Trade Spend Problems, Accountant Myths, And Sales At Trade Shows

💡 Do You Really Know What Trade Spend Is?

If you’re in the Consumer Packaged Goods (CPG) industry, you’ve likely encountered the perplexing world of trade spend. Maybe you’ve even had that moment of shock when a $200,000 charge from Whole Foods mysteriously disappears from your account. But do you really understand why it happened? Trade spend is more than just a line item on your budget; it’s a crucial aspect of your business that intertwines with every department—from Sales to Marketing, Operations to Accounting. Nikki McNeil, Co-Founder and Head of Deduction Management Services at Vividly, has seen it all. With experience at companies like Justin’s Nut Butter and Lily’s, Nikki is here to shed light on the mysteries of trade spend and why mastering this "unsexy" part of your business could be the key to your success.

📊 Trade Spend: The Invisible Hand Guiding Your Business

Trade spend might not be the most glamorous topic, but it’s one that affects every corner of your business. From influencing your pricing strategy to shaping your marketing campaigns, trade spend is the invisible hand guiding your business decisions. Think of it as the pulse of your financial health—if it’s off-beat, your entire business can feel the impact. It’s the reason why your accounting team is pulling their hair out, why your sales team is constantly renegotiating deals, and why your marketing team is rethinking that expensive ad campaign.

Understanding the full scope of trade spend is essential. It’s not just about deducting a percentage here and there; it’s about knowing how every dollar spent impacts your overall profitability. For CPG companies, this is non-negotiable. Whether you're a startup just finding your footing or a seasoned player, ignoring trade spend could be a costly mistake.

💰 Know Your Bottom Line: The Key to Successful Retail Partnerships

Before you approach any retailer, there are three things you must know:

• Your bottom line price point: Ensure you’re not just making sales but making profitable sales.

• The retailer's desired margin: Retailers have specific margin targets, and your pricing needs to align with them.

• Your target audience: Selling to the right customer base is crucial; mismatch here can lead to failure.

It sounds simple, but it’s amazing how many brands overlook these basics. Knowing your bottom line ensures that you’re not just making sales but making profitable sales. Without a clear understanding of your costs, you’re setting yourself up for a short-lived partnership.

Retailers, especially the big ones, have a keen eye on their margins. If your price point doesn’t align with their desired margins, you’ll find yourself in a tough negotiation—or worse, no deal at all. And let's not forget your target audience. Selling a premium product to a discount retailer’s customer base is a recipe for disaster. Aligning these three elements is crucial for a partnership that lasts.

🤝 Long-Term Relationships Over One-Night Stands

CPG brands often fall into the trap of chasing after every retailer that shows interest. But not all retail relationships are built to last. In fact, some might be nothing more than a fling. Nikki McNeil emphasizes the importance of sticking with retailers who will be long-term partners. The goal isn’t just to get your product on as many shelves as possible; it’s to find retail partners who believe in your brand and are committed to growing it alongside you.

Think of it like dating. A one-night stand might seem exciting, but it can often do more damage than good. The same goes for retail. You need partners who are in it for the long haul, who will support you through thick and thin. This approach not only builds brand loyalty but also strengthens your market position over time.

🛠️ Making the "Unsexy" Parts of Your Business Sing

Let’s face it: Accounting and Operations are not the sexy parts of a business. They’re the parts most entrepreneurs would rather avoid. But here’s the kicker—if you handle these unsexy parts well, the sexy parts of your business (like Sales and Marketing) will sing louder than ever. When your financials are in order and your operations run smoothly, you can focus on what you do best: selling your product and growing your brand.

Neglecting these areas, however, can lead to disaster. Mismanaged trade spend can lead to unexpected deductions, cash flow issues, and strained relationships with retailers. By paying attention to the details and ensuring that every aspect of your business is working in harmony, you set the stage for success.

🎪 Trade Shows: More Than Just Selling

Trade shows are a double-edged sword. On one hand, they’re an excellent opportunity to showcase your product and make sales. On the other hand, they can be exhausting and, at times, fruitless if you’re solely focused on selling. Nikki suggests taking a different approach: think about building relationships and laying the groundwork for future opportunities.

Yes, everyone is there to sell, but the brands that stand out are the ones that focus on connection. Trade shows are an opportunity to meet potential partners, gather market insights, and set the stage for long-term success. It’s not just about what you can sell today; it’s about the relationships you can build for tomorrow.

🔄 Go Wide: Experimenting with Trade Spend

If you’re a new brand, figuring out how to manage trade spend can be daunting. Nikki’s advice? Go wide. Try different strategies and see what works best for your brand. Trade spend is not a one-size-fits-all solution. What works for one company might not work for another. The key is to experiment, measure the results, and adjust your strategy accordingly.

By going wide, you give yourself the flexibility to learn what works without committing to a single, potentially flawed, approach. This experimental mindset can lead to innovative strategies that set your brand apart from the competition.

🚀 Ready to Master Trade Spend? Follow Us for More Insights!

Trade spend might not be the most glamorous part of your business, but it’s one of the most critical. By understanding its nuances and implementing the right strategies, you can turn this "unsexy" part of your business into a powerful tool for growth. Want to dive deeper into this topic? Follow our page and watch the full Episode 17 conversation here with Nikki McNeil to learn how to navigate the complexities of trade spend and set your business up for success.