9% net contribution growth captured through the new merchandising model, obtaining +20% EBIT impact.
Despite being the clear leader in a developed and highly competitive market, our client still had plenty of untapped potential. The sales force was not covering many high-volume outlets in the fragmented channel. Moreover, during visits, their focus was on order taking rather than development.
The opportunity was clear: a large part of the market remained uncovered, without the service level needed to capture the potential. On the other hand, hiring more headcounts entailed significant labor risk due to local legislation, as well as insufficient ROI on a much bigger sales force.
During our research, we identified that sales reps invested around 25% of their time doing cooler merchandising in order to meet company standards. Coolers were a key growth-driver in this channel.
Our idea was to re-direct the merchandising time of sales reps to developing the market. But how could we do this and still maintain execution & merchandising standards?
The solution: a digitally enabled merchandising model.
We opted to transfer the cooler-merchandising activity to the client in exchange for an economic incentive. To prove their cooperation, customers were required to take pictures of the coolers through an app powered by image recognition. The software recognized the products available in the cooler, and an algorithm gave a score to the cooler depending on the quality of merchandising. Incentives were transferred to the customer through a rewards platform.
Merchandising and auditing costs decreased greatly, by involving the customer in the activities and by a more efficient process. Back office costs were low because most of the processes were automated. On the other hand, customer satisfaction improved, through more direct, more relevant, more frequent, and more visible incentives. The model was a powerful tool to provide incentives directly to end-customers, skipping other intermediaries.
The new model freed up time that was invested in development aimed at capturing potential through a customer-centric approach.