Anyone with common sense knows it wouldn’t be smart to drive a car with eyes locked on the rear-view mirror. Most argue that if you do, you may as well be driving blind. You’d be oblivious to the slowdowns, roadblocks or potholes ahead, and unaware of other cars competing for space in your lane. Regularly checking behind you will keep you mindful and proactive as your vehicle propels you forward, but driving with that sole perspective is not a safe nor effective way to get anywhere fast.
CPG growth should be thought of in the same way: looking in the rear-view mirror for a complete promotion analysis to avoid less-than-optimal promotional tactics, or to repeat ones that appear effective, is not the best way to operate.
Promotion analysis: retrospective reporting doesn’t tell you ‘why’
Post-event analytics alone do not translate directly to the collection of right decisions to be made in the future. A rear-view look at CPG promotion effectiveness is not the best predictor for future growth because it only shows what worked – or didn’t – in the past. These observations are certainly insightful in building future plans, but not in isolation. At best, these reporting tools can tell you to do more of something that did work well, or less of something that didn’t, but this perspective is extremely limiting. Rather, you need to know if there are contributing factors that when combined could bring you a better outcome, as well as how these factors might vary in the future and which ones you can control. To seize opportunities and optimize for the very best results you need to understand all of the influences that drive true efficiency improvements.
Underlying factors may not be repeatable
Sometimes it’s not entirely clear why one promotion didn’t perform well, or what contributed to the success of another, if you’re only looking at high-level performance numbers in a rear-view mirror, you could think, “Well, that worked well, so let’s do it again.” But “doing it again” assumes your ability to replicate the same factors that led to that outcome – competitive promotions, available alternatives, weather conditions, even a shopper’s personal preferences. Who’s to say that consumer demand will be the same on a different day, in another month, or during a different season? For example, just because a promotion performed well at Thanksgiving doesn’t mean similar results can be anticipated at Easter, or even the following Thanksgiving if market dynamics in the weeks leading up to it have changed. Certain aspects of a promotion’s performance are not controllable, and those that are should be considered when planning for future promotions.
Indeed, a rear-view mirror has inherent value, and it would be dangerous to drive a car without one. But when it comes to CPG promotions, reporting on past events needs to be one part of a holistic solution that interrogates all of the data to get to the root of promotion effectiveness. It’s critically important for CPGs today to have predictive and prescriptive systems, driven by artificial intelligence and machine learning, to leverage data at the most granular level. The danger in driving through the rear-view is dollars lost to your competition, and keeping that share of wallet is dependent on making the right decisions for the future.
There’s a better way forward. Grab a copy of our latest white paper, “Harnessing AI to Change the Game,” to explore how you can drive better decisions and predict future outcomes, looking at all of the data around you.