Published on: November 10, 2010
The 2010 edition of the Customer and Channel Management (CCM) Survey is out from The Nielsen Company, McKinsey and Company, and the Grocery Manufacturers Association (GMA), reporting that manufacturer/supplier companies that “made the right bets for growth, built better capabilities, and collaborated more effectively with their top retail customers” were able to emerge from the recessionary environment “better and stronger than their peers, with share gains, growth, and margin expansion to show for it.”
The survey “revealed that CPG manufacturers that outperformed their category peers implemented winning practices in several critical dimensions” Among them:
• “Sales strategy winners were able to achieve faster sales growth than their category peers while decreasing selling costs (as a percentage of net sales). Net sales for these winners grew by almost 3 percentage points more than the average growth for their category, and they invested 8 percent less than the category average to achieve this growth.”
• “Pricing winners were able to increase their unit prices by 3 percentage points more than the average unit-price increase for their category and grow their category share by 2 percent.”
• “Trade investment winners achieved higher market share and gross margin growth than others, with greater impact from their trade investment efforts by capturing 11 percentage points higher sales lift from each promotional price point reduction and a 14 percentage point higher sales lift from merchandising than their category peers.”
• “While most manufacturers believe that their strategic collaboration efforts are effective, only 20 percent of these efforts achieve significant impact. This group achieved, on average, a sales lift that was 11 percentage points higher than other collaboration efforts.”
• “Complexity-management winners were able to decrease their number of stock-keeping units (SKUs) while increasing market share. On average, these winners realized an 8 percent greater reduction in SKUs and 5 percent higher sales than others in their category, and they increased overall category size.”
Among the recommendations made in the report:
• “Make big, forward-looking bets to unlock growth. The survey revealed that winners are seeking to solidify gains made during the crisis and preparing for even stronger performance coming out of this period; 70 percent of these top performers (versus 17 percent of others) are reshaping their go-to-market models.
“Accordingly, in the next 12 to 24 months, more than half of the winners plan to boost their field sales organizations and merchandising resources, and one-third of winning companies also plan to increase their use of brokers and to combine broker and retailer resources to reach more outlets. To ensure that their bets are aligned with changing high-growth opportunities, winners continually evaluate resource investments by channel and customer.”
• “Build a strong sales leadership team, next-generation capabilities, and cross-functional collaboration. Winners ensure that they staff the right sales leadership resources to ensure future growth, emphasizing deep category expertise, customer knowledge, and a strong strategic perspective.”
• “Create customer-focused account teams as part of a winning sales organization. While all survey respondents deploy sales teams of similar sizes, winners' teams have a high percentage of customer aligned functional experts in areas such as pricing, category management, and trade marketing versus their category peers.
“As we have seen in the past, winners also tailor their customer teams to the unique needs of each priority retailer. In addition, winning CPG organizations report a high level of collaboration and more effective relationships between sales and other key internal functions including marketing, finance, and supply chain. In contrast, in the grocery channel, winners deploy more of these functional experts to support their retailers.”