Source of Business®
How to generate growth?
Growing net revenue in mature categories is always challenging, and even more so during times of substantial cost inflation. Shoppers constantly switch between brands, stores and offers. This promiscuous behaviour may be your biggest opportunity for optimisation.
As the original pioneer of the Source of Business®™ methodology, Accuris created an operational approach to revenue management, allowing for effective growth management through detailed analysis of the origin (or “source”) of baseline growth and incremental sales.
Thinking strategically about growth
Discounting our way to volume growth is not sustainable - actually it is only hurting the bottom line. But achieving real revenue growth is not easy, especially in mature markets. It becomes critically important to run a marketing and trade program that taps into positive sources of sales growth.
Source of Business® decomposes sales growth accurately into five sources:
• Cannibalisation: incremental sales of a product caused by volume switching away from other products belonging to the same supplier;
• Competitive brand switching: incremental sales of a product caused by volume switching away from competitors’ products;
• Stock piling: incremental sales of a product caused by a time shift of purchases, generating an increase during the event and a decrease post-event;
• Retail-level switching: incremental sales of a product originating from an increase of sales at this retailer or retail outlet, at the expense of sales at a competing retailer or retail outlet;
• Category expansion: incremental sales of a product originating from a net increase of sales at total product category level.
All Source of Business® indicators are calculated through mathematical modelling, campaign by campaign, product by product. The Accuris model accurately reflects the impact of a price increase, a new product introduction, a promotion, a competitor promotion, and the growth trends of brand, retailer and category, as well as the implication of seasonal patterns, calendar and other effects.
What we offer
Consumer goods companies use Accuris to enable their entire pre- and post-evaluation process. With Accuris, you have a robust, recurring service where all promotions, trade and marketing investments are evaluated and optimised for revenue impact.
The service typically covers:
Software to evaluate and optimise
Quarterly workshops with customer and finance teams
The industry-leading Source of Business® methodology
Gross and net impact
For every campaign you are running, you must consider the positive, but also the negative elements and how they impact volume, value and profitability. Incremental volume gained at a gross level is often dramatically decreased when taking into account the negative side effects of promotions.
Thanks to its unique Bayesian approach, Accuris is the only solution on the market that can split category, brand and retail switching effects for each week / product / retailer specifically. Other approaches may report general trends, but are not promotion or campaign specific. With Accuris, you can use these metrics to manage category expansion, or minimise cannibalisation or to optimise switching. You can actually start managing net revenue growth - with Accuris, not with any other vendor. But...
... pssst. ... they won't tell you.....!
Promotion evaluation involves a lot of time and effort, often related to data handling. With Accuris, you have the option to completely outsource the data cleaning and integration, so your staff can focus entirely on creating more effective programs and strategies.
A complete performance review
Integrating financial allocations and costs as well as display data will reveal further the denominators to your promotions success. Often promotional analysis is limited to looking at sales volumes to see where increases have been gained and why.
Accuris is able to include additional data points to make thorough assessments on the key elements of your promotional performance.
- Financial allocations, budgets, and costs of goods giving you accurate Return on investment results for each and all events
- Display data to understand the impact of differing levels of instore support
- Competitor calendars to analyse how your competition wins, loses or promotes at the same time as you and on which packs
- Price and product positioning analytics
- Sell in data to reveal forward buying by retailers
Why it matters
All CG companies we talk to have their revenue management initiatives. However, very few get to the bottom of it and maintain a robust, recurring effort of optimisation. Old habits return.
With Accuris you have the right combination of coaching, workshops, data handling and advanced modelling to seriously address the zero-sum issue.
Your competitive advantage
Unlike any other approach, Accuris allows identifying strategies and tactics that reduce cannibalisation, increase traffic to store and grow category value. Ours is the only methodology that reveals revenue types by mechanic, pack and promotion. No generalisations. And that gives you the precision and the credibility outsmart your competitors in your negotiations with the trade.
A core statistical principle used in the Accuris methodology is Bayes' theorem. Developed by Thomas Bayes in the 18th century, it only recently received widespread recognition.
Interestingly, Thomas Bayes was laid to rest at Bunhill Fields cemetary, just minutes from Accuris' London office.