Route to Market Excellence - Get the Basics Right in 20 Steps

What's this Article About?

You will find this helpful if you are looking to grow your FMCG sales/revenue, or if you are looking to increase brand distribution, volume and/or profit growth, while improving the efficiency and effectiveness of your Route to Market (RtM) strategy and execution.

What do we mean by Route to Market Strategy?

Route to Market Strategy (or Trade Marketing and Distribution Strategy, or Sales Execution Strategy), provides a roadmap to get your products, from your factory or warehouse to your customers, distributors, and/or end-users, in the most efficient and effective manner, with the aim of growing sales while satisfying customers.

What is our Approach to RtM Strategy?

Our?approach to RtM Strategy is known as the 20 Steps to Route to Market Excellence?methodology. I developed this approach in partnership with my Enchange colleagues. Together we combine decades of operational execution, commercial insight and proven best practice, working with some of the top global FMCG companies, to develop our step-by-step approach.

Our methodology gives you a framework and approach to facilitate the development of strategy, tools, organisation, and execution capability to drive your sales forward, achieve customer satisfaction and deliver excellence in execution.

Our systematic approach, which we tailor to client individual situations and needs, covers the?four phases of Assessment, Strategy, Design, and Implementation, covering 20 crucial steps?leading your organisation to excellence in RtM execution. The order of the Steps is less important than the need to be aware of them all. You may focus on one specific step, based on your circumstances, or you may need to consider on several steps. Either way, you must be aware of how changing one, may affect another.

Let's get into the detail.

The First Phase is ASSESSMENT

To start with, you should review and understand (not guess) every element of your current RtM setup.?This should include reviewing your ‘current’ 20 steps across your RtM. This should?include a baseline market data analysis (including, for example, total market size, company shares, breakdown of channels, geography, segments, price, pack format, etc.), the performance of current and available distributors, your channel strategy, field force, back office, sales management, operations, CRM, to name a few. We also recommend reviewing RtM operations of competitors and best in class non-competing companies.

STEP 1 - Review Current RtM Performance: You will need to look across your current RtM and Strategy, scrutinising the existing 20 Steps that are present, including a SWOT Analysis from our standpoint, current work practices, metrics, portfolio analysis (pricing and SKU segmentation) and the effect on RtM, advanced RtM Data Analytics, etc.

STEP 2 - Consumer & Market Mapping: We must understand the current consumer behaviour and trends, the specific geographic realities, the trade landscape, the number of Points of Sale (both direct and indirect), including the Trade Census/Every Dealer Survey, the key battlegrounds, must-wins, etc.

STEP 3 - Distributor Assessment: (Direct/Indirect/3rd?Parties) – a process that includes creating the Assessment, conducting the Assessment, ranking each Distributor Partner (DP) in order of their assessment scores, and then finally assigning each DP into a performance band based on their rankings. Read more on our Distributor Partner (DP) Development Programme. Download our?Distributor Performance Guide.

STEP 4 - Competitor Analysis: We must understand as best we can, our competitors RtM Strategy and execution approach across their 20 Steps, including their current position in the market, across all channels, segments, pack formats, prices, their SWOT Analysis, etc. Download a copy of our??Competitor SWOT Analysis Template.

THE DELIVERABLES?OF THIS FIRST PHASE INCLUDE:

• Current RtM performance?– A-Z of current performance covering the 20 steps
• Market Analysis - Overview of the Total Market Size (Volume, Value and Shares), including for example, by Producer, Channel, Segment, Price, Geography, Key Account, etc.
• Portfolio & Pricing Analysis?– – Overview of Brand Portfolio, Price, Portfolio & SKU Segmentation, Pricing Strategy and Execution
• Distributor Performance Assessment?(Macro and Micro) vs Best in Class Model & Ideal
• Competitors?– Model of Competitor RtM, Competitor Portfolio and Best in Class RtM Models, Competitors 20 Steps and Market Data Analysis
• Market Map?– Current Consumer Behaviour and Geographic Nuances, Outlets by Channel and Coverage Map (Direct & Indirect)

The Second Phase is STRATEGY

Based on the extensive review in the Assessment phase, looking strategically across the 20 Steps and working closely with your cross-functional and interdepartmental teams, map out your customised RtM Strategy and approach to deliver your strategic goals.

STEP 5 - RtM?Strategy & the 4D Approach: We must understand exactly where we want to play, how we are going to play there, and what exactly success will look like for all parties involved. We must define our overall approach to RtM linked to commercial goals and backed by market data. Including:

• Define our DIME Approach (Direct, Indirect, Mix and Everything in between). You can learn more about our?DIME Approach.
• Detail what success looks like.
• Define your requirements across 4D’s (Distribution, Display, Dialogue, Digital). Read our views on?Digital in FMCG RtM.
• Link them to the organisation goals.
• Detail a Strategy Map to define dependencies and ensure organisation buy-in.

THE DELIVERABLES?OF THIS SECOND PHASE INCLUDE:

• 4D RtM?Strategy & Approach - Covering the RtM Service Model, Direct vs Indirect, DP Development Programme, Channel and Customer Approach, taking account of Segment/Pack/Price Strengths, Weaknesses and Goals, etc.
• RtM?Strategy Map?– Highlighting Key Dependencies of RtM Strategy Components. Read more and see an example of an?RtM Strategy Roadmap

The Third Phase is DESIGN

In this phase, the focus should be to design the specific steps that deliver the RtM strategy. This includes classifying each point of sale/outlet against chosen criteria, segmenting these into channels, building territories to cover the market, designing the required RtM structure to deliver this.

The right data and metrics need to be available, a Sales Incentive Programme to support RtM goals should be developed, and the sales force need to be equipped with the required toolkit to deliver. Finally, a Trade Incentive Programme to partner with your customers is needed, with every element of the RtM having Digital integrated for ease, speed, reach, growth and optimisation.

STEP 6 - Outlet Classification: Target precious RtM Resources at the right retail outlets.?Classify each retail store physically, based on a set of agreed criteria, and then?Segment For Gold.

STEP 7 - Channel Classification: Review, define and prioritise online and offline channels and sub-channels, including their management and resource allocation. Learn more about the 9 key areas to focus on when?building your Channel Strategy.

STEP 8 - Territory Planning: The RtM Team/DPs, must have clearly defined, resourced, and performing territories, with effective route planning and call frequency. These must take account of the local geography, market mapping, trade coverage, available resource FTEs (To Be vs. As Is), etc.

STEP 9 - RtM?Structure: The RtM Team has a suitable structure, organisation, time, and equipment to cover the entire universe allocated, and to support the RtM Strategy. Taking account of Field Force and Back Office, Distribution, Merchandising, Promotions, Telemarketing, Customer Services, Events, Trade Marketing, Horeca, etc.

STEP 10 - Data & Metrics: Define the current data and KPI capability and measure against the new data requirements, including the Revenue Management Model (e.g. maximising revenue with efficient territory planning, route optimisation, sales targets, incentives, understanding?Total Cost to Serve Model?etc.), New KPIs, Reporting. See a?Balanced Scorecard?example?here.

STEP 11 - Sales Incentive Programme (SIP): The internal company incentive programme is used to motivate and influence the behaviour of salespeople and teams to deliver company-specific results.?Any SIP should take account of overall RtM reward and retention strategies, past successes, new targets including volume, brand distribution, Point of Sales (POS), visits, etc.

STEP 12 - Trade Tool Kit: The RtM Team should be equipped and trained for outlet execution and activation, including order capture, order method, POS material placement and management, planograms, portfolio and pricing process and initiatives, trade incentives and promotions, trade engagement options, etc.

STEP 13 - Trade Incentive Programme (TIPs): ?The mechanisms that you put in place to incentivise and encourage your trade partners (e.g. key account, retail, distributor, cash & carry, wholesale) to engage with and deliver on your RtM objectives. You should review past successes, promote loyalty, develop and test options, etc.

STEP 14 - Technology: You need to define end-to-end?digital RtM integration, including, for example, CRM, handhelds, order capture, Retailer Self Ordering (RSO) trade data capture, trade census management, tracking customer compliance to terms, merchandising, image recognition, planogram compliance, digital and ePayments, RtM Data Analytics, etc.

THE DELIVERABLES?OF THIS THIRD PHASE INCLUDE:

• Outlets?– Customer Outlets Classified and Segmented for Gold
• Channels?– Channel and Sub Channel Management Plan
• Territories?– New Territories, Resource Plan, Route Plans, Target Calls and Frequency
• Structure?– Defined Field Force (Type, Numbers, Structure), Reward and Retention Strategy and Cost to Serve Model. See practical?Cost to Serve examples?here
• Data & Metrics?– Roadmap including Requirements, Capture and Systems, New KPIs, Revenue Management Model, Defined Qualitative and Quantitative Reporting
• SIP?– New Sales Incentive Programme and Training Plan
• Trade Tool Kit?– New Trade Tool Kit, Toolkit Process, Agreed Approach & Training Plan
• TIPs?– New Trade Incentive Programme and Training Plan
• Technology?Digital Integration Roadmap across the 20 Steps and Execution Plan

Implementation

Now is the time to focus on implementation. Depending on the strategy chosen or the depth of change, we may either pilot (test and learn), scenario plan or implement the new approach with your teams.

STEP 15 - Distributor Partnership Programme: Develop long-lasting partnerships with distribution partners. Learn more about?Distributor and Wholesaler Management. Read more on our Distributor Partner (DP) Development Programme.

STEP 16 - Third Degree Partnerships (3DPs): Identify your customer's key issues, costs or constraints, and then form a partnership with a service provider who can solve them for the customer, at a significantly reduced cost. Download our guide to 3DPs.

STEP 17 - Key Account Management (KAM): Understand and define your organisation KAM needs, create a framework for relationship management, negotiation, joint business and action planning, regular reviews, develop and implement trading terms and conditions, the training programme for KAMs, etc.

STEP 18 - Training & Upgrading: Develop and roll out the training programme to support all aspects of the new or upgraded RtM. Roll out New RtM Development (NRD) approach to ensure Continuous Improvement. Download our RtM training guide The 10 Key Steps of an FMCG Sales Call as one example of the type of Sales Training that may be needed.

STEP 19 - Functional Integration?– Map out and execute the RtM links to other company functions, especially Marketing and Supply Chain (sales forecasting/inventory management/out of stocks prevention, etc.). Also include Finance, Operations, IT and HR. Integrate the new RtM with the Sales & Operational Planning (S&OP) process. To understand further, read our functional integration example.

STEP 20 - Culture & Leadership: Ensure that there is Top Team and CEO active support from the first step. Develop and execute a supporting change management plan including clear messaging across all functions. Develop cross-functional buy-in and support.

NEXT STEP - Continuous Improvement: Monitor the 20 Steps effectiveness, test and learn with new initiatives, review the approach, change what doesn't work, and roll out what does, thus ensuring continuous improvement.

THE DELIVERABLES?OF THIS FOURTH PHASE INCLUDE:

• DP Development Programme?– Defined & Agreed Model, Development Plans, New Contracts & SLAs, New Performance System, Transition Plans
• 3DP?– Partnerships, Negotiation Plan and Programme Rollout
• Training?– Defined Programme, Workshops, Train-the-Trainer, On-The-Job Coaching,?RtM Centre of Excellence
• KAM Programme?– Defined KAM Approach, Rules of Engagement, Negotiation Strategy and Rules
• New RTM Development (NRD)?– The New Continuous Improvement Programme (covering the 20 Step), How to Capture and Spread Success
• Functional Integration?– New Functional Interfaces Embedded, S&OP and RtM Integrated
• Culture & Leadership?– Change Management Plan, Workshops to Support Plan
• Continuous Improvement?– Follow Up Plan to ensure sustainability and continuous improvement

As we always say at?Enchange,?NOW?is the time to be reviewing, building, and/or transforming your RtM Strategy and Execution to reap the rewards. Do not wait.

Best of luck on the journey.

What should you do now?

• Subscribe to my?Newsletter on Route to Market Excellence.
• If you need specific help on any RtM issue, in any market, please?reach out to me
• Use our?20 Steps to Route to Market Excellence model?and our 20 Steps to Route to Market Excellence Implementation Guide to help you on your RtM journey.
• Use the?Enchange Supply Chain House?to help with your Supply Chain Transformation.