The latest Accenture research on Margin Pressure Comparison by Industry (as seen below) illustrates the volatility that Consumer Good companies are currently facing due to rising inflation, due to high raw material and supply chain costs with zero tolerance for passthrough.
Reference: Accenture 2022 – How Does Inflation Affect Business?
Why Is Margin Protection So Important?
As we’ve seen in the past, when inflation increases, cost of living increases and consumer spending becomes more conservative. Consumer spending pressures coupled with difficulty in controlling the cost of sourcing raw materials or supply chain disruption, it requires immediate attention by manufacturers to instantly know where margin-thin products are placed, and understand how quickly they’re moving. The right stock needs to be in the right place at the right time with insights into their sales velocity.
A growth mindset has been core to Consumer Goods commercial strategies to meet aggressive revenue targets. But under the current economic climate, it’s now mission-critical to control and protect margins as a primary lever to protect the bottom line. Consequently, manufacturers must adapt and invest in effectively controlling pricing, promotion and placement of products both in-store and online, while selling flawlessly everywhere.
What Is Margin Protection Management?
With Aforza’s margin protection capabilities, Consumer Goods companies can now maintain the margins they have, protect market share and strengthen customer loyalty despite difficult market conditions.
Aforza’s margin protection management capabilities enable end-to-end acceleration of margin control across every channel, connecting HQ planning to omnichannel execution in real-time. A powerful segmentation engine targets customers based on their profitability. Omnichannel pricing & promotion engines then control margins on every channel, including offline mobile in the field. Powerful cross & upsell recommendations ensure maximum sales efficiency with larger basket sizes during store visits. As a result, customers using Aforza have seen over 250% growth in sales performance with significant costs savings by achieving greater commercial efficiencies and agility.
Aforza customers have highlighted 6 ways they now gain greater margin control with the solution’s capabilities.
1. Target customers based on profitability
Only send sales teams to visit customers when it’s worth it!
Sending sales teams to every potential customer is an unreliable, scatter-gun approach when focusing on longer-term margin protection. Not every customer account can justify the expenses of visiting and selling to them.
With Aforza’s segmentation engine, you can evaluate the performance of customer accounts ahead of time and determine your sales visits based on profitability; ensuring you get the maximum value out of every sales visit. Additionally, with optimised route planning, you ensure that your sales teams can get to these higher profit customers as efficiently as possible.
2. Maximise sales efficiency with larger basket sizes
Make sure sales are getting the most value out of each customer visit.
Provide your sales team with the tools that will make every selling moment in the field as efficient as possible. Without offline tools, sales teams work around their retail execution apps, resulting in missed revenue opportunities and an administration headache.
Aforza customers can execute perfectly, anywhere. An offline engine sits at the core of every Aforza capability, so we can take internet reception out of the equation for your success. Sales teams can take orders in the field, capture competitive info, execute audits and schedule deliveries in the moment, all while working offline. Some of our most powerful customer benefits are based on offline recommendations for trade up-sells based on real-time visibility into stock availability.
3. Control pricing & manage discounts everywhere
Keep your prices consistent and profitable on every channel.
Time and again, we hear customer frustrations about their inability to control prices and discounts across different routes to market. In worse case scenarios, field sales reps create arbitrary pricing and discounts on a customer-by-customer basis because price controls don’t exist. Arbitrary pricing and promotion execution erodes sales margins and creates disjointed commercial experiences across different channels.
With Aforza’s Omnichannel Pricing Engine, gain perfectly controlled pricing, promotions and placement of products with the ability to adapt to your customers’ changing needs, in real time, during store visits. This will enable your business to optimise and control pricing for each market and customer segment that’s going to drive a positive ROI. Ensure consistency and control across all your potential customer channels – whether they’re accessible in the field, via telesales, eCommerce, distributors and beyond.
4. Guarantee customers pay
Never place orders in accounts that won’t pay up!
Every other step of the sales journey will be pointless if you never reach the point of payment with your customers. It’s important to ensure your sales teams can go into every customer interaction with full, real-time visibility on account credit history, order checks and validation rules – all offline.
5. Cleardown all stock
Avoid getting to a situation where your stock perishes and cannot be sold.
There needs to be a definitive balance to the amount of stock provided to stores to maintain margin. Too little and your brand presence will shrink, reducing customer awareness as they take up other products. Too much and you run the risk of losing product volume to perishing waste and invoking administrative costs for damages, spoils & returns.
With Aforza, ensure that you know how much of which products are in-store with real-time stock availability and a single commercial product catalogue. A customer might not always know what they have in store, and over-order to compensate; give your sales teams all the information they’ll need to make effective decisions in store, offline. Our end-to-end inventory management can provide total stock view and ensure that up-selling and cross-selling don’t risk becoming overselling.
6. Command a Premium
Keep brand equity high by continually selling the value!
In order to increase gross revenue and command a premium for your products, it’s important to sell the value. With today’s modern customer, this is all about brand detailing and integrating digital assets into every sales visit.
Educate the buyer into the value of your brand through consultative selling using digital slides, images and videos. This needs to be seamlessly integrated into the visit progress and available online and offline to ensure no disruption.
Control Starts With Understanding Your KPIs
To support you in this control and margin protection, Aforza has also launched the industry’s first Consumer Goods KPI Index. The 100+ page index includes everything a CG company needs to confidently run their business and understand each sales, margin and promotion performance metric in real-time.
The Consumer Goods KPI Index is complimentary to all manufacturers & distributors, and available to download below.