Based on the hundreds of campaigns we run every year for fmcgs in the top 4 retailers, here are the top 3 traps that most companies fall into. Do yourself and your brands a favour and start working on them now.
1) Review your grocery e-commerce spend - downwards. It's the fastest-growing channel yes, we all know that, and by god it generates headlines, but let me gently re-introduce reality to the often fantastical awe that surrounds this subject: the vast majority of brands are spending way too much money on it and spending it for the wrong reasons.
The channel currently represents between 1% (Morrisons) and 8% (Sainsburys) of grocery trade. But I see brands every week investing 3-6 times that proportion of their shopper budget.
If you want to invest in your buyer relationship that's fine - invest away. I've never known a buyer turn down gate fees. But please, let's not pretend that investing 30-50% of your budget in supermarkets' (generally woeful) e-commerce offerings is anything to do with marketing.
2) Don’t set budgets by retailer. No, I have not gone mad. Of course, at some point, you will need to be clear on what is being spent where. But like all marketing investment, your shopper budget should be invested where the best returns are. That does not always correlate neatly with retailer market share and nor should it. After all, market share is a historical read, the purpose of marketing activity is to change behaviour.
The factors that should drive your investment split between retailers should include
Where is the biggest growth opportunity?Where are the best activation channels (both effectiveness and value for money)?Where is the biggest secondary space opportunity? This is the single biggest determining factor of ROI in most campaigns and yet is rarely considered at budget split stage.And finally: what is the retailer expectation / effect on relationship?
The more your shopper marketing budget becomes a marketing and media investment that follows return, the more successful it will be. This means, for instance, taking compliance into account when determining budget levels. That might mean reducing some retailers to zero!
3) Employ a base and stretch method in every plan.
It is obvious that brands will not be in a position to evaluate which customers are offering the biggest opportunity until after meetings with retailers are held. So it follows too that budgets should not be committed until after that point.
That’s tricky, you might say – how can I go and present to a customer without knowing how I’m going to be supporting the launch or initiative? Simple – use the same method retailers themselves use, which is a base and stretch approach.
Whether you call it Bronze, Silver and Gold, or whether you just present support options in tiers, the critical step is to identify what components and variables from the retailer’s side you want to ask for, and then tie them to the levels of investment in your shopper plan.
If we get 8 weeks off-shelf, full distribution of all 3 SKUs, then we can do our Gold plan, which might involve 300m impressions, and 5 separate touchpoints in 400 stores. But if we get no off-shelf, limited distribution of only 1 SKU, why on earth would we support that to the same extent?
By starting to employ these 3 simple tactics in your business, you will move your shopper marketing function away from being execution, and towards being a strategic part of your marketing plan. And if you’re a consumer goods brand, that's exactly what it should be.