312. Your Margins Are Unpredictable - You're Optimizing Trade Wrong

0:00Your trade marketing software isn't the problem, but it is not the solution. What you think is working is holding you back. If you're an emerging CPG brand, you've probably invested in better data, better dashboards, better reporting, better trade marketing software. You've been told that if you can measure it, you can improve it. So you track everything, your promotions, your lift, your deductions, your ROI, and yet your margins feel unpredictable. Your growth feels inconsistent and your strategy feels reactive. So you double down. More data, more reporting, more analysis. But here's the uncomfortable truth.

0:37What you think is giving you control is actually keeping you stuck because you're optimizing for something that was never designed to help you win. The story. When better data didn't fix the problem. Let me explain. I've worked with brands at every stage from pre-launch to hundreds of millions of dollars in revenue. I've seen a pattern that doesn't make sense on the surface. The brands that are the most organized, the ones with cleanest reporting, the ones with the best dashboards, are the ones that are most frustrated. They can tell you everything. What their lift was, what their spend was, what their deductions were, what their trade ROI should be.

1:14They're not guessing, they're informed. And that's what makes it dangerous, because it feels like control. But nothing is changing. Margins are still tight. Promotions aren't compounding. Growth isn't predictable. and the founder starts asking, what am I missing? Here's the answer. You're measuring performance, but you're not understanding behavior. And that is the difference between reporting and strategy. Here's the insight. Trade marketing is not a reporting system. This is the shift and one of the most important shifts you can make in your business. Trade marketing is not a reporting system.

1:50Trade marketing is a competitive system. Let that sink in. Because most brands treat trade marketing like accounting, track the numbers, analyze results, optimize the spread. But trade marketing doesn't exist in isolation. It exists inside of a system, competitors, retailers, categories, and most importantly, your shopper. And here's the blind spot. Most brands are optimizing their business in isolation. They're asking, did our promotion work? Did our sales go up? Did our ROI improve? But they're not asking, why did shoppers choose us or not? What else changed in the category? What did the competitors do at the same time?

2:32Did we actually create new behavior? That's why your results feel inconsistent, because you're only seeing part of the system. The real problem, data without context creates false confidence. Consider this, your data can tell you what's sold, when it's sold, how much you spent, but it cannot tell you why it sold. And that's the problem, because if you don't understand why something worked, then you can't repeat it, you can't scale it, and you can't build a strategy around it. This is the exact blind spot I see with almost every brand, and it's reinforced by the tools they're using, because those tools are built to track performance, not explain behavior.

3:13The six insights your software can't give you. Let's break this down in a way you can actually use. Number one, internal data versus external data. Your software shows you your world, your sales, your performance, your trends, but it doesn't show you what's happening around you. Competitor promotions, pricing shifts, assortment changes, category dynamics. So you think we've improved performance, but in reality, the market moved and you didn't see it. Action step, start asking what changed in the category while we were measuring ourself. Number two, you can't see your competitive position. Most systems are brand centric.

3:54They show you your results, your trends, but not your position. You don't see who gained share, who influenced your results, who changed shopper behavior. So you're optimized based on incomplete context. This is why brands feel like they're working hard, but not gaining ground. Action step. Every promotion should answer. Did we outperform our competition or just participate? Number three, volume is not the same as incrementality. This is one of the most expensive misunderstandings in CPG. Your software celebrates lift, volume spikes, but it doesn't tell you what was truly incremental. Did you attract new shoppers, increase basket size, drive new behavior?

4:38Or did you discount existing demand? Most brands don't know, and that's why trade spend quietly destroys runway. Action step. Stop asking, did sales go up? Start asking, did we create a new behavior? A different way to think about this is, what are the goals and the objectives of your strategy, your trade strategy to build awareness, increase trial, steal share. All strategies should focus on building base sales and maintaining margin. Number four, brand growth versus category growth. This is where experienced operators separate themselves. You see your sales increased, so you assume you're winning, but retailers care about the category growth, shopper value, profitability, basket growth, customer conversion, not just your brand.

5:25This is where your unfair advantage lives because many natural and better for you brands drive more profitable category growth but they're judged on the wrong metrics this is how you change that conversation action step start framing everything as here's how we grow your category more profitably remember that natural better for you shoppers are typically less price sensitive more loyal spend more per trip and they don't settle. Number five, software can't build strategy. Let's be clear, software is not the enemy. It's a tool. It can organize data, track performance, and visualize trends. But it cannot think, interpret behavior, identify opportunity, or build strategy.

6:10And that's where most brands get stuck because they expect the tool to do the thinking. Number six, category growth versus brand growth. Here's something most founders miss. Your brand can grow while the category stays flat. That means you're taking share, not creating value. And over time, that limits your upside. Savvy retails reward brands that grow the category, bring in new shoppers, increase basket size, improve profitability, because that's what drives their business. This is why everything I teach connects back to shopper value, category growth, retailer success. Reframe You're using the right tool for the wrong job.

6:51Here's the simplest way to think about this. Trade marketing software is like QuickBooks. It tells you what happened, where the money went, what your numbers look like. But it does not tell you how to grow, how to compete, and how to win. If you rely on it for that, you'll stay reactive. This is why so many brands feel stuck. Not because they lack effort. Not because they lack data. Because they lack a system. The better way. Start with the shopper. This is where everything changes. And this is where I start with every brand I work with. One question. Why did what happened happen? And answer that.

7:29You don't start with the data. You start with the shopper. What problem were they trying to solve? What did they value? What triggered the purchase? What alternative did they consider? Why did they choose your brand or the competitors? Then connect that to your category dynamics, retail execution and trade strategy and competitive positioning. Now you have a complete view of the system, not just reporting. This is how you improve trade marketing ROI, make better retail decisions, increase basket size, build loyalty, and extend your runway. If this episode made you rethink the way you're looking at your data, then the next step is to see how it actually works.

8:09I'm hosting a live working session where I'll walk you through how to evaluate your trade performance beyond dashboards, how to uncover where your growth is really coming from, how to identify blind spots your competitors are missing, and how to turn trade marketing into a true competitive advantage. This is not a presentation. It's a working session. We're going to break this down step by step so that you can apply it immediately. If you want to join, register on the homepage of my website, RetailSolve.com. Recap, the truth most brands miss. Trade marketing software isn't the problem, but it also isn't the complete solution.

8:47Because data shows you what happened. The shopper explains why. Strategy determines what happens next. And when you combine all three, that's where your advantage lives. You don't need more data. You need better context, better clarity, and a system that actually helps you win. If this resonated with you, share this with a founder looking for more runway. Connect with me on LinkedIn. Visit RetailSoft for more brand building strategies. I'm Dan Lohman, and this is the Bulletproof Your CBG Brand Podcast. Stop wasting money. Want to know how to explode sales? Here's this week's free downloadable guide.

9:23Trade marketing includes everything required to get your brand in the hands of shoppers. It's your growth engine and the largest item on your P &L. Trade marketing is crucial for your brand growth, but 70 % of trade spending is wasted or ineffective. Learn the essential strategies and tactics to save you money and boost profits. Thanks for joining us today. Please reach out and share your most pressing questions and I'll do my best to get you the answers that you need on future episodes, including expert advice from CEOs and industry thought leaders. Comment, leave your questions, and get this week's free downloadable guide and the show notes at retailsolved.com slash session 312.