Welcome to Unpacking the Digital Shelf, where we explore brand manufacturing in the digital age. [inaudible]
Everyone. Peter was me here from the digital shelf Institute. When one e-commerce executive from a global brand tells you they're pushing for a radical rethinking of the beliefs that have driven growth for decades at their company. It's an interesting anecdote when 10 executives tell you the same thing, it's a research project when Molly Schonthal founder of the digital shelf Institute, executive forum and Chris Perry, chief learning officer at first mover started hearing similar anecdotes and data points from the members of executive forum around the shifts their companies were making to maximize growth. These are consequential shifts and standing pricing strategies, a soar in planning, Oregon budget. They decided to tackle bringing a forceful call to action to the market. This new research is titled the shift to total growth, accountability, and Molly. And Chris joined me to talk us through it.
So Molly and Chris, thank you so much for coming on the podcast to share your new research. It's super exciting. I feel like it's it's a real I mean, it's what we were going for a shift in mindsets that need to be called out almost as a conversation starter, as much as anything there's just so much that we'll have to follow from this. So to really provide the solutions that we're talking about. But I think raising the conversation and, and bringing some of this the results of your conversations with executives to the forum is really exciting. And so Molly, I'd like to start with you. What was the Genesis of, of this research project?
Well, similar to our last piece, Chris and I never set out to be researchers, but we bore witness to a ton of conversations with brand executives around the difficulty in understanding how to increase their profitability on the digital shelf. So right now we've seen through the pandemic and increased opportunity and increased pressure on the e-commerce business. And although you would think that's only good news, it comes with a whole host of concerns and challenges. And once you hear someone talk about something once or twice, you think, oh, that's interesting. And then you hear it 10 times from 10 different brands and you go, wait a second.
This is a thing.
And I know just the person to help me.
And that would be Chris Perry, Chief Nerd, always curious. Yes. Hello nerd. I think, I think Chris, like the, the, tell us a bit, the issues that came up that that were sort of the pains that people were talking about that have started to happen in this shift as, as digital becomes the driver of all growth, but isn't necessarily accounted for in that way yet. So tell me, like, what was one of the first fundamental shifts that kind of arose from these conversations?
Yeah, 100%. And to that point we hear, and we suffer as practitioners and leaders in the space from a lot of symptoms of root cause problems as e-commerce was growing, but then got accelerated to your point via COVID-19. And so when you started bucketing them into, you know, and kind of asking the why, why, why until you got to the root cause we kind of ultimately kind of crystallized three core drivers, these issues that have symptoms that we've all been facing, been trying to solve for, but that really to solve for, we need to, to this, to the topic of today's discussion, a shift in mindset, that first one really is this idea that everything affects everything and, and where that is being driven from is, you know, once upon a time we operated in a more physical finite fixed brick and mortar world, we still do to a degree, but where there was very limited transparency, very li you know, I would say more taxed speed to market for retailers and brands alike and competition was relative to your local area, but, you know, arguably a retailer and a brand, once they have you in the physical store, have you relatively captive in that moment?
And so the competition in the lost business wasn't as, as real for retailers before the world of digital. And so through that, we could, we could approach things in silos, right? We could go to market through classes of trade, right channels of business. And, and really through that, we had this world where everything was kind of following this, like channels were following this like code of conduct, right? Like there was this gentleman's code of how we would go to market by type of business, right club and dollar and drug and grocery. And so long story short, that code was kind of made up that wasn't real. It was just the way things kind of formed because of like, you know, apple, apples to apples groups bundling together and being operated against over time. And it just defined these guardrails. But now, as we all know, well, we live in a digital world as shoppers, as consumers, as buyers.
There's blurring line between our roles every day, not to mention the blurring line between retailers becoming brands and brands becoming retailers, but then the blurring lines between channels, right? And classes of trade, where you've got groceries, getting into food service and partnerships, bridging the gaps between classes of trade. And, and then again, from a shopper perspective, I may see an ad on Amazon, but then I bought the brand in question and the ad in a physical store in a completely different retailer. And so this idea that, you know, the whole idea of the flywheel almost is, is very well captured here. This, everything affects everything from how we engage the shopper, how they're morphine between roles all the time, how the retailer is engaging in what they define now as their rules of engagement and what, you know, what fence is potentially not now around them anymore, they have a lot more Liberty. And now that the implication for brands is that we have to, we have to go to market with a, an omni-channel approach. For lack of other words, single channel planning really is actually more harmful to us than it is good. In, in the new, in this new world of retail.
Yeah. And I would imagine that that accommodating or adjusting to that shift really requires leaders that are willing to have forced these conversations that, that break down the silos. So that change how things are accounted for et cetera. And Molly, I think that brings us to the second issue that was coming up, right?
Yeah. So, I mean, just one anecdote based on the sort of everything affects everything situation, Christa and I collected almost a blooper reel of brands expressing, were telling us stories about trying to operate with a single channel view and that failing. And Chris, you remember one of, one of those bloopers was a brand who had a retailer approach them to try it. And D-list one of their skews at the physical store. And when upon further investigation, the brand and the retailer realized that the skew was a top seller online and they were picking, packing and shipping from the store. So had they taken it off the shell, both the brand and the retailer would have been essentially shooting themselves in the foot, but the coordination sort of across, from online to offline, both on the retailer and the brand side, kind of wasn't in place to realize that while it was happening and that like, I, we have a whole bag of stories like this.
And to that point, even the word channel gets misrepresented a lot, but again, it's not just drug versus dollar versus mass, right? It's also this store versus online and then devices and social versus commerce versus, you know, other forms of media. So again, however we use these words liberally, like the point being is there is no wine really between much, there may be, they may have to be some, some rules of engagement to help organize around something, but we have to be, we have to be ready to break down the silos. And that's what kicks off kind of the root cause of that. Molly we'll talk.
So the second root causes, and don't worry listening audience, we will get to the things that you have to do to overcome these. We're just getting you all wound up. So go with us.
Yeah. That's happening to me too. It's the, it's the hero's journey. So let's keep going.
So next level of discomfort single functional views. So single, single functional, and let's be specific. I mean, marketing versus commerce is stupid, right? This is a marketing thing. This is the Congress thing. If you just take a look at an Amazon product search result, you'll notice that a ton of what you see is retail media spend in this way, retail distribution is really marketing led and, you know, share a voice or Sheriff's search can be portfolio driven too. Like, it doesn't make a difference whether or not your department is marketing or commerce. These two things are required to work together in order to show up and grow your business. So stop trying to parse them out in terms of, you know, is this a brand building thing? Is this a tree thing? Okay, functional lines shouldn't exist anymore. And looking at your digital shelf growth in terms of a single functional view is entirely insufficient.
And that directly pairs back to that blurring of the external world, right. That we're trying to serve and serve our shoppers through. If their blinds have blurred, ours have too as well.
I mean, if you look at why this is happening again, I'm sorry for ranting. I'm here because I told Chris, we wouldn't ran about all the stuff that's wrong with like Curry quickly to the stuff that we recommend you do to make it right. However, I can't help myself on this one, if you unpack why people still want to pledge allegiance to marketing or commerce. It's, I believe because of traditional functional structure as an agency structures and how people are rewarded on a row as, or performance marketing on sales or brand awareness. And all of those things are superficial given the kind of action that happens on a digital shelf.
And, and some of that too, is just having been on both sides of brand and market and sales at different points. It, part of it is in my brand days, we were multiple degrees further away from Kevin bacon than sales, because we were thinking, you know, we had an annual goal, but we can kind of blame sales for not activating effectively on those amazing brand strategies that we put. And so again, everyone was accountable, but slow but matrix and on slightly different time cycles. And so when I was slapped by the world of sales, when I changed over, I S I suddenly saw that big discrepancy between the, the, the cycle of measurement, right, for our arguably the same goal, but on a very different timescale. And so that, that also creates unnecessary friction between functions that doesn't doesn't function.
So the slap by the world of sales, I keep picturing that scene in airplane, when people are like lined up to come hit the passenger in the seat where you slapped a lot by sales,
It, it, it was an eyeopening experience, a very humbling one. And one that made me respect my sales peers, 80,000 more times than I had before when I used to blame them for not activating my brilliant brand plans. So I, I learned my own lesson humbly,
Although blaming another function is always dominant strategy.
I mean, always do it, just feel bad about it, if you can. So you
Were talking about Chris, let, let's keep going with you. Cause you were talking about the, the five change, the sort of the behaviors of the digital shelf. And there's one fundamental characteristic of how the digital shelf drives search and, and conversion, et cetera. And, and I think that's one of the things that creates this, this new tension that needs to be solved. Right?
Right. So, so one of the, one of the critical things coming out of this, everything affects everything highly transparent. Real-Time dynamic marketplace across channels in classes and marketing and sales is price, right? So first I want to disclaim as always legal disclaimer. Pricing is always at the sole discretion of the retailer. That's not in question period done, but what if pricing is at the sole discretion of retailer who is not human, who is not abiding by any code of conduct, but to be the most competitive at any time in real time, even at the expense of their own margin, even at the expense of their own profitability for a period of time. Well, that's real that's that is Amazon and an everyone responding to Amazon globally, but definitely in the north America markets that we see today. And again, it's their PR that it's their prerogative, right?
It's their strategy to outsource some of these automatic decisions to an algorithm to uphold the, the, the prime promise of value and not as well as speed. But when pricing is controlled by an algorithm in real time, irrespective of class of trade or pack size, or sometimes variant or even promotions, right, not just the price, went down on a Walmart roll back and gets matched, but now a gift card with purchase of a larger basket size at target gets, you know, matched in real time down to the unit or a club offer is matched on the per ounce. Right now we get into a very tricky space as brands, because not only does the net to the shopper, arguably the shopper wins, right. I now don't even have to shop at club with the club membership to get club pricing somewhere else. Right. because that was based on the old rules of engagement that don't exist.
Amazon is arguably club because you've got a prime membership, so they don't look at it differently. But now to the shopper, they win because they get the value and the retailer who owns that wins for a period of time until they realize they're losing money, but then brand equity is suffering, right? Because now maybe your premium, this isn't so premium. And it would be hard to go back. Retail margin suffers from the person who matched, but is now at risk with the person who feels they, the retailer feels they need to match. And then at some point, an Amazon automatically also delist you or, or a human retailer decides no longer to carry you because they can't carry you competitively. And you may not be willing to fund them down to that level of, of margin requirement to be competitive. So there there's this whole bunch of issues that comes out of that transparency and a world where we sell a lot of the same things, everywhere and price being, the only thing we can compete on. And now we've outsourced that to a machine. He can do it really, really fast.
So in this hero's journey that we're on, I can feel the protagonist getting more and more anxious thinking that the world is dark and there's no way that she can survive. And yet there might be some hope on the horizon, Molly, this is, this is true. I hope the report you you have put together is, is say, is calling for a shift to something you're calling total growth accountability. So Molly, lay it out for our hero. What is, what is the hope?
So if you are feeling the pain based on the situation that Chris and I described we have an answer for you if you call in now. No. So total, total accountability. It is simply the practice of measuring and making holistic decisions and investments to drive overall business growth and performance versus separating out strategy and goals by marketing sales retailer online, offline. Okay. So I'll say it again, the practice of measuring and making holistic decisions like underline holistic decisions and investments that drive overall business growth and performance versus, so don't separate out strategy and goals by marketing sales, retailer online and offline sounds easy. Right? so we said separating out brand marketing media and sales is stupid. What is not stupid is looking at these things together. So I know you're thinking, how the hell am I going to do that? Well, Chris and I are going to start to outline certain practices that you can move towards. And these are four significant shifts. So Peter back to you and Chris to get us on the role of healing here.
Yeah, of course. Well, I mean, certainly one of the, one of the major things you talked about, one of the major movements here is around how do we deal with pricing in this new environment? So what is it that that this study recommends
Th and what I'd say is there's kind of like a short term, like how do we resolve the pricing tension that we're feeling in the short term, which might not be the longer term things that we can do that actually fully aligned with our brand strategy, right. Of how we want to bring our brand to market, but there are some inherent, like we may not be able to sell our brand because of the price issues that we have in the market. So there is that quick, like, what's the band-aid and then what's, what are the stitches that are going to heal us long-term, but it shouldn't be surprising if we're facing all the rhythm driven pricing, then we need to have a new price matching proactivity to our go to market strategies and approaches. And so knowing that algorithms are driving at least the cause of a lot of the human responded you know, responsive price changes in the marketplace, we need to take a much more intentional approach about this.
And so the first thing, and this is gonna sound obvious, but this might be just a nice thing to be able to say to people that you have to bring along for the ride, assume not Manny MSRP, manufacturer's suggested price anymore. Assume the lowest price you allow in the marketplace will be the new price everywhere, right? So lowest promoted price that you technically allow or haven't stopped from happening through the means brands can control will be the new price. So the lowest price somewhere will be the new price everywhere very, very quickly. Why, because of that transparency, that competitiveness, the algorithm driven decisions. And so what that arguably needs is a few things. One we're going to actually dig into as its own practice is kind of the number two practice here to solve. But one is differentiation, strategic differentiation of your portfolio. Part of why there's price matching is that everyone has the same thing.
Even a different size of the same thing is the same product just in a larger pack size. So whether it's ounces or toilet paper rolls or K cups or whatever, the lowest common denominator is, something can be matched on the same exact item. So differentiation is one that we're going to talk about even more in depth, but that, that is a starting to remove the ability to match, but also give, arguably do something strategic with your retailer partners who might value that you did something different. So we're going to do, we're going to dive into that a little more in a minute, but that idea of differentiation, exclusivity, strategic differentiation of promotion. So I've been asked many times with Chris through, you're saying, there's this price matching that even matches promotions? Are you saying I can't promote anymore? Not at all, but maybe how you promote needs to change to, right.
And maybe that's painful because you got to educate your retailer or do something that, you know, might seem to have less ROI right now, but longer ROI in the future. Because a rollback at Walmart or an NVM Costco or a straight discount is 1000% going to be mashed on a top selling item at a top selling retailer, a even now because of the pandemic and the heightened awareness that Amazon system has of all other retailers, even more strategic deal structures, like gift card with purchase or being mapped. So nothing is truly immune because pricing is at the sole discretion of the retailer, but there are different types of deal structures and Val alternative values you can offer that might incent the shopper, but not necessarily cause the price matching to that pop up in my head might be some sort of cause campaign, right?
So for every one you buy, we donate one, right? Or we donate a dollar, right? Well, I have run those myself and seen double digit lift off of no promotion at all. Just the cost right there also might be. And I love the example that's publicly in market. I just, I just bought it at target. The other day. Johnson and Johnson has run many times that by three first-aid products of their brands and get a free first aid kit, which arguably isn't like, you know, it's, it's not a, you know, a fancy kit, but it's a nice quality kit to house the products you just bundled and bought at full price. And it's a, and it's a value with purchase that isn't a straight discount or a cash offer through a gift card. So it's, it's really trying to understand the dynamics of who's matching what in real time, what offers can aren't being matched and looking for ways that maybe actually in all honesty build value for the retailer as well.
So there's the strategic differentiated portfolio, which we're talking about more in depth, there's promotion differentiation. And then a lot of people go right to map policies, right? Oh, we're going to have a, we have a map policy. That'll protect us. Yeah. Not really. It will help you once. You've gotten rid of some of the other root causes. It's a tool in your toolbox. It's not the tool in your toolbox, right? If you haven't gotten rid of the root causes, the matching will still happen. And you'll just have to go enforce your policy resulting in stop shipping and other penalties that impact your business. So map and other types of policies that are available in market in the U S and Canada explicitly for map are really valuable, but as preventative tools, once you've removed the source root cause. So and I'll pause there. Cause Molly, I know we talked to a number of folks about this, but any thoughts,
A little bit about the blooper reel on this one, as well as you were talking to Chris and hearing from a brand who had a price match to a different format, like their club item was matched to an a non-club item, drawing the total value of their product down and hurting both them and the retailer. And so rather than, I mean, what Chris has articulated is rather than having these O S moments and looking around just like little, you know, captain police, like investigation, where are we? Where's our policy being violated, like sort of moving from that stamps to a little bit more, where could we possibly be matched, right. Assume that's gonna happen. No, why that happens and come up with a strategy to prevent it from happening where it shouldn't be happening
100% and that's by all means this isn't something you flip overnight, right? Like it's going to take some time, but the more foundational thing root causes, you remove the fewer one-offs you have to go whack-a-mole to get rid of. And to that point now you're not just policing and putting out thousands of fires. The fires that actually ignite probably are new challenges. We haven't even discovered yet that are worthy of your time, as opposed to trying to get rid of the ones that we now know and suffer from all the time as brands. And so so, so that, that price matching is really important. But what I touched on and, and this, we had a number of anecdotes that actually a couple of member brands who are taking a very strategic approach to this, which is exciting is this idea of differentiating your portfolio, which when set out loud gets kind of a rolled eye or mean look from everyone who's ever been forced to rationalize their rationalize, their skew count.
I was in charge of skew rationalization on brand long ago. And I got rid of tens of skews in a few months. I was so proud, right. But I should have arguably been saving them in a bank to use later when we needed the strategic differentiation, but didn't want to get rid of our core assortment right away. Right. We've got to like build the plane and fly the plane at the same time. So one can pick up over the other, but this idea of differentiation maybe in a more, in a really extreme world would be, what if we had a completely different portfolio for every major retailer. Now that sounds crazy. Right. But don't, we kind of already do that a little bit for club. I mean, they, they only get a few, but we differentiated for them because you couldn't go to market with them, but they'd already justified their size because they had a tried and true model that had already earned a certain scale and then they could grow from there.
So we don't have to go that extreme to start. We're already kind of doing this now to band-aid this we're creating unique pack sizes, which still get the price match, but maybe we should be looking at unique variance, right. Or tip bowl or hero skews to start, right. Hey, I've got my brand sold everywhere, but I'm going to give these three retailers of choice, something special. Each that can be my prime day promotions or my roll back skew or target deal days skew, or the one I'm going to run a target circle offer on so that when running no one prompts the whole brand to go down collectively. And in once those earn a certain level of credibility internally, it starts making the case for more. So you don't have to start over from scratch and kill your portfolio and add a whole new one you build from scratch.
But some examples on both sides, one but Coco, one of our members, Jim Morgan shared an example of something public, where he combined the opportunity to differentiate what the shopper need, right? So organic as a need state is, is on the rise. And they had an organic opportunity that they were able to create as, as at least a short term, exclusive item on Amazon so that they could promote that and drive that, but that wasn't going to cause their core coconut water line to go down with the ship. And so that's an example of just one skew that could be differentiated, but very thoughtfully. But if we look at toys as an example, toys, is that a lot longer in the market to differentiate because they've had to, because their world shifted digital earlier. And when you look at brands like Lego and nerdy, they've got fully differentiated lines at each key, retailer target Walmart and Amazon in the U S alone, not to say they don't sell common skews, but now they've got a whole line that they can double down on during key promotional windows that don't again, bring the rest of the business down.
And so, so whether it's, it's differentiating to truly differentiate just to save yourself from price matching, whether it's, Hey, do that and capitalize on a shopper opportunity. Or in some cases, there might be an opportunity that's seasonal that we're the speed to market. It's only captured by an e-commerce opportunity, right, where you could never have sold in and out that fast in store. And by selling on a retailer's website or on Amazon, you can get in and out for both either a annual season or a one-time occasion. And the one example I like in the market that I saw was a few years ago Pepsi-Co ran in the UK on Amazon, a call of duty video game, launched box with all those they're Doritos variety packs in partnership with the call of duty game and even had a pack that was variated as a soft bundle at the launch, which only lasted for the period of the launch and then went away and obviously wouldn't necessarily happen again because the game wouldn't relaunch every few months, but what an opportunity, yes, maybe less efficient than a very skew rationalized portfolio, but how, what an opportunity to capitalize on impulse, buy at full price to capture new occasions, new shoppers in partnership with somebody maybe they hadn't played with before.
And so there's so many cool opportunities here. It doesn't just have to be a band-aid to get around price matching, but it can be a real shopper opportunity.
So Molly you know, both of these sound like complex practices and that need to be cross-functional conversations and, and a lot of communication and, and and shared KPIs to make these, these practices sort of worth developing and talking about. And that really comes down to kind of what you were talking about before, which is, are people working together? Do they have shared incentives, et cetera? And I think that takes us to the next bandwagon.
Yeah. So practice number three is my starting to sound like I repeat myself bringing marketing and sales together. My favorite topic. So, you know, in the past, there were sort of two relatively clear and defined commercial functions in CPG marketing, which own the consumer and brand equity consumer experience and longer term brand building accountability and sales, which owned the shopper own trade partnerships, retail activation in market with shorter term sales accountabilities the two kind of collaborated, but more in a Baton handoff, the way nowadays that kind of loose collaboration at the periphery is of those two teams no longer makes sense. Aside from the fact that the majority of product discovery is fueled by marketing and media money, even on the digital shelf. A lot of the tactics that involve selling are also sort of half marketing, half sales things.
The practices that we see that work really well are honestly marketing and sales in the same organization. E-Commerce reporting up to marketing or marketing reporting to eat calm, or the two of them reporting to a common boss. If that's not a reality for you. Maybe there's a way to organize around total share of voice per channel, which is a tactic that one of our member brands has driven to unify marketing and sales. And so this is the practice of looking at the percentage of inventory, both paid and organic on a given channel, trying to figure out what, what are those opportunities you need to capture in order to sort of maximize your share of voice versus the competition. And then working across tactics that we wouldn't traditionally define as brand building marketing, like say it's a banner ad or a homepage takeover in practices.
We would traditionally associate with trade. Like maybe it's a paid search terms and putting those together and looking at sort of the total share of voice outcome of employing all kinds of strategies like from the artist formerly known as marketing and media and the art or artists formerly known as sales. One of our member brands was able to take that sort of total share of voice practice regardless of whether or not the tactic is marketing or sales granted to capture 75% of COVID related growth. And I know you're all asking yourselves, or maybe you're asking yourselves, is that above the line or below the line? What we're seeing is this kind of practice right now is categorized as below the line, since it's a retail specific takeover, even though sort of brand equity and brand building is involved in establishing dominant share of voice per retailer, but more and more of that starting to come apart as sort of marketing and sales started to parse out how they worked together.
And is this really a trade thing or is it a brand building thing, but there are more than enough anecdotes that Chris and I have discovered that warrant the coming together, the integration from a KPI point of view of marketing and sales, the moving away from meaningless KPIs, like Roaz, which a person can sort of make happen for their brand by just, you know, spending against things that don't matter to what are the behaviors that you want to see from a shopper and how visible do you want to be on the digital shelf, like taking share of voice on by
Chip? I, I think that last point is what keeps ringing in my head. As you talk about this, which is the, the big underlying shift here that, you know, we say all the time, but it continues to be true that we haven't yet made the adjustments to it that we need is that the consumer is in charge. Like the, the, the whole point of the end of this day is to sell as much of your product to consumers, as you can. And with the proliferation of channels, you have to deal with the fact that that's not just going to be done by sales, selling pallets to retailers. And so to me, the underlying this, that when you were talking about, I sort of pictured that whoever that sort of chief growth officer is that might be at the top of that pyramid, they're thinking about it, that person is thinking about it. In terms of how much of this product are we selling to our consumers? Is that fair? Is that shift underlying this? Am I thinking about that correctly?
I mean, absolutely. We have been you Peter, you, I, Chris others have been part of conversations where we see the transition over to chief growth officers, the taking apart of digital only role offices or roles and moving them into sort of total growth, accountability roles. It's, it's a thing it's happening. It's finally, finally happening more and more.
And, and what's, and, and the thing is, I've seen a couple of different organizations who like added like a chief growth officer, but who was separate from the rest of the team. Like, how can you have someone in charge of growth, but then the rest of the organization reports to people who aren't driving, like which, which I sound silly because the point is there are people being dedicated. Like there should be an e-com person or people in the sh in the, in the beginning of a project when something is new, because dedicated leadership is a part of successful change. But if you wanted to get everyone behind a specific change in this instance, total growth, you need to KPI everyone on total growth, right? Even if marketing people and sales people, whoever owns the account and owns the brand might have different leading KPIs, or they may have different meeting actions. They're responsible for their direct lag metric is the same. If even in that, in that instance, if you couldn't organize everybody under one person outside of like the CEO, if you just gave everyone the same actual KPI and measured them on it, promoted them on it, hired them on it, you would actually get everyone acting the same way because they'd be making decisions on the same thing. So even if you can't change the structure of the KPI part would actually get everyone to act the way you want them to act. And
I think there's a good point there, which I hadn't yet thought. It isn't part of, of the talking points of our research, but the, the G the growth and our total growth and accountability is really around taking the old parts and new parts of your business and driving healthy revenue moving forward, versus just underlying or extending. And as long as you can, the revenue from your old functional allegiances, I'm just going to drive online and I'm just going to drive offline. And I'm just going to drive like more ads for less money. And when our company implodes, whoops,
And you'd say, well, I did what I was supposed to do, because that's what you were being curated and nurtured to do. No one had CA and I, I w when we talk about total growth of accountability
Off the shelf, that's not selling in store because I'm not accountable for the fact that it's a number one seller on Instacart, and they're picking off the shelf at the store. Like I don't, my, you know, my organizational objectives are don't relate to the person who cares about that.
Well, growth accountability is not, it's not, it's a simple concept that Natomas sound like a brilliant, basic, but it's not being done actively or holistically across the industry by no means, is it easy to implement for know, multi thousand person CPG organizations, but it is what's needed. And, and, you know, in general, if you look at who's succeeding from a retail perspective in the market today, there's several out there, but target is killing it in the market today, overall in an e-commerce. And guess what? They have enterprise merchants who don't think about channels, but just think about total growth now, is that the only thing that they do well? No, but is that an underlying reason that they make a lot of really good decisions about how the store should change and about how online can augment that? Yeah, because that's, they're thinking about their guests holistically, irrespective of what touchpoint needs to morph to make that next touch point, the better one to convert. And so, and they're retained. And so KPIs alone can make a big difference, which then ultimately might force your structure to change later. And
So just cause we're we're, we, we need to move along to the fourth one, which has really underlies all of this, because no matter what, which one of the three that we've already talked about you look at so much of the shift that needs to happen is one of speed and agility in a world, run by algorithms in a world where opportunities and potentially disasters pop up everywhere. You know, with retailer ad platforms springing up throughout the year, like all of these things that are going to happen much faster you need to be able to move money around to make sure that you get the most out of your dollar. And so Molly talk, talk us through this last one. So
Rather than airing all your funds in a very expensive project that no one really knows the details of, but then you can pull back and reallocate. We recommend a budget budgeting fluidity, or a practice four, which is plated flexible budgeting, say that 30 times fast. So moving away from this idea of traditional planning timelines that are more similar to your old media TV timelines, seasonal timelines, train negotiation, timelines, and looking at both sort of a long-term value outlook and a short term that outlook. So if you're going to try to max out your share of voice by channel you're always going to be need needing to test the threshold of investment that you have to create per channel in order to get the share of voice that you're after. And one month that may be different from another month. It may look the same amount of money may look like over an investment one month and under investment another.
And you need to have the fluidity in your budget to account for that. This is no longer a matter of filling the top of the funnel cheaply. It's a matter of looking at the true ecosystem of tools at your disposal. So one of our members creates longer term longer horizon budgets for value realization on large upfront technology investments, right, which takes six to eight months to begin to show value, and then shorter flighted investments for the kind of budget that needs to be reallocated month to month and even week to week. There's a member who meets every week to look at their retail investments. And they also allocate 50% of their EBTL media to Amazon, and then 50% to their other top retailers, knowing that there's a halo effect. One member runs a sick six week budget process that could range from five to 25% of their amp. I mean, the point here that I'm making is flexibility against a common goal. And without that you may gain security and predictability. Yay, but you'll miss efficacy. Boom.
And, and you know what one thing I'll share is I realize some people get scared when they think like, so I'm supposed to make my annual plan with no with no structure, no commitment and no, no, you're not officially not committing to things or laying out a plan, but one way to do this too. And this goes back even a decade. But, but in my own personal experience in the past with large CPG, one of the things that I think set Reckitt up as a company very well was a practice of it wasn't necessarily like overt budget fluidity at that time. I don't know. I'm not speaking for them today, but having been in brand, there was definitely fluff in our mind. Like we always had something that was set up, that we were going to invest in that didn't actually hadn't been committed yet, but we to do it right.
We were going to, we were percolating the ideas, but long story short, like every quarter or six months, they would call for a cut of X percent of the budget where you didn't have to come back and pitch for, for that money. But because we were all generally tied to everyone else's performance, even if your idea got cut, and then you didn't win it back, somebody else's better idea got the funding and everyone won as a company. And so while I don't want to say everybody's KPIs, KPIs were exactly the same. They were much closer to one another than I've seen in other organizations where functions are completely separate. So even if you don't start with 50% flex, but you know that there's some innate money sitting out there being able to call it back up and then have people pitch. If people are really passionate about what they're already doing, they'll be able to show you the results.
And if they're, if they, if somebody else has something new, Hey, Instacart just popped up on the scene. We really need to be investing here. We'll show me the case. We've got some funds, some rainy day funds to invest. So you might be able to create the money, even if you didn't start with the money because not everything. I mean, if everything's already committed there probably some issue, unless you just don't have a large budget. I mean, but there should always be something fluffy sitting out there that wasn't fully locked in, that you can ask for back and then put up for, for, for a pitch session, from the, from the organization for great ideas that can drive that growth. And that also prompts growth, accountability.
So dear listeners, following this this hero's journey we, we, to, to close, I kind of want to throw, throw both of you a question where you can own it, how you have to choose and then give a couple of sentences of why you're choosing. So, cause there's a lot to hear. There's a lot to take in. This is a multi-year conversation for, for any organization, but if you were sitting in the e-commerce seat today, which one of these would you choose to focus on first and
Speaker 5 (46:32):
That's a great question. I, if I want to go root, cause I would probably do what Molly talked about first in our solutions, which is marketing and sales integration, but even deeper than that, that KPI alignment. Because if those are aligned, all other things start to become true because now maybe they'll come true differently for different organizations and categories and retailer sets. But like if we're aligned on the same goal and same KPIs, and we're going to start seeking solutions that achieve those goals and some of those. And so we're going to start seeing everything arguably similarly. And so thus, maybe differentiated assortment and price matching proactivity and budget fluidity become a reality very quickly because the foundation was unlocked with how we're measured. So that's less sexy, but that's like, and I realized that that's a loaded one because how do you do that easily with thousands and thousands of people.
But that was, that's what I would focus on even years later, I see if we've only done that. So simply everything would have been unlocked, right? But we're seeing retailers results prove Walmart aligned, their merchants target had already done it. Look what they're, they're kicking butt in the market. Are they immune to challenges? No, but they're kicking butt because they laid the groundwork and Walmart just did it last year. So we're gonna start seeing their, their benefits come over the next few years, the way we're seeing targets, you had already done this years ago. So we can do that as CPGs, too,
Molly, Sean doll. And we should be clear. This is not just a CPG report at all, but, but that's where, where you've spent a lot of your career. So you have a fondness for that category. Of course, Molly agree or disagree,
A hundred percent agree and gonna add on budget fluidity to help support that collaboration. Yes. You've got to have the money.
You're always taking more. What a team take a new take. So you're putting this, this research out there, which is the product of so many executive conversations. And, and we should say like, actually all the research we do at DSI is really the beginning of the conversation. It's not like we've arrived here with fully formed answers. And also every one of these things sort of comes with an, it depends because it relies on what, how is your organization structured? And what's the willing to, you know, there's a whole bunch of stuff here, so we don't come to you necessarily with the answers. But we hope that this research begins conversations, gives ammunition for conversations, provokes a conversation. And, and to that point Chris and Molly, can I sort of offer to people the opportunity if they're compelled by this or interested in exploring it further to, to link Lincoln with you on LinkedIn and, and raise questions or challenge or, or offer your own anecdotes and be part of the solution. May I offer that Chris?
Definitely. Anytime, anywhere you name it, we're, omni-channel, you
A hundred percent, if you can deal with us. Yeah.
And I can tell you that's a, that's a challenge, but totally worth it. So Molly and Chris thank you so much for your, your, you know, your incredible contributions, of course, the digital shelf Institute. But also to this thought leadership that is, I think represents the next kind of phase of evolution to, to drive maximum growth. So I think it's a, just a really fascinating conversation. And thank you for, for coming on to talk about it.
Yes. And we thank the DSI members who've contributed to this cause this isn't all our brain shop. We're just last sewing this tornado and trying to bring it to you as one, one circle of a sill cylinder of wind here to start,
You letting us benefit from your pain and on your achievements. And
Thank you for helping us break a cylinder of the wind. Our thanks to Molly and Chris for joining us, please please share this episode with your colleagues. It we'll start a conversation that you need to have. Thanks for being part of our community.