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Delivering more than £9m incremental margin

The Client  

Total Negotiation Group’s client is a global manufacturer within the FMCG sector. It is a key category for retailers, so is always under pressure 

Their Challenge 

From a strategic review, the client had identified that their current trading term’s structure didn’t leverage the retail opportunities to their full potential, either for their business or for the retailers. 

In the words of the client’s Sales Director, ‘traditionally these agreements have been based around fixed payments that require no performance or behaviour to be completed before trading terms are paid. As this kind of investment delivers no real benefit to our business, it was important that we addressed these issues before we moved into our new agreements.’ 

Total Negotiation had been successfully working with this client to build negotiation capability. The extension of the partnership to trading terms consultancy was borne out of a high satisfaction level with the results from the sales force capability shift. 

Objectives of the engagement 

The client prioritised several key retail groups who were growing and were seen as the retail benchmark in their sector. It was important to create a new precedent for conditional trade terms, which would then be rolled out to the next levels of accounts.   

Total Negotiation Group were asked to advise on alternative trading terms structures and to work with the key account teams to implement them. 

The solution 

Timing was crucial. Total Negotiation Group partnered the trading teams to create a plan, which would ensure that all internal stakeholders were aligned to the new terms structure before the team implementation training sessions started. 

Outcome 

In all the groups, new trading terms were agreed, converting into practice the strategic goals. The ‘more for more’ strategy was structured to benefit the retail partners in return for a more measured and disciplined investment structure. 

At an operational level there were 2 distinct and measurable results: 

  • Increased availability of products in all accounts, supported by clear visibility of the products on all pricing communication mediums
  • Adoption by all accounts of key targets to achieve for terms payments to be triggered.

Over a full year these trading agreements are expected to deliver over £9m in incremental margin. Additionally, the client’s position as market leader has been underpinned. 

Future 

The client recognizes that there will continue to be tough trading challenges in their category, and these will surface in all of their markets at different times. They are using the model developed with Total Negotiation Group to plan a pre-emptive approach and are accessing TNG’s expertise and resource in other markets.

About the author

Total Negotiation Group