(Here’s a tip for brands looking to establish better retail trade relationships.)

Trade marketing is typically the single largest line item on a company’s income sheet, but how do you know if your trade marketing is effective?

Most promotions are ineffective and fail to encourage new shopper trials – the primary goal of every promotion. While rewarding loyal shoppers to make repeat purchases can prove beneficial, new shopper engagement is the key to growing brand sales.

More important, promotions help retailers compete more effectively by driving shopper traffic into their stores and away from their competition. This is the greatest bargaining chip any brand can offer a retailer. Digital strategies level the playing field for small brands and provide a substantial competitive advantage. Savvy brands leverage their ability to drive retailer sales when they negotiate with retailers for premium shelf space, incremental merchandising opportunities, etc.

1. CreativityMost promotions lack creativity. Brands tend to repeat prior promotions or mimic competitor promotions. Companies that have creative strategies typically have greater success growing sustained sales. Effective promotions encourage incremental and impulse purchases. Co-promote within the brand and with complementary items when possible to maximize your ROI. Digital strategies allow brands to drive consumer engagement. Promotions that align with the retailer’s digital strategy help drive exponential awareness and traffic to both the retailer and the brand. The ultimate goal is to increase consumer purchases after the promotion ends. Digital strategies are very effective in measuring shopper engagement.

2. PurposeEvery promotion should have a well-defined and understood purpose that aligns with your customers. Design promotions around opportunities to build your brand such as important causes (Earth Day, back-to-school, etc) and product demos. We live in a digitally connected world - shoppers expect transparency and authenticity. Shoppers today research brands online while standing in front of the product. Leverage your digital strategy to enhance and amplify promotions that are retailer specific.

3. Strong brand building strategyPromotions that don’t grow category and brand sales are a huge waste of resources and money. Set specific goals and objectives for each promotion, then evaluate promotions afterward to highlight successes and/or missed opportunities. Account for all costs including deductions, digital strategies, retailer fees, scan down rate, bill back, missed sales due to out-of-stocks, off-invoice rebates, menu fees, fixed costs, forward buys and miscellaneous costs when evaluating promotion effectiveness. Include retail, distributor, broker, and supplier execution in your evaluation.

4. Promotion scheduleSome companies have very predictable promotion schedules that train customers to purchase their brand only when they are on sale. While it’s nice to reward consumers for being loyal, the goal of all promotions is to encourage shoppers to be loyal and to invite new customers to try your products. A more effective way to reward existing shoppers is with digital strategies that provide exclusive incentives and coupons. Learn your competitors’ strategies and the effectiveness of their promotions. Build your strategy around their promotional efforts to maximize every opportunity to invite their shoppers to try your brand.WF

Daniel Lohman, CPSA is an Organic and CPG Industry Strategic Advisor, certified at the highest level of category management proficiency. He is creator of the free course Turnkey Sales Story Strategies and the BRAND SECRETS AND STRATEGIES podcast, an audio natural products accelerator. Daniel’s company, Category Management Solutions (CMS4CPG) provides innovative ideas, actionable insights and strategic solutions for companies interested in gaining a significant competitive advantage. His unique approach and expertise are designed for the small to medium size brands wanting to grow their business, build shopper base and expand brand shelf space. Email Dan at dan@cms4cpg.com