We are all in the middle of the holiday season, and that certainly involves a lot of preparation & coordination. And at the end of most in-home celebrations, someone needs to do the dishes. For years, I have often associated deduction clearing with doing the dishes. It is the required cleanup & reorganization after all the planning, execution & positive results are realized (yes, I’m referring to doing the dishes here). It needs to happen but is not the focal area.
Yet, when you discuss trade spending with many emerging CPG brands, the discussion immediately moves to deduction clearing & the related challenges. Why is this such a major challenge & high level of stress for emerging CPG brands?
A key reason is a lack of clear objectives, then a defined process with specific roles & responsibilities around budgeting, planning, execution & documentation. With this in place, trade spending. If these are in place, deduction matching is quite simple – and yes, there are repays to be addressed after the fact, but this is not the key goal. The major benefit of accurate deduction management is to have an accurate assessment of your performance vs, your plan at a promoted group, brand & customer (direct & indirect) level across various time periods. This information can then be used for analysis to improve the next spending plans, develop better business growth presentations for our retail partners & achieve your organizations business objectives relative to revenue, volume & profitability. The deduction process becomes simple & the repays are quite insignificant compared to the overall business results – after all, trade is typically well over 20% of your gross revenue.
Next Thanksgiving, a good planner may realize that there was not enough turkey or too much stuffing. They will also understand what went great, and maybe what to change. Few will discuss how doing the dishes went.