The Role of Trade Promotion Management (TPM) in Growing Your Retail Business
In a recent episode of the Foodbevy podcast Startup to Scale, our Co-Founder Chris Ambarian sat down with Jordan Buckner to discuss the critical role of trade promotion management (TPM) systems in managing the complexities of trade promotions, deductions, and chargebacks as a brand grows. While basic tools like Excel may suffice initially, brands soon need TPM systems to handle the increased scale and complexity of promotions across retailers and regions. Implementing TPM requires upfront effort, but early adoption significantly benefits brands by providing strategic control over trade spend, maximizing ROI, and ensuring effective cross-departmental collaboration.
As your brand grows in retail, the complexity of managing promotions, deductions, and trade spend becomes too much for spreadsheets to handle. As someone who has helped guide many brands in their journey away from spreadsheets, Chris knows a thing or two about what it takes to implement a Trade Promotion Management (TPM) system, how it can help brands effectively manage trade spend as they scale, and why earlier is better.
Listen to the full podcast episode here: Startup to Scale - Managing Retail Trade Spend
While Excel may work in the beginning, it eventually becomes unmanageable, especially once your brand grows beyond a few million dollars in sales. As promotions increase, so do deductions and distributor chargebacks, which can overwhelm any company trying to scale without a Trade Promotion Management system in place.
Promotions that once seemed simple, with a single retailer, turn into complex, multi-regional campaigns involving distributors, discounts, management fees, and chargebacks. A Trade Promotion Management system integrates all the necessary data into one source of truth, enabling you to track every dollar spent and unit sold, helping your brand stay on top of expenses and improve profitability.
Why Trade Promotion Management is Critical for Growth
As Chris explained, the true power of a Trade Promotion Management system is in its ability to optimize trade spending. TPM provides a clear, organized view of both income and expenses. Without TPM, brands often lose track of where their money is going, which negatively impacts margins and profitability. Properly tracking promotions ensures you understand the ROI for each campaign and avoid common mistakes that could drain your bottom line.
Chris also pointed out that brands running promotions through distributors are often losing more money than they realize. "It's the understatement of the century—brands are losing more money than they think they are," he said. Without a Trade Promotion Management system, it's nearly impossible to fully understand distributor fees and promotions, which means missing out on opportunities to recover lost revenue.
"It's the understatement of the century—brands are losing more money than they think they are."
Setting Up Trade Promotion Management: What It Takes
Setting up a Trade Promotion Management system is essential, but it requires work. Chris is clear that brands must be prepared for the effort it takes to implement TPM effectively. However, once it’s in place, the benefits far outweigh the initial challenges. A good Trade Promotion Management system allows brands to better track deductions, promotions, and overall trade spend, ensuring every dollar is accounted for.
The process of setting up TPM typically takes between two to four months, depending on your company’s complexity, but the payoff is significant. As Chris mentioned, “If you don’t manage trade spend properly with a TPM system, you're leaving money on the table.”
It’s crucial for brands to have a dedicated person or team overseeing the implementation and management of Trade Promotion Management. This individual should have P&L responsibility and the ability to coordinate across departments like sales and accounting. Chris emphasized that TPM should not be left to salespeople alone, as they are focused on making sales, not managing profitability. Instead, someone with a strategic view of the company should be responsible for managing trade spend.
The Importance of Early Trade Promotion Management Adoption
One of the key lessons from the conversation is that implementing a Trade Promotion Management system early on is critical. Waiting too long could result in costly mismanagement of trade promotions and deductions, which negatively affects profitability.
Chris shared stories of brands that delayed adopting TPM and subsequently faced major financial losses. Early adoption of Trade Promotion Management helps prevent such issues, allowing brands to streamline operations and avoid common pitfalls. The sooner you start, the sooner you can track your trade spend accurately and make data-driven decisions.
Final Thoughts: Why Trade Promotion Management Matters
For brands scaling their retail operations, a Trade Promotion Management system is vital for managing the complexities of trade promotions, deductions, and chargebacks. With a well-implemented TPM system, you can track every dollar, validate deductions, and ensure you’re maximizing your promotional investments.
Chris made it clear that Trade Promotion Management is not just a tool to save time—it’s about ensuring your brand remains profitable as it scales. “Managing trade promotions is about managing profitability. A good TPM system like Promomash helps you do that effectively, ensuring you’re not losing money unnecessarily.”
Ready to take control of your trade spend and implement Trade Promotion Management? Listen to the full podcast episode and learn how Promomash can help your brand scale effectively, saving time and boosting profitability.
Listen to the full podcast episode here: Startup to Scale - Managing Retail Trade Spend
