Effective Deduction Management Strategies To Maximize Cashflow, Grow Sales, & Scale Your Brand
Retail Solved

Effective Deduction Management Strategies To Maximize Cashflow, Grow Sales, & Scale Your Brand

Tired of feeling like an ATM machine? Stop throwing money away! 

Deductions are a huge drain on your finances. Not all are valid. They can derail and even bankrupt your brand placing a huge burden on your cash flow while negatively impacting all aspects of your business. 

It’s estimated that 25% of a brand's gross sales are tied to its trade promotion budget. The challenge is that over 70% of all trade spending is wasted or ineffective. Knowing how to maximize each and every promotional opportunity is critical to your long-term survival as a brand. 

Deductions play a big part in this. 

Every slight improvement means more runway for sales growth, higher brand valuations, better terms when negotiating with investors, fuel for more innovation, greater support for mission-based causes, and more!

Let's face it, retail is “pay to play” and big brands have a substantial unfair competitive advantage. You feel like the deck is stacked against you and for good reason - but it doesn't need to be. 

What if I told you that there was a better way? What if I told you that you were not alone and that even the big brands struggle with this? It's true - and I have first-hand knowledge working with hundreds of retailers as well as big and small brands in every stage of development.

When I carried a sales bag for Unilever I had to reconcile deductions. They monopolized my time and very little of my efforts benefitted the company. This is because of the way retailers and distributors deduct. It takes time to untangle the paperwork blizzard they send you when you request documents. Deductions are frequently hidden or lumped together making it difficult, if not impossible, to match each deduction with your invoice. 

This is done on purpose. You see, this is a profit center for brands and retailers. That is why much of it is farmed out to a third party company. I remember spending countless hours leaving messages, sending emails, and combing through invoices. My boss eventually told me to ignore them and focus on selling - what they were paying me for. This the point. The hope, in many cases, is that brands just give up and stop challenging deductions. 

Sadly, this is a big reason brands fail and it’s why most promotion dollars are wasted or ineffective. Let’s fix that and give you the edge you deserve! 

Simple Strategies To Effectively Manage Deductions

Avoid deductions 

  • Work hard to avoid situations that cause deductions in the first place. Make certain your contracts are all specific, very clear, easy to understand and contain all the relevant details and agreements. Every promotion you commit to requires a contract between you and the retailer. Most brands overlook much of this and as a result, the contract has no “teeth” and therefore results in deductions
  • Be specific and clear in your communication. Be precise and detail-oriented. Make certain that there are no unresolved questions 
  • Don’t agree to promotions that do not help you achieve a specific goal. These are a huge waste of money and this is where most deductions appear. For examples, distributor promotions with no accountability promise like paying on items scanned

Be extremely organized

  • Organizing is a huge challenge for brands. You need to be able to isolate each contract and align it with each deduction. You also need to include all supporting documentation and notes 
  • This becomes more complicated when working with multiple products, multiple promotions, and multiple retailers and distributors

Become an expert in your retail partner

  • What are their objectives, rules, goals? Become valued and trusted resource - what retailers REALLY want! 
  • Ensure your promotions meet all of the retailer's specific objectives. Most brands expect retailers to accept generic promotions that overlook the retailer's rules, goals, and objectives. Make it easy for retailers to choose your promotions over your competitors! 

Be an expert in the category, competition, and retailers market

  • Know your numbers! Every retailer and every event is different. Know exactly how your promotion will impact retailer category sales, their ability to compete in their market, and shopper market basket size
  • Promotions that are not targeted are a huge waste of money! Targeted promotions help you achieve your specific objectives and goals
  • Targeted promotions help maximize planning and forecasting. Ensure you have the right amount of inventory to accurately support each promotion! 
  • Use the Free Trade Promotion ROI Calculator on my website to maximize each and every promotion - compete with simple easy to follow instructions. RetailSolved.com/PromotionROI.  
  • Deduction management needs to be included in the cost of promotions. Targeted promotions reduce the need for incremental deductions  

Be prepared 

  • Know answers to all questions. Don’t assume anything. A good lawyer never asks a question they don’t already know the answer to. So should you. Help your retailer partner succeed with your guidance and support.
  • Your clarity will improve your ability to support your retailer partners and it will reduce deductions while growing profitable sales 

Recap and assess promotion with retailers 

  • Be timely and be proactive. Identify what worked and where you can improve. Retailers will appreciate your honest assessment and savvy retailers will work hard to maximize result on future promotions
  • Your success is their success. This can help you eliminate deductions altogether. Deductions also waste the retailer's time. Help them help you to succeed.

To learn more about effective deduction management:

How To Dramatically Reduce Promotion Spending And Explode Sales – FREE webinar


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Deductions are a huge drain on your finances. Not all are valid. They can derail and even bankrupt your brand placing a huge burden on your cash flow while negatively impacting all aspects of your business. 

It’s estimated that 25% of a brand's gross sales are tied to its trade promotion budget. The challenge is that over 70% of all trade spending is wasted or ineffective. Knowing how to maximize each and every promotional opportunity is critical to your long-term survival as a brand. 

Deductions play a big part in this. 

Every slight improvement means more runway for sales growth, higher brand valuations, better terms when negotiating with investors, fuel for more innovation, greater support for mission-based causes, and more!

Let's face it, retail is “pay to play” and big brands have a substantial unfair competitive advantage. You feel like the deck is stacked against you and for good reason – but it doesn't need to be.  

What if I told you that there was a better way? What if I told you that you were not alone and that even the big brands struggle with this? It's true – and I have first-hand knowledge working with hundreds of retailers as well as big and small brands in every stage of development.

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Daniels view on deductions hit a home run.

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