What challenges is FMCG sales facing and what does it need to be successful now and in the future?
Hardly any other industry is as strongly characterized by rapid changes in the product range, intense competition and concentration on the customer side as fast-moving consumer goods (FMCG). In most segments, there is high price pressure with constantly rising consumer demands in relation to mega trends such as healthy nutrition, quality awareness and sustainability. The polarization between brand suppliers, on the one hand, and introductory prices, on the other, is becoming increasingly clear. At the same time, the industry is characterized by a high diversity of suppliers with comparable products and complex supply chains.
In response to this, companies are continuously trying to reduce their costs, raise the profile of their brands at the point of sale (POS) and bring more innovations to the market. And the sales force plays an important role as an intermediary between companies and distributors. The outlined field of tension in the industry poses a variety of challenges for the sales force. The following describes some of these challenges and shows how they can be turned into opportunities.
Challenges in sales
The FMCG sector must, on the one hand, align itself with the long-term megatrends of the industry. On the other hand, the actual consumer decision is often very unsettled and dependent on many complex factors. It is therefore becoming increasingly difficult to predict market developments with the necessary precision and detail. This, combined with the industry realities described above, makes it very difficult for FMCG companies to maximize sales and profits to the extent that corporate objectives and the fundamental goals of any sales force are met.
The aim is to list and place the right products with the distributors at the right time, despite the fast pace of the market, and to achieve a profitable price for one’s own company. The sales force can be supported by the use of analytics, visualization and automation tools. However, the mere use of these tools does not automatically make the sales force more efficient—as the right framework conditions are needed to achieve the desired increase in efficiency and transparency.
Sales, with all the different sub-processes and areas, must be understood and lived as a holistic process. If this is not the case, a multitude of problems and resulting losses in efficiency and effectiveness may be experienced—among others in the areas of sales force automation and planning in the sales force.
Sales Force Automation
By using sales force automation, it is possible to reduce and simplify the effort related to routine tasks or to automate them completely. In this way, the duplication of customer activities can be avoided, for example, and sales leads can be tracked systematically. The time that is saved can be used for directly sales-related or analytical-conceptual tasks.
For many companies in the industry, this solution has been a big issue for some time in order to achieve more effective sales. Experience has shown that sales force automation is often only applied in sub-processes or sub-areas such as the field force. However, for a disproportionately strong increase in efficiency through sales force automation, the sales force must be mapped holistically as a process. This also includes process-relevant functions and areas outside the sales department—such as marketing and controlling.
The need for an end-to-end sales process is also evident in sales planning. A distinction can be made here first of all between the basic planning of the KPIs of the sales force or the company, which often takes place in an annual and/or quarterly time period, and the planning of specific activities, for example within the framework of sales talks.
In basic planning, a kind of logic emerges between corporate goals, customer goals, and the goals of the areas and districts of the field force. And here, a mixture of top-down and bottom-up approaches is often used.
When planning specific activities, the national target is derived from factors such as historical values, overall article trends and customer situations, as well as the basic annual or quarterly targets. In developed organizations, both key account management and field management are involved here. Their early involvement in setting the overall goals simplifies the subsequent breakdown of the goals into key accounts or areas and districts.
Basic tendencies of the individual articles
In order to define national goals in such a way that ambitious and realistic sub-goals can be derived for each individual sales employee, taking internal ideas or ex-factory sales as the basis is generally not enough. According to experts, often too little attention is paid to the development of individual articles in the market. The reason for this may be that the required sales information is not available. In other cases, market research data is available in the company, but is only accessible to the sales force to a limited extent and not across different systems. An integrated system including results from market research could improve the information situation and therefore also the basis for decision-making, which would also optimize the planning of sales activities.
Why the data from the stores is so important
The sales force often also lack detailed sales data from the individual stores, because the information often stops with the delivery data provided to the distributor (the customer warehouse). However, this data is important for placing sales-appropriate quantities, partly because the situation in an individual store can differ significantly from basic article trends. An end-to-end solution would provide great advantages here. If the sales force receives detailed sales figures (for example scanner data) from the stores, these can be analyzed immediately. Specific customer needs will be recognized at an early stage and sales measures can be individually managed, adapted, optimized and monitored.
Sales management needs data—and they need this in a suitable form
Sales management often lacks up-to-the-minute information on the implementation of activities by its own field staff and/or external service providers. If sales management only receives the relevant data, for example on goal achievement and customer visit rate, at the end of the week or even month, this data has already lost most of its relevance for the purpose of intervention. The requirement must be that data on current activities is made available to sales management in a suitable form up to the previous working day—regardless of whether it is provided by the company’s own employees, external service providers or a combination of both.
FMCG sales requires an end-to-end sales process design that optimizes direct sales time, ensures an up-to-the-minute exchange of data, and enables a high degree of sales transparency. Such a solution makes a significant contribution to the sales force’s ability to successfully meet the current and future challenges of the FMCG industry.
Fig. 2: Transparency in the sales force: Sales Performance Dashboard in the SAP Analytics Cloud
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