How to Run Successful Trade Promotions for Retail Distribution

Trade promotions are incentives that inspire your B2B customers, i.e. retailers and dealers to buy more or in range from you. These can be schemes, discounts, or offers that stimulate successful retail distribution. 

Trade promotions are designed by brands with the purposes of sales uplift, enhanced range selling, and introducing new products. These include cross sell schemes, upsell schemes, and period purchase schemes but it is often observed that they fail to bring the desired results. The reasons behind this are many – from inadequate communication during customer ordering or order taking to a lack of points visibility for customers to a lack of the right technology to run trade promotion – and need to be addressed promptly to derive the maximum benefit from schemes or promotions. 

To illustrate with an example – You have introduced a scheme for Class A stores that offers a significant discount, let’s say 15%, for buying 50 packets of your SKU. You have calculated that this should give you a 5% sales uplift with your new scheme leading the charge but discover that your uplift has only been 2%. Despite your efforts and intent, your “excellent” new scheme isn’t working as excellently as you intended. 

What are you missing here? What more could you have done? Is it human error or an obsolete sales system? 

We explore these and more in this article! 

When Do Trade Promotions/Schemes Underperform?

As schemes are formulated with the goal of selling more or selling in range or selling faster, it is critical that they are well-researched and accurately targeted to provide maximum mutual benefit to customers and brands. 

Sometimes, despite your best-laid plans, you don’t see the outcome you expected from your scheme. Here are some of such situations:

Lack of Communication During Order Taking

Schemes are designed with the sole purpose of driving sales. They are not to be applied post facto or during billing but during the order taking or order placing itself. As catalysts for sales, timely communication of schemes during orders has the intended effect of more purchase or range in the short or long term. 

For example, if it’s your distributor who applies a scheme during invoicing, it creates a hassle and runs a possibility of mistakes when compared to auto-application during secondary sales but more importantly, it is ideal from a sales and customer-centric perspective to communicate and apply schemes during the order itself that also allow for understanding customer behaviour.

This connects to both your sales reps and customers.

As the representatives of your company, sales reps are out on the field with a great deal of responsibilities. Naturally, this, combined with the unreliability of human memory, makes it extremely challenging for them to pitch the right schemes for the right products to the right customers, especially when schemes keep fluctuating on a time and need basis. 

Lack of Visibility into Scheme Effectiveness

Your schemes are not set in stone. What this means is that scheme design is a continuous process involving research, analysis, and re-strategising. 

This issue arises because most companies rely on their MIS (Management Information System) teams to analyse data retrospectively, often after the scheme has already ended.

This post-facto analysis means that by the time brands understand whether a scheme was successful or not, it’s too late to take corrective action. If a promotional scheme is underperforming or not resonating with the target customers, brands miss the opportunity to adjust their strategy, leading to lost sales and wasted resources.

The inability to monitor and assess scheme performance in real-time can result in a range of problems. For instance, if a discount or incentive isn’t driving the expected consumer behaviour, brands might continue investing in a failing strategy, ultimately impacting profitability. 

Lack of Configurability

To anticipate and handle every potential scenario of sales, where you push your products to customers with the help of schemes, you need to have a highly-configurable system. Configurability allows you immense freedom to set your own scheme rules, incorporating various scheme types, and to target the right customer segment. A rigid system without the ability to configure schemes to align with strategic goals and target the right audience prevents brands from running effective campaigns. This fails to engage customers and drive sales.

Outdated Reward Programs

Gone are the days when reward cards and paper vouchers were the emblems of good performance or loyalty. Such traditional and outdated methods are prone to problems when it comes to redemption, both logistical and practical. In-transit losses and the fact that physical coupons can get damaged or misplaced are big disadvantages, among others. Convenience is the father of all stimuli while inconvenience is the opposite. 

Inconvenience with Physical Reward Cards

Firstly, physical reward cards can be misplaced or damaged. Secondly, they can be lost in-transit. Thirdly, a lack of an online system means that keeping track of rewards on an analogue basis. Going digital, on the other hand, means that not only is the gifting system highly organised but customers can redeem points by simply pressing a button on their phone screens. There is no chance of rewards getting lost in transit or a need to physically keep track of which customer is getting rewarded. 

Lack of Points Visibility

Rewards programs that don’t show progress or point accumulation clearly fail to motivate them to do more. When the next milestone is clearly defined or a period purchase scheme tells them to buy a certain quantity in a certain time, customers will naturally do more to sell so that they can keep more of your stock in the store. Show them how many points they have earned and how far to the next reward and it can become a big difference to your sales. 

Failure to Adapt to Competitor’s Schemes and Promotions

In this tug of war between you and your competitor, your customers will always prefer a brand that offers them the maximum discounts or reward points. This makes it imperative that you do regular audits of what schemes your competitors have designed. This can be done during store visits and engaging retailers/dealers after which your existing schemes can be modified, if need be. Failure to capture this data or a failure to modify your schemes off this data (if needed) due to a lack of configurability means that your competitor’s schemes will reign supreme among your customers. 

The Secret Sauce for Running Effective Trade Programs

Effective trade programs are those that are meeting your expectations and are already affecting your sales positively. Running effective trade programs, however, requires you to know and understand what this entails. Here, we’ll illustrate this using the BeatRoute platform’s capabilities wherever applicable. 

And the first step to that is to know what schemes are available. 

Know Your Promotions

• Invoice or In-Bill Schemes – These are schemes which are applied at order level and can be divided into two types:
  • Cross-sell Scheme – Excellent for range selling, this scheme combines different product types for a customer’s order basket and offers a discount for it. The primary purpose is to increase the range being sold to retailers.
  • Upsell schemes – Focused on increasing purchase volume by pushing greater volumes of a particular SKU, with discounts or reward points as incentives.
• Skema Pembelian Periode – These are schemes that push customers to buy a certain value of products within a certain period of time. This instils a sense of urgency among customers to buy fast and buy in significant volumes to meet the criterion. A positive side effect of this scheme is that customers tend to aggressively push your products during tertiary sales to clear in-store stock to be able to order more frequently. 
• Loyalty Programs – Though not a scheme type, well-designed loyalty programs reward customers for sticking with you long-term or for reaching new milestones by rewarding additional discounts or redeemable points to them. 

Execute Pinpointed Targeting of Schemes

Blind scheme application without any data, research, or segmentation in place is inadvisable. Customer segmentation is done on the basis of your customers’ sales potential, buying patterns, footfall, area, store size, etc. Naturally, it is clear that a Class C store won’t have the same buying capacity/behaviour as a Class A store. So, when you apply a scheme to a store it’s not meant for, you are ensuring three things:

1. Your B2B customer refuses your scheme as they feel it’s unfit for them, thereby adding to the inefficiency of the scheme
2. Your customer’s dissatisfaction opens up an opportunity for your competitors to exploit 
3. Loss of time, effort, and sales
4. Loss of repeat sales

BeatRoute’s proprietary operational AI suggests only the right product combination, and as a consequence, scheme application is also accurate.

Communicate Schemes to Customers at the Right Time

Designing a great scheme is not enough, you need to communicate it to the customers at the right moments, to reap the benefits. 

We will illustrate this with two kinds of communication that BeatRoute facilitates:

Communication via Sales Reps

While taking orders, sales reps have clear visibility into which scheme goes with which product combination or SKU volume. This is of immense help because customers are immediately stimulated to buy more or in range when they are informed of lucrative schemes by sales reps. This makes the sales reps’ job easier, makes store visits more productive, gives sales reps more time to focus on other matters, and also helps them to get closer to achieving their own milestones. 

Communication via Customer App

The customer app, accessible via WhatsApp/Viber, also provides a clear picture of recommended order baskets and available schemes. When a customer places an order on the app, they do so while informed of the best possible combination and scheme. Timely alerts via WhatsApp/Viber about new schemes, progress updates on the next milestone, and reminders about missed opportunities keep customers motivated. Scheme integration into the order-placing process enhances convenience, helping customers to take full advantage of promotions. Also, redeemable reward points greatly incentivises engagement, building loyalty and driving repeat business.

Track Performance of Schemes in Real Time (Not After the Scheme is Over)

When all is said and done, it’s time to have a proper setup that tracks the adoption and performance of schemes. After all, if you don’t know how your scheme is performing, you don’t know when and where to improve. Here are some ways to do all that:

Use Scheme-Related KPIs

Setting up the right KPIs to track the adoption and progression of promotional schemes shows you how well the promotions are being received and utilised by customers. When your sales team has visibility on these KPIs, they can monitor performance, identify trends, and make informed decisions for corrective actions. There will be a more proactive approach by the sales team to modify your strategy and drive better outcomes.

Use Custom Dashboards and Reports

Having a system that can create custom dashboards and reports on your scheme performance gives you tremendous insights on a granular level. BeatRoute’s very own Report Builder feature enables you to build dashboards and reports with drill-downs, filtering, and sorting options. While enabling you to analyse and understand scheme performance data at various levels of detail, this helps you to make data-driven decisions and drive profitability.

Send Auto-Alerts About Subpar Performance

If a scheme is underperforming, your sales team must be made privy to it. Without a proper system in place or some form of artificial intelligence to assist, it can be too late by the time this can be realised. Fortunately, innovations like BeatRoute’s AI-powered CuesBot sends proactive alerts to the concerned team whenever a scheme is not generating the sales it’s supposed to.

If needed, notifications can also be triggered to the customers themselves alerting them of unused or underused schemes which are expiring soon.  

Our Final Take

Retail brands run trade promotions to boost sales or push specific products. Naturally, there are expectations that brands have for such efforts but schemes don’t always deliver on them due to issues like setup, targeting, communication, or performance tracking or even all of them. In such conditions, the schemes inevitably underperform and sometimes this failure comes to light too late for timely strategising.

You can boost your ROI from schemes by using a highly-configurable platform like BeatRoute, which allows you to design schemes aligned with your business strategy, communicate them effectively to your sales team and customers, and monitor scheme performance in real-time to stay on track.

If you are interested in what we can do for you, try our free demo.