You should invest in a trade promotion management (TPM) tool with your very first Sales and Accounting/Finance hires. When these hires are made, distribution begins to grow, more promotions become established, and accounting starts to strengthen internal controls - especially as it pertains to validating promotional expenses as each expense directly affects your organization’s cash flow. (P.S.- our Pine tier is one of the most affordable offerings in the emerging brand space!)
We talk to CPG brands every day about alternatives to TPM tools and help guide them to make the best possible decision for trade management. The primary alternative brands consider is Microsoft Excel/Google docs. While these tools certainly have their place, they simply don’t cut it when it comes to properly managing trade spend.
You may be wondering…what’s wrong with Microsoft Excel/Google docs? That’s an excellent question. I’ve personally utilized them both to manage trade spend, the second largest expense on the Income Statement, at the various CPG companies I’ve worked for in the past as an accountant. I’m not here to say you’re wrong in utilizing those tools; however, they’re not an efficient way to plan trade spend, especially as you begin to grow rapidly. Here are three big reasons why.
With the Cresicor TPM platform, trade spend is treated as thoughtful, purposeful investments. Each promotion planned will go through a series of approvals within your organization as validation against company strategy. With a decade of experience, I’ve yet to see a brand properly execute this hierarchy without a TPM platform.
Trade Promotion Management platforms, like Cresicor, make it a one-stop-shop for resolving all of the above challenges. Each promotion is housed within its own profile that generates an automated unique identifier and encompasses all details within the promotion contract including an audit log, unlimited attachments/notes, and approval workflow.
With trade spend making up, on average, 15-20% of gross revenue, investing approximately 1-2% of the overall trade spend budget into a TPM tool is a very small investment that not only harmonizes both Sales and Finance/Accounting but allows you to track a plethora of actionable data, such as:
As your organization grows, you can use your TPM tool to maximize the opportunity of trade spend: ROI analysis, indirect trade rate visibility, accrual methodologies by type of trade and customer, forecasting, budgeting, etc. As you can see, TPM tools are not just limited to planning promotions but allow you to dive deeper into actionable insights that allow your organization to scale. The right TPM tool put in place now, will help you grow into these areas in the future. Microsoft Excel will not allow you to scale.
Starting from the very beginning on a TPM platform will provide you with a consistent data set where you can easily reference prior period promotions and determine whether or not you want to rerun that promotion in future years. It’s all about creating a clean, trustworthy dataset from day one so your organization can learn, grow, and adapt accordingly.