Commercial revenue planning: Evaluate multiple scenarios


Bob Debicki

CPG & Retail Industry Head

There are many ways to allot your marketing and trade spend, but only a few will lead to reaching revenue goals. Find them using “what-if” scenarios.

In our previous installments, we introduced the first two ingredients of Anaplan’s recipe for top-line revenue growth, and we covered identifying your revenue drivers and planning out your allocations. Using those two ingredients, you’ve determined how to get your products to market and onto shelves efficiently, and are well-prepared to adapt quickly as conditions require.

Your next task is to apply allocations so that they generate customer demand. In practical terms, you need to create reasons and offer incentives for shoppers to visit a store and purchase your product. Successfully doing so involves spending allocations advantageously regarding how you supply and promote your products. You know from past experience that some parts of your spending plan can affect both sales and profitability positively, and that there are instances where a higher top line leads to a lower bottom line.

As most commercial revenue planners know, there are a few right ways to spend your allocations, a lot of wrong ways, and no single way to know the difference beforehand. Evaluating multiple scenarios in real time, the third ingredient, provides the insight you need to discern those few right ways.

Spending money is easy. Spending money to make money requires planning.

Up to this point, you’ve focused on assessing how much of your addressable market you can reach with your planned product mix. Growth and revenue targets have been set, investments allocated, and a plan to hit those targets is in place. It’s now time to open your wallet and determine how best to spend those allocations in order to achieve the desired levels of demand and ultimately hit those targets.

At the highest level, there are two areas into which you can direct your spend to drive demand: marketing and trade. At this stage, your focus is on spending allocations most effectively—not only on media placement and in-store promotions but also holistically across the two. As you work on determining your optimal spend, you constantly ask: As the price declines, how much volume will we sell and how will that affect profitability?

It’s a tall order, and the odds are not in your favor. Studies have shown that seven out of 10 demand generation campaigns are ineffective, failing to achieve a profitable level of volume within their specified time frames. You need better odds. One of the best ways get better odds is to conduct a set of “what-if” scenarios of your marketing spend, trade spend, and both of them combined, optimizing iteratively to establish the most effective spending plan.

The data you need is everywhere and nowhere

Data is essential for running “what-if” scenarios and there is no shortage of it available to planners, whether from internal or external sources. Yet such an abundance of data brings with it two major impediments to unlocking the insights it holds within.

The first is being able to compile and consolidate all that data so that it can be integrated into your system and then be applied meaningfully to the planning model. Otherwise, analysis projects end up being one-off studies of a single account with a single promotion, occurring over a single time period. The results are nice to know, but usually cannot be applied to the whole business.

The second challenge happens once the data is in your system. The data is often of such great volume that only summary-level analyses are feasible. Such reports often conceal critical activity at lower levels, from markets and regions, all the way down to store clusters and individual stores, any of which can be successful to widely varying degrees.

Both of these impediments defeat the purpose of running “what-if” scenarios, which is to evaluate spending effects down to very detailed levels on the product hierarchy, over various time periods, factoring in all that you’ve learned from previous campaigns and promotions.

Anaplan allows you to bring more cooks into the kitchen without spoiling the feast

In the previous installment, I discussed how Anaplan for Commercial Revenue Planning uses the power of an in-memory database to help you allocate your investments optimally. That same technology, combined with Anaplan’s unrivalled Connected Planning capabilities, also allows you to determine the best spending plan for those allocations.

Anaplan for Commercial Revenue Planning assembles all of your commercial revenue planning data into one environment, enabling you to perform “what-if” scenarios covering your entire marketing and trade spend. You and your partners within the organization gain keener visibility into the details of your marketing and trade data, and can view hierarchies clearly. You can collaborate with your trading partners in a secure shared space in which you manage access. All of these can be executed in real time, making use of systems throughout your enterprise.

The payoff for revenue planning is manifold. For example, Anaplan partnered with a global beverage manufacturer to create such an environment for their massive distribution operations, connecting it with finance and most of their supply chain within just 18 months. Efficiency gains showed up almost immediately in reduced cycle times, pinpoint-precise inventory management on a global scale, and the ability for hundreds of users to collaborate on over two dozen product revenue models. Their commercial revenue planning team attributed the successful recent launch of a major new beverage product, one with household name recognition, to intricate collaboration that would not have been possible without Anaplan’s solution.

Nothing succeeds like success, especially when you’ve found a good recipe for it

Anaplan for Commercial Revenue takes you beyond simply analyzing your marketing spend and commercial activities to demonstrating whether you’ve hit revenue and profit targets. By staging your planning data in a single system, you gain the capacity to institutionalize all you have learned, and will easily build models that can be reused and systems that can be repeated. Those are two key mechanisms by which value-creating business activities are optimized, and value-enabling business processes are continuously improved. In the next and final installment, I’ll cover how commercial revenue planners can leverage their current and prior planning efforts with Anaplan’s computing power to optimize and automate revenue performance, year after year.

Learn more about how Anaplan for Commercial Revenue Planning can help streamline your operations and boost revenue.