332. Your Promotion Increased Sales. Why Did Cash Get Tighter?

0:00Your promotion increased sales. Why did cash get tighter? A promotion can increase sales, make the retailer happy, help the broker hit the number, and still quietly shorten your runway. That is the part most promotion and recaps miss. The sales spike is visible immediately.

0:16Dan Lohman:The deductions, fees, margin compression, forward buys, execution gaps, and lost baseline sales may not show up until much later. By then, the report has already called the promotion a success. The team has already added it to next year's calendar, and the most expensive promotion may become the one you repeat because sales went up. That is worth saying again. The most expensive promotion may become the one you repeat because sales went up. Are you ready to hear more? This is the Bulletproof Your CPG Brand Podcast. I'm your host, Dan Lohman. Now, let's roll up our sleeves and get started. Your promotion increased sales, so why did cash get tighter?

0:55Dan Lohman:That question is becoming more important because this is not a predictable growth environment. Input costs are changing. Retailer expectations are increasing. Shoppers are more cautious. Freight, packaging, ingredients, promotion, and execution all cost more and that can vary unexpectedly each month. The biggest enemy may not be a single cost increase. It is the uncertainty. The same promotion can cost more, still sell fewer units, attract a different shopper, and produce a completely different financial result than it did last year. Repeating the old calendar may feel safe but the conditions underneath it have changed.

1:34Dan Lohman:Most brands promote like sheep. They repeat what they did last year, follow the retailer calendar or copy a competitor. But rinse and repeat is not a strategy. They run the event because the retailer expects it, the broker recommends it, the competitor is doing it. It was on last year's calendar. Everyone in the category promotes during the same holiday, so the brand assumes it should too. That does not make the team careless. It means the business inherited system built around activity rather than a clearly defined outcome. This is common across the industry, so you're not alone. Even the largest brands fall into this pattern.

2:12Dan Lohman:Industry analysis from Nielsen and IRI have shown that trade can represent about 25 % of a brand's growth sales, while some category-level studies have found that close to 70 % of a promotional spending may be wasted or ineffective. The exact percentage varies by category, company, and methodology, but the larger point is difficult to argue with. A significant amount of trade spending subsidized sales that would have happened anyway instead of creating profitable incremental growth. That is in addition to the impact from competitive initiatives, shopper behavior, and seasonal influences. With costs rising and shopper behavior becoming less predictable, every ineffective promotion is more expensive than it used to be.

2:54In simple terms,

2:55Dan Lohman:trade is often one of the largest control bowl investments on a CBG brand's income statement. Yet many brands approve it with less discipline than they apply to payroll, inventory, production, toilet paper, or hiring. A promotion lifts sales, so the team calls it a success. But sales lift is not proof that a promotion worked. Did it bring in new shopper? Did that shopper buy again? Did it improve baseline sales after the event? Did it grow the retailer's category? Did the product remain in stock? Did the retailer execute what the brand paid for? Did the promotion create profitable demand or simply make loyal shoppers cheaper for a week?

3:32Dan Lohman:Those are very different outcomes. The lesson I learned selling chips. Years ago, I worked for a regional chip company as a direct store delivery route driver, DSD. I called on 11 stores and earned a commission on what I sold. The larger national competitor had far more money than we did. They regularly ran buy one get one free promotions during the biggest chip occasions of the year, including Super Bowl, Cinco de Mayo, and Memorial Day. I could not afford to match them. At first, that looked like a disadvantage. Then I started asking a different question. Why would the largest chip brand give away a product during the exact weeks when shoppers were already willing to pay more?

4:12Dan Lohman:Those stores were packed during the major holidays. displays were crowded. The national brand had money, the awareness, and the promotion countered. Trying to outspend them would have been foolish, so I promoted the week before. The strategy was simple, help the shoppers pantry load before the national promotion began. By the time the large brands event arrived, many households already had chips at home. They either did not need the competitors product or needed much less of it. I was not simply moving my sales to a different week, I was interrupting the competitors expected shopping pattern. There was another layer to the strategy.

4:48Dan Lohman:The company I worked for also supplied the retailer store brand chips. When I generated more traffic and stronger displays the week before the holiday, the retailer sold more of our branded product and more of its own private label products. That gave the retailer reason to care. I was not walking into the store saying, please help my small brand. I was helping the retailer create more profitable traffic, strengthen its own brand, compete more effectively, and capture sales before the national promotion began. Then execution became the proof. My displays were full. The promoted items were available.

5:23Dan Lohman:The shelves were maintained. The retailer did not have to chase me, fix my work, or apologize to shoppers because the display was empty. The national brand could not always deliver at that level of execution. After a few events, the retailer began leaving my displays up during the national brand's promotion. They stopped charging me extra for some of the additional space. Eventually, I earned the large front lobby display shoppersol the moment they entered the store. When a retailer opened a new superstore, they awarded me with a 4 ,900 bag front lobby display and several end caps. The larger national brand was left with its regular space in the chip aisle.

6:02I doubled my paycheck in less than two years, became the company's top salesperson month after month and was quickly promoted.

6:09Dan Lohman:More importantly, the company became the trusted vendor across the broader market. The regional president of the national brand once told me that he needed to hire me because I was costing him too much money. I will not pretend. That did not feel great to hear. The result did not come from a deeper discount. It came from understanding the shopper, competitor, retailer, timing, economics, and executing better than the other company did. The promotion was part of the strategy. This is where many brands get stuck. They treat promotions as isolated events. Marketing creates the message. Sales negotiates the event.

6:44Finance tracks the money. The broker submits the forms. Operations ships inventory. Someone reviews the sales afterwards. Every function may complete its task correctly, and the business can still lose. A promotion is not a separate date on a calendar. It is part of your go-to-market strategy. It affects cash, margin, inventory, forecasting, retailer trust, shopper behavior, competitive position, deductions, velocity, base sales, and display distribution. When I later worked for big brands, I used the same basic thinking. Instead of accepting the standard retailer calendar, I studied the shopper, category, retailer priorities, competitive activity, and execution conditions.

7:25Dan Lohman:Some of my retailer results grew the brand by 32 % in one quarter, 83 % in another quarter, and 50 % in another. Those results helped me earn advisory roles where retailers would ask me to review and validate the category captain's recommendations before accepting them. Think about what that means. I had a voice in the retailer's category strategy, including recommendations that influenced assortment, pricing, merchandising, placement, and ultimately the fate of every brand on the shelf. We gain much of the strategic advantage of being a category captain without taking on the enormous cost and administrative burden.

8:01Dan Lohman:That is a hidden opportunity for small brands. Doing a little better than the competition each day produce an outsized result over time. That is what effective trade strategies should do. It should not simply produce a temporary spike. It should leave the brand, retailer, and shopper relationship stronger after the event ends. This is how you level the playing field with bigger, better funded brands. Five questions you should ask before you repeat a promotion. Before you approve or repeat another promotion, ask these five questions. Number one, what job is the promotion supposed to do? Is it designed to create trial, build repeat purchase, defend distribution, support a new item, reduce excess inventory, help the retailer win an important shopping trip, compete against a specific event?

8:50A promotion without a clear job becomes a discount. A discount without a clear measurement plan becomes a leak. Number two, what shopper behavior are we trying to create? Sell more units is not a shopper behavior. Are you trying to get a new shopper to try the product? Encourage a current shopper to buy a second unit. Move a shopper from the competitor. Create a new occasion. Build a larger basket. The strategy, message, timing, and measurement should follow that behavior you want to create. Number three, what does the retailer gain? Retailers do not exist to support your brand. They want productive shelves, larger baskets, category growth, shopper loyalty, better traffic, stronger execution, and a competitive advantage and fewer operational headaches.

9:37Dan Lohman:My chip strategy worked because it created value for the retailer beyond my own item. The stronger the retailer outcome, the more negotiating leverage you earn. That may lead to better placement, reduced promotional fees, additional displays, better timing, stronger support, and more productive conversations. This begins with building retailer trust and becoming their go-to vendor. The partner consistently brings them solutions, not problems. Number four, what is the true cost? Do not stop at the discount. include allowances, buildbacks, scan downs, menu fees, brokerage fees, distributor costs, demos, deductions, forward buys, out of stocks, missed sales, operational friction, shopper infusion, and internal time.

10:22Dan Lohman:Then look at what happened after the event. Did baseline sales increase? Did shoppers return? Did the retailer reorder because shoppers bought the product? Or did the retailer simply buy inventory instead of the event? The report can be accurate and still answer the wrong question. Number five, what should happen next? Should the brand repeat the promotion, change the timing, reduce the depth, change the item being promoted, improve the message, narrow the stores, increase inventory, strengthen execution, stop the event completely, or cross-promote with a complimentary brand? A useful promotion recap should not end with a chart.

11:00It should end with a decision, an owner, and a next action. It should include a clear roadmap to improve the next event. The ethical easy button. Founders are consistently sold an easy button. Buy the software, adopt AI, add a dashboard, automate the report, hire another person, run the same promotion with better data. Those things can help, but the easy button comes after the business defines what success

11:25Dan Lohman:means. Here is the easy button I trust. Start with one promotion. Use the report you already have. No platform is required. no perfectly clean database, no company-wide transformation. Ask the five questions, then decide whether to repeat it, revise it, or stop funding it. That is faster, easier, and much less risky than rebuilding the entire trade system before understanding what's actually wrong. That becomes a repeatable framework for future promotions. The easy bun is not another piece of software. It is a simple, repeatable decision process your team can use every time. This is retail clarity in practice.

12:04Dan Lohman:Over the last several episodes, we talked about listening to the signals, understanding why the math changed, recognizing that accurate ports can still mislead you, and building the operating rhythm that allows your team to make stronger decisions. This is what that looks like in practice. Over the last four episodes, we built a retail clarity sequence. Listen to what the shoppers are saying and what the retailers are telling you. Understand the economics, competition, execution, and context. Decide whether the promotion created value. Then build what worked into an operating rhythm and stop repeating what quietly drains runway.

12:41That is what episodes 328 through 331 were designed to help you do. This promotion example puts that complete system to work. The goal is not to stop promoting. The goal is to make every promotion earn its place in the plan. You do not need to fix your entire trade system tonight.

12:59Dan Lohman:Start with one promotion your team is planning to repeat. That is the fastest, easiest, and low risk place to begin. Here is a practical next step. I created a free guide to help you put this into practice. It is called the 8 strategies to maximize your trade marketing ROI. It will help give every promotion a clear purpose, connect it to real shopper behavior, measure the true event cost, improve execution, avoid trading shoppers to only buy or deal, manage trade funds like cash leaving the business, and decide what should change before the next event. The guide also includes a promotion ROI self audit and a simple diagnostic to help you recognize whether the issue may be margin, timing, execution, deductions, rented volume, or decision quality.

13:45It is designed to help you turn trade from a reoccurring expense to more discipline growth lever and a meaningful competitive advantage. Download it free at RetailSolve.com forward slash guide seven. That is RetailSolve.com forward slash guide seven. Start with one promotion your team is considering repeating. You may discover the promotion worked exactly as intended. You may discover a few small changes can dramatically improve the next result or you may discover that the sales spike was hiding cash, margin, execution, or a deduction

14:18Dan Lohman:link. The goal is not to collect another guide. The goal is to make the next promotion decision clearer. When every dollar has to work harder, a slightly better decision repeated across every retailer and every event can create a very large advantage. That is how smaller brands compete with bigger funded companies. That is how you protect your runway, strengthen retailer trust, and give your brand the edge that it deserves. Thank you for listening to the Bulletproof Your CBG Brand podcast. You can download the free guide, review the show notes, and get the resources mentioned in this episode at retailsolved.com forward slash session 332.

14:55Dan Lohman:I look forward to seeing you on the next show.