The right combination of Point of Sale Materials (POSM) can make a huge difference to your sales and profit. A simple switch in the combination of materials can double your sales. So, how do you decide which POSM you use to support a particular activity? It sounds like a simple question, so let me rephrase it a little. How should you decide which POSM you should use to support a particular activity? See what I did there? If you’ve answered both questions honestly, many of you will have just admitted that there is a big gulf between what you should do, and what you currently do when it comes to making decisions about point of sale material. So why is it that we don’t always make optimum decisions about POSM, and what can we do to help us make better decisions and improve POSM effectiveness in the future?
The consumer goods industry spends a fortune on POSM
I’m not sure that I need to spell it out, but let’s just be sure we’re on the same page. Firstly, the consumer goods industry spends a fortune on point of sale material. This report suggests globally it is around US$15 billion and growing. And of course, that is just what is spent on the material: that doesn’t include the money spent on discounts and retailer fees. When we’ve analyzed this for our clients, total spend in this area is often 10% of sales, or more. For many companies the amount spent on in-store activities is greater than their TOTAL PROFIT!
POSM effectiveness represents a huge opportunity to influence shoppers
Secondly, we know that the store can be one of the most important opportunities to influence shoppers right before they make the final purchase decision and pick up your brand (or not, as the case may be). So given that point of sale material is massively important, and the fact that we spend a lot of money on it, why don’t we optimize it? Why don’t we make better decisions about the type of POSM we deploy?
Current approaches to POSM Planning are badly flawed
The first part of this goes back to my initial question: what do we do right now? When we survey people in the industry, and examine actual practice, we find that the majority of practitioners are trapped when it comes to the choice of POSM type. They are stuck between the demands of retailers, and the limitations of their budget. And of course the budget was set based largely on what we’ve done in previous years. So in my experience, the most common ‘POSM planning process’ (if we can call it that) is to plan to do what we usually do, and adapt that based on specific retailer demands.
Does anyone notice what is missing from that process? I can spot two huge flaws.
POSM effectiveness starts with being shopper-centric
The first flaw is that there is no reference to the shopper we are trying to influence, and what we are trying to get them to do. POSM is part of shopper marketing, and shopper marketing is defined as influencing shopper behavior. Namely, influencing shoppers to do something that they wouldn’t ordinarily have done. We call this the ‘job to be done’ or the Shopper Behavioral Objective, and it is one of the most powerful planning tools we’ve found.
Different activities will be targeting different shoppers, who currently behave in different ways. And our goal will vary from one activity to another. One activity might be to get a non-category shopper to buy the category for the first time. Another might be to drive trial of a new product among current brand users. Or to encourage shoppers to buy more of a brand that they originally planned.
Each of these examples has a different target shopper, with a different current behavior, and a different desired behavior. A completely different shopper behavioral objective.
So why would we use the same POSM as we did on a previous activity?
Why would we buy the standard package of POSM that the retailer pushes us towards?
Why on earth would we assume that is the most effective approach for every activity? Highly unlikely, you’d think!
POSM Planning needs to be fact-based and evaluation-based
Which brings me onto the second flaw in the budget/retail demand POSM planning method that currently prevails. There is no recognition of the effectiveness of different POSM (and different combinations of POSM).
Very few (almost none) of the trade marketers I speak to are actively testing and evaluating different types of POSM and different combinations of POSM at all, let alone against different objectives.
I’ve been looking at some data from BASE, an insight company that helps brands understand and maximise the ROI from their shopper focused investments. Here are a few soundbites about the effectiveness of different combinations of POSM taken from their BASE® Benchmark database of results gleaned from analysing campaigns in the UK and beyond.
- From the BASE data, on average a display drives 20% uplift. Combining this with front of store media can drive this lift up by 50%
- Taking a standard shelf-talker and adding interactivity (a tear-off, for example, this doesn’t have to be digital) can add up to 66% to the uplift versus a standard shelf-talker.
- When accompanied by shopper marketing media, there is little or no difference in the uplift of a 30% discount versus a 20% discount.
Obviously, this is pan-category. The exact answer will depend on the category, the channel, the shopper mission and the objective (and that’s the data that BASE can give you!) But just take a step back and think of the power of this data.
POSM Evaluation transforms our investments and returns
The ability to know which level of discount delivers the best return.
The ability to understand the value and cost of every single piece of media and POSM you are considering.
The ability to explain to the retailer why you want to invest in one media versus another.
The ability to arm your sales team with the information they need to negotiate a deal with the maximum ROI for the company
POSM Strategy and POSM Evaluation is a winning combination
The ability to understand, strategy by strategy, campaign by campaign, what is likely to be the most effective blend of media, discount and POSM material, and to use this to target different activation plans for different shopper behavioral objective.
Fundamentally, the combination of strategy and evaluation creates the potential to massively improve the effectiveness and return on investment of what you do in stores (and on-line).
I’m not suggesting this is a magic bullet. I’m not suggesting that a combination of strategy and evaluation is going to stop retail buyers demanding investments you don’t want to make. I’m not suggesting it will magically get your boss to give you more budget (but it will certainly help!). But I do know two things:
- Being more strategic about how we invest at retail (and as a first step, setting a Shopper Behavioral Objective for each activity) will improve the focus of your interventions and help deliver better POSM decisions (including better messages and creative work!) which I guarantee will lead to better results.
- More time evaluating the effectiveness of what we do in-store completes the circle. It helps us understand whether our plans delivered our goals and inform our future investment decisions. Without that we can’t hope to improve.
Take the first step to POSM Effectiveness NOW
If you’d like to know more about how to plan & evaluate your shopper marketing activities, check out our training programs on managing in-store activations and shopper communication, or get in touch now to find out more about how we can help. And if you are interested in BASE® and how they help, you can get in touch here.