While being in the CPG & SMB space for quite a while, this is something I seldom, if ever hear. Seldom has a CEO, founder or board member said, ‘I want to use trade to win!’. The comments typically are about the ‘high cost of doing business’, clearing high deduction balances & securing repays – but never about leveraging trade to win.
Yet the reality is that virtually all smaller natural brands (and some conventional ones as well) are spending 25% to over 40% (as a percent of gross revenue) on trade. I’ve spoken to more than a few former founders who went out of business due to losing the trade spending battle. Many natural brands believe their trade percentage of revenue is in the 15% to 20% range, and when you sort it out, virtually all of them have been dramatically higher and they do not feel like they are ‘winning’ anything.
However, let’s be clear – trade spending is about winning.
This is winning for your brand and winning for your retail partner. And by developing brand equity, the consumer wins as well.
To measure this, both on a short and longer term basis, I would ask a few questions:
- How do we define winning for our promoted group, our brand, and our company?
- Do we have clear metrics for success around winning at our key customers?
- How often are you (or your broker partners) presenting success stories or plans for both of you to win based on comparative, quantitative numbers?
This does not happen overnight, but there are key brands that are winning – you can too with the proper plan. If you are spending trade dollars at this level, you deserve to win! And, like winning, the journey can be fun and rewarding!