CRM in Emerging Markets – Consumer Goods Industry Focus
CRM, when done right, drives incremental revenue, margin and a more efficient and effective sales force. For a global organization looking to win in emerging markets enabling CRM capability is more than developing and deploying new tools and processes – it is a transformation. This article outlines an approach to simplify this transformation and to deliver business benefits.
CPG manufacturers are aggressively targeting emerging markets to enable future growth. The increasing number of consumers of international brands of personal and household products in these markets represents a tremendous branding and sales opportunity. The numbers below are staggering:
· 84% of the world global population accounts for 50% of Global GDP
· 30 Million traditional shops world over
· Potential to add 1 billion consumers for every worthy Brand.
CPG companies are capitalizing on this opportunity by increasing their presence and focusing on affordability, accessibility and awareness of their brands. For example brands like Oreo and Tide do not have a formal presence in India. CPG firms would do well by launching affordable variants of these brands in India. Distributors are a key stakeholder in the success that CPG companies can drive in these markets. In Latin America a CPG firm will need to work with a few hundred distributors; whereas in Asia Pacific a CPG firm would need to leverage 1,000-2,500 distributors to reach 1 Billion new consumers!
There are several business barriers to effective information exchange between the CPG Company, the distributor and the distributor‘s sales force. Often the technology available with the sales force is fairly primitive including paper based exchange of information. The added complexity of multiple languages and low level of sophistication due to lack of formal training within the sales force further amplify the benefits of a robust CRM platform in most developing markets.
Value Chain in Emerging Markets
Emerging markets are complex. Complexity is driven by channels, products and routes to market. In developed markets CPG firms work directly with large organized national scale retailers. In emerging markets CPG firms work primarily with distributors. The distributors employ a sales force that services High Frequency Stores (HFS) - individual mom and pop stores which carry relatively small inventory, pay cash and need very high frequency servicing. Further, market structures vary widely across emerging markets. In Brazil, Mexico, Malaysia and India — for example — modern trade and traditional trade co-exist; whereas in Ecuador, Peru or most Southern Cone countries traditional trade makes up majority of the market. The existence of traditional trade and therefore the route to market presents the following challenges:
1. Lack of control on retail execution. For example, a CPG firm does not have the ability to direct the sales force to execute specific activities. The sales force therefore—typically— pushes products that are easier to sell in that store as opposed to those driven by trade/consumer promotion.
2. Lack of visibility to retail sales. CPG firms have visibility of the receipt of their shipments to a distributor but not to what the distributor sold to a retail outlet.
3. Low level of sophistication of sales representative due to lack of formal training.
4. Need to collate data across distributors.
5. Lack of advanced technologies/tools to drive automation
In our experience, an approach that enables you to streamline and harmonize business processes while introducing innovation can increase your chances of achieving a successful outcome.
Streamline program management, technical leadership, change management, training, development, integration, and testing - everything into one program.
· Accelerate CRM platform development with early brand/country deployment wins.
· Ensure adoption by engaging local leadership early in the program.
· Involve star performers from the sales team right from the start. Design the details with their input. Ensure it is their baby and not (only) yours.
· Ensure adoption by providing ―context sensitive help
Focus on detail and achieve realistic global process harmonization by determining a country variant due to local business practice, culture and legal needs. For example, you will find that planning oriented processes can be harmonized across markets, while transactional processes and those that lead to competitive advantage may need to be country specific.
We are of the opinion that winning early in emerging markets will drive significant growth over the next decade and that CRM will accelerate achievement of that outcome. We also believe that breakthrough ideas that enable distributors to perform better and in turn create visibility for CPG firms to each retail store will create a significant competitive advantage.