No matter what business you are in, getting experience in what you do and avoiding mistakes is often based on the principle "learning by doing." But if you are a new founder or owner of an emerging CPG brand getting their product on store shelves, there isn't much time to learn - it's more do, do, do.
Naturally, when you're getting into a business without much knowledge and experience there's going to be lots you don't know...until it slaps you in the face. And if there is an industry where you'll get slapped around a few times, it's CPG! 😱
Yes, there are a lot of mistakes to be made because CPG is a complex world. But hey - it's absolutely ok because you are not alone. I was once there too, and made all of these mistakes and more. I won't be able to save you from making all the mistakes, but I can try to save you - and your bank account - from a few significant ones.
This is a list I put together for a webinar focused on survival strategies for emerging brands. Based on our experience here at Promomash as well as my own past experience as a brand founder, here is a list of the top - or most common - mistakes I've seen brands make. You can also watch a quick recap of those mistakes in this short video.
So let’s dive in, shall we?
Mistake #1: No baseline.
If you don't have the resources to subscribe to expensive data or don't even have sales data to start from, listen here for a tip on how to get an educated estimate of your baseline - i.e. non promoted sales. And here's a bonus tip: you could also look at Crisp as a cost-effective option for data on over 40 major retailers in one place!
Mistake #2: Inaccurate lift projections.
If you're a first-time founder or new to CPG, you may want to pay special attention to this one because the lack of experience can make you vulnerable to falling into this trap. Getting to know baseline sales is not easy, but for new CPG brands with little to no data, it's especially challenging. Not knowing this can cause a negative domino effect on your forecasts and projections. Listen here to one example...
Mistake #3: Failing to account for all charges.
As you start to acquire more customers, they're going to want promotional support, and you're going to have to make some decisions. Despite that ATM sign everyone sees on your head, you don't have unlimited funds.
• How do you know what all that support will ultimately cost you?
• Are you considering all possible charges across the six different tactics you can use to promote in-store?
• Do you have a plan/process to capture and categorize all the deductions?
Planning for your promos and tracking deduction data will help to not only give you a point to start from, but better predict costs for future promos - and avoid what happened in this story!
Mistake #4: Not keeping contracts and documents.
It may seem straightforward, but so many brands make this mistake because they don't realize the potential consequences of NOT having those documents on hand - for example, when you're facing a post promo audit on deductions. It's also always good to have these on hand when it's time to dispute deductions, so you can always be sure you understand what was agreed to and what is a "gray area."
Mistake #5: No granular view of deductions & trade spend.
With more distribution and sales come more deductions taken by retailers and distributors, resulting in increasingly less-than-expected profits. If you are like most emerging brands, you don’t have the time, resources or money to organize, research, and dispute hundreds of deductions. This can be frustrating when so much of your profit is at stake. And even if you decide to take on the task internally, you won't get to a level of detail that's meaningful without spending untold hours analyzing spreadsheets. You can still potentially miss a significant amount (like $70k!) of charges, as I explain here.
Most brands in this predicament are so much better off outsourcing deduction management. At Promomash, we offer this service end-to-end, turnkey and done for you from beginning to end. Check out our services to learn more if you're interested.
Mistake #6: Not negotiating effectively with buyers.
This is an important one, and although success in negotiating typically comes with experience, sometimes all it takes is some confidence in your numbers and the value you’re providing to that retailer. In fact, knowing your numbers is one of the things we've seen sets well-run brands apart. That confidence comes with having the right data, tools and guidance to extract meaningful insights you can use with your buyers. Even if you’re new to the game, don’t be afraid to grab the bull by its horns and get great deals!
Skip the mistakes.
At Promomash, we're here to help brands succeed and try to avoid mistakes like these. Let's face it - this is a tough business where most brands do fail. Being aware of the pitfalls is half the battle! To learn more about how to NOT fail in retail, you can watch the whole webinar that inspired these nuggets of wisdom, hosted by our friends at Foodbevy.
And if there's any way we can help make your journey in CPG just a little bit smoother when it comes to trade marketing and promotions, deductions, or field marketing, contact us.