From Placements to Profit: Unlocking the Power of Trade Marketing Metrics
As competition intensifies and we move into the critical OND selling period, trade marketing will be a significant focus of wine and spirits companies’ budgets.
This is all good, but too many companies need to stop and measure the return on their investment.
To determine the true impact of trade marketing efforts, it’s critical to measure the ROI as accurately as possible.
“Modern” Trade Marketing
Trade marketing tactics used to be fairly straightforward. Some of the most common ways brands would spend money in the market include:
Off-Premise
- In-store coupons
- Shelf talkers
- Case cards
- Floor stands/bins
- Under-counter racks
- Strategic partnerships
- Sponsorships
- New distribution incentives
- Media underwriting
On-Premise
- Wine by the glass features
- Table tents
- Promotional events
- Corkscrews
- Wine buckets
- Large format dummy bottles
- Coasters
- Straw caddies
- Bar mats
- Logo wear
But in modern times, there are many “new” ways to spend your trade marketing funds, such as:
- Creating and maintaining a “trade section” of a website with everything a distributor salesperson needs, such as tech sheets, tasting notes, label and bottle images, bios, etc.
- Social media content (videos, images, copy)
- Email marketing campaigns
- Digital marketing and advertising
- PR and communications efforts
- Entering competitions to earn awards
Most wine and spirits companies spend heavily on these items (typically 7-10% of their gross sales.
However, many companies struggle with inefficiencies in their trade promotion programs. Due to intermediary costs and complexities in the distribution chain, only about 50-60% of the budget may directly reach the consumer.
WWPDD? (What would Peter Drucker do)?
Famous for the saying, “What gets measured gets managed,” the great management guru Peter Drucker preached that measuring something increases the likelihood of taking action on the information.
We completely agree with this and have built a platform to do precisely that.
Accurate ROI measurement is essential to determine the true impact of trade marketing efforts.
In trade marketing, ROI refers to the financial benefit a company gains from its trade marketing efforts relative to the cost of those activities.
Too often, companies spend what is in their trade marketing budget but fail to analyze the ROI thoroughly.
Here are three “hidden” risks of not taking the time to measure the results:
- Wasted budgets
- Missed opportunities
- The danger of repeating a low-return promotion next year
But let’s take a moment to get as specific as possible here by listing the things all wine and spirits companies should track:
- Sales lift: the increase in dollar sales due to the trade promotion compared to a non-promotional period.
- Redemption rate: the percentage of coupons or offers redeemed by customers.
- Incremental sales: the additional units sold during the promotional period.
- Sell-through rates: how quickly promoted products sell at retail or restaurant locations.
Companies must equip themselves with the software tools to run these calculations to assess whether their trade marketing investments are effectively driving profits and enabling them to optimize future campaigns based on measurable outcomes.
Mistakes and pitfalls to avoid
Measuring trade marketing ROI is very complex, which is likely why most companies don’t do it well.
Attributing sales growth to a specific trade marketing campaign is challenging because so much of the impact is “indirect,” meaning it passes through multiple channels.
The two biggest mistakes often made are:
- Lack of clearly defined metrics to track
- Inconsistent or cumbersome data collection
Attempting to do this by hand is an exercise in futility. Doing it by hand (i.e., using Excel spreadsheets) is the most common pitfall companies fall into.
Here is a great checklist you can use to determine if your systems are up to snuff:
- Can you easily create and share consistent KPIs with your distributor partners?
- Can you quickly analyze program performance and results (without requesting the data from someone else)?
- Do your promotional performance systems integrate with finance, operations, and production?
- Can you strategically align your promotional efforts across multiple markets?
- Do you have an approval process that leverages automation?
It’s difficult to imagine anyone can accurately asses the ROI of their trade marketing efforts without the tools in place to execute the five items on the checklist above.
Speaking of checklists, grab your FREE copy of our newest resource, “Turning Data Into Revenue: A Checklist for Success!” (click the image below)
The Cost of Ignoring the ROI
There are serious, real-world consequences for wine and spirits companies that fail to measure the effectiveness of their trade marketing spending.
One of the most significant costs is misallocating resources for future promotional programs. Not every trade marketing promotion will be successful. Most will, but not all.
Without the tools and methods securely in place, companies will run the risk of repeating unsuccessful programs.
Better insights lead to smarter spending decisions, more effective trade marketing, and higher profitability.
Given the intense competition and industry headwinds, few companies can afford this misallocation of funds.
Start maximizing your trade marketing spending today!
Measuring the return on investment (ROI) of trade marketing is essential for large wine and spirits companies to ensure their promotional dollars are being well spent.
Trade marketing activities, such as in-store coupons, point-of-sale materials, and restaurant by-the-glass promotions, can drive significant sales.
Still, without proper measurement, the actual impact remains unclear.
By tracking key metrics like incremental sales, redemption rates, and sales lift, wineries can make data-driven decisions, optimizing their marketing spend and maximizing profitability.
Ignoring ROI leads to wasted budgets and missed opportunities, while focusing on measurement empowers companies to align trade promotions with their overall business objectives and build long-term success.
Ultimately, knowing what works and what doesn’t allows adult beverage companies (large, medium, and small) to compete and thrive in an increasingly competitive market.
About Andavi Solutions
Digital collaboration is in our DNA. We’ve been redefining the possibilities of data-driven decision-making since 2009.
We have the tools, software, and knowledge to bring your entire trade promotional spending (and pricing) together in one place.
Reach out TODAY for a free consultation and start taking control!
