TPM INSIGHT
A common challenge for TPM systems are conditional promotions, like ‘Buy one get one free!’, ‘Buy 3, get all for 10€’ or rebates granted when the consumer scans a certain coupon in an app. These promotions represent rebates that are not granted on every participating product sold during the duration of the promotion, but only when the conditions are fulfilled.
While most promotional activities can be represented as a price cut (10% off!) or a fixed amount that needs to be paid for a service (rent space for a display, print flyers), the creativity of Key Account Managers (KAM) and retailers when advertising for products is quite limitless.
A common challenge for TPM systems are conditional promotions, like ‘Buy one get one free!’, ‘Buy 3, get all for 10€’ or rebates granted when the consumer scans a certain coupon in an app. These promotions represent rebates that are not granted on every participating product sold during the duration of the promotion, but only when the conditions are fulfilled.
The best way to handle such promotions in Salesforce TPM is to estimate the cost and reserve money for an off invoice payment after the promotion is completed and it is known how often the rebate was granted. A KAM can estimate how much of the planned volume will be sold fulfilling the rebate condition and enter it as a redemption rate in percent. This will already cover scan deals that offer a simple rebate.
However, more complex are the multi buy tactics. Salesforce TPM needs to calculate the cost associated with each time the rebate is granted. For example, a simple BOGOF (Buy One Get One Free) promotion is quite straightforward, where every second product sold is given away for free resulting in a 50% rebate. But in reality, manufacturers often have a variety of multi-buy models that are far less straightforward, such as 'Buy 3 products of a brand, get the cheapest for free!' or 'Buy one choose one of 3 different products for free!'.
To manage such promotions, Salesforce TPM can use a formula to calculate the average cost, allowing a reasonable amount of money to be planned for the promotion. With Salesforce TPM's support for BOGOF and similar multi-buy tactics, businesses can implement effective promotional strategies and achieve their marketing goals while minimizing the risks associated with conditional promotions.
(A variety of products getting multi buy deals: BOGOF, Buy 2 get 1 for free, Buy 2 for 6€).
