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How To Manage Trade Spend

Jarvis Stack

Most brands view trade spend as a cost of doing business instead of strategic investment. Within this guide, we will walk through the three necessary steps to optimize trade spend and improve organizational efficiency.

Step 1: Planning a Trade Calendar

In order to reconcile and evaluate promotion performance, companies require an organized system to store all of your planned promotions. Promotion planning is the groundwork from which advanced insights and ROI is created. Here are some additional pieces to keep in mind when creating your promotional plans. For more information on the types of trade, we created a series of blog posts evaluating OI’s, MCB’s and Scans. Ensure that your plans align with your growth strategy.

  • Metrics used to calculate an expected spend are all-inclusive for the cost of the promotion. Some items often missed include: - MCB markups - Marketing fees - Admin fees - Payment terms - Broker commissions
  • Determine the cost of the promotion with fact-based estimates using historical data.
  • Set a schedule to re-visit cost estimates so the sales team is always predicting the most accurate values.
  • Incorporate a permission structure for organizational accountability.
  • Save backup for promotions to assist in disputes and audits.

Step 2: Collate Deductions & Validate

With promotions clearly organized, the next step is collecting and validating the deductions received for promotions. The first step is to compile all of the various backup sources for promotions. Once this is done, Cresicor’s Deduction Scanning Module will help parse through and organize each deduction that needs to be validated. Deductions will need to match promotions, a process we covered in more detail through our Fab Five blog. Additionally, for deductions that are unknown or disputable, tracking these through a dispute log is essential. Here are some additional details to keep in mind through this process:

  • Tracking trade for your key customers, smaller customers like independents, and alternative channels can be planned to an “All Other” bucket.
  • Understand spend at the product group level for key customers.
  • Separate valid deductions from unknown or those that need more attention.
  • Track each missed promotion (deduction is valid, no promotion planned) as a KPI.
  • Review the log of missed promotions with the sales team to understand trends and ultimately, avoid a repeat.

Step 3: Finalize & Insights

Now that promotions are planned and deductions are validated, it’s time for the big reveal, where you can connect the actual expenses with planned promotions. Through this, you will view trade as an investment, gaining full transparency to topline and customer performance. Through actual insights, you’ll be able to relieve cash flow and optimize trade spend investments.

  • Understand insights through good data. If there isn’t an organized system in place, insights are less impactful.
  • As the business grows, the volume of work and time to complete steps one and two will increase. There are two solutions: hire more people to manage deductions or use software for smarter processing and efficiency.

We’re here to help. We are made by CPG for CPG and have walked in your shoes. Have questions? Connect with us.

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