0307-43-001Product Promotions Effectiveness
Chris TantakisCanada
2
Background – Current Process
Product Promotions: Product Price Discounts Rep / Manager Commission incentives Direct Customer incentives
Origin of promos Corporate objectives / focus Marketing objectives / focus Vendor objectives / focus
Analysis Run Rate Trend Analysis Product life cycle / replacement Response to Competition
More effective measurement, analysis, and
benchmarking will improve
effectiveness
3
Background – Current Process
Currently: A significant portion of our promotions are applied after the
sale is complete (Survey to determine current %) Creating a commission enhancement Increasing Selling Expense Adversely affecting ROI
4
Project Definition
Problem Statement: Total INA Marketing Spend requires greater impact assessment.
Track $ spent to benefits realized … Canada Region product specific marketing promotions for IBS sales reps.
Project Definition: Summarize and define current marketing spend and re-align it to maximize
benefit … identify Key Input Process Variables effect on sales success rate (close rate)…
Project Metric “Y”: Big Y = Effectiveness of Marketing Spend 2nd Level Y = Product Promotions Effectiveness 3rd level Y = ROI from Product Promotions Y1 = closing rate per proposal
Y2 = number of proposals per promo
Scope All product promotions for Canada (including Canon / Ricoh dealer channel promos)
5
Project Evolution
Mkting SpendEffectiveness = f (Promos Effectiveness, Advertising Effectiveness, x3, x4,...xn)
--------------------------------------------------------------------------------------------------------------
Promo Effectiveness = f (ROI, Inventory adjusted, Branding, x4, x5,...xn)
--------------------------------------------------------------------------------------------------------------
ROI = f(Cost, Return)
--------------------------------------------------------------------------------------------------------------
Return = (Close rate, number of proposals, size, x4,...xn )
6
Project Definition
Project Benefits: Operating Income will improve by $402k in the 12 months following
project completion, through an improved closing rate per promotion Close rate will increase by 15%
Financial Benefit: Every current new product is eligible for some kind of promotion
only 65% of all sold products are billed with a promo $129M FY04 Equipment budget Canada @ 65% of deals apply promos = $83.85M eligible product sales @ 15% improved close rate = $12.57M incremental Revenue @ OI from Eqmt Rev @ 3.2% = $402k incremental OI
Leveragability: Project can be leveraged across the balance of INA through the
Malvern Marketing team.
7
Process Map – High Level
Page 1
03-07-43-001 Tantakis MarketingHigh Level Process Map
Wednesday, September 24, 2003
Recognize Needor Desire for
ProductPromotion
PromotionCreated / Modified
Communicated toSales and Admin.
Sales Results
Feedback Loop Collect andAnalyze Data
Decide to continue,change, or discontinue
Promotion
End Promo
Project focus
Spin off benefits
8
Potential Inputs “X’s”
Y1 = Close Rate (per proposal)
Close Rate = f(price discount, customer direct incentive, rep commission incentive, rep training, x5,...xn)
Y2 = Number of proposals (per promo)
Number of Proposals = f(rep commission incentive, market need, price discount, x4,...xn)
9
Measurement System for Y
Track success rate of proposals with a cross section of the sales force: Different Success levels:
5 reps above 100% of Plan 5 reps between 80% - 100% of Plan 5 reps above 60 - 80% of Plan 5 reps below 60% of Plan
A Mix of Rep Types: 4 AE3
8 AE2
4 AE1
4 ASR Other considerations:
Reps and Teams with higher forecast accuracy vs. On Target
10
Measurement System for Y
Data Collection Methodology: Collect Data by e-mail
Develop operational definitions for the reps Reps to complete a convenient tic box survey weekly
Validation methods for rep data Proposals written (& on file with Admin assistant) On Target Phase 3 Sales Commission System Data
11
iR5000 Survey (Draft) 0 1 2 3 4 5 6
Questions iR5000 iR5000 iR5000 iR5000 iR5000 iR5000 iR5000How many different customers received proposals from you this week, on this
products:
iR5000 iR5000 iR5000 iR5000 iR5000 iR5000 iR5000How many different customers signed contracts with you this week for this product (regardless of units sold per
customer)
For each deal please check the appropriate boxes below
Revenue* Gross Profit*Deal 1Deal 2Deal 3Deal 4Deal 5
For each customer check off which promo was required and used to
develop the proposal
For each customer contract which promo will be used to bill the deal
0 Customers 1 Customers 2 Customers 3 Customers 4 Customers 5 Customers 6 Customers
Promo B
Promo A
Promo E
Promo D
Promo C
Promo A Promo A Promo A Promo A Promo A Promo A
Promo B Promo B Promo B Promo B Promo B Promo B
Promo E Promo E Promo E Promo E
Promo C Promo C Promo C Promo C Promo C Promo C
Promo D Promo D Promo D Promo D Promo D Promo D
Promo E Promo E
0 Customers 1 Customers 2 Customers 3 Customers 4 Customers 5 Customers 6 Customers
Promo B
Promo A
Promo E
Promo D
Promo C
Promo A Promo A Promo A Promo A Promo A Promo A
Promo B Promo B Promo B Promo B Promo B Promo B
Promo E Promo E Promo E Promo E
Promo C Promo C Promo C Promo C Promo C Promo C
Promo D Promo D Promo D Promo D Promo D Promo D
Promo E Promo E
12
Next Steps
Sept 21 – Oct 3 Set Survey Questions based on FMEA
Oct Collect data on inputs
Oct End Identify “Key Process Inputs” from data
Nov Week 1 Build test promos based on “Key Process Inputs”
Nov Collect data on inputs Analyze data
Dec Provide guidance for future promo design Provide revised process map