store (decision to buy) rate is so high.”
- “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:
- POS Marketing ROI = Gross Margin $ – POS Marketing Investment $ / POS Marketing Investment $
If needed, you can modify this formula to measure the ROI of the incremental sales attributed to a particular marketing at-retail initiative:
- POS Marketing ROI = Gross Margin $ of Incremental Sales – POS Marketing Investment $ / POS Marketing Investment $
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: