Lack of Compliance Management is Costing Distributors and Retailers More Than $634.1 Billion in Lost Sales

Many will hear the term “Compliance Management” and immediately think of a function completed by the legal department. In today's world compliance management is no longer just for legal. While there are some things related to compliance that are legal, there are many more that are related to general distribution and retail operations you as a company needs to be aware of to be successful today.

With more than 70% of purchase decisions occurring in-store ensuring your business is compliant at the store level is more critical than ever. According to a 2015 CNBC article, “out-of-stocks" accounted for $634.1 billion in lost retail sales in a single year. This is purely due to a lack of compliance. By taking the time to ensure you have the right back stock and ensuring your product is placed on the shelves companies are able to avoid hundreds of billions of dollars in lost sales. How much can you benefit by simply being prepared?

One area that distributors should pay particular attention to is the use of Point of Purchase (POP) marketing materials. According to the POPAI’s Compliance Initiative study, only 10% of DSD markets found their displays and materials to be compliant. With companies spending over $60 billion a year on these materials they are sure to lose out on potential sales that could be captured if these materials would be placed correctly. Gaining insight from the field is of even greater importance when you are relying on store level employees to complete key actives for your business.

Many will ask how they can best improve on their compliance as well as ensuring they don’t have major issues going forward. Then there are many ways to go about it, but the three best are the following:

Make it easy for your field teams to do their jobs.

When promotions are planned initially, it is best for your team to stop and consider where your field team members could be confused or frustrated during the setup process. Team members are less likely to complete tasks that are difficult, frustrating or even confusing to them. Remember not everyone has the same vision you have in the very beginning so as the old saying goes, keep it simple stupid.

Tie results of promotions to bonuses and incentivize your team.

When your field team has a financial incentive to complete things correctly, they are more likely to do them and do them right. When it is possible and appropriate, its a massive boost for your teams to know they re going to be rewarded for a job well done. Include some bonus at the end of each quarter for them executing your promotions flawlessly.

Have your team verify completion

The easiest way to ensure compliance is to have your team show you they have done things correctly. Not only does having photographic evidence show you it was done right it also gives you the ability to see if mistakes were during the setup process helping to prevent future challenges.

If you take the time to manage your compliance as well as collect the critical data from the field you are going to see a considerable increase in the effectiveness of your marketing campaigns and promotional dollars.