4R Systems introduced its all-new 4R Navigator – a suite of machine learning-powered analytics services designed to help retailers solve critical business challenges. 4R Navigator consists of four scientifically designed solutions that provide actionable insights with very fast results, and without the typical overhead costs. These solutions can be deployed and provide quick – but substantial – wins in as little as 3-6 weeks.

We’ve already explored SKU Rationalization and Clustering Analysis. Next, we’ll take an in-depth look at the third solution – Promotion Effectiveness.

What is Promotion Effectiveness?

Retailers and c-stores know that promotions are a crucial aspect of an effective sales strategy. All retailers and c-stores use promotions in various ways to achieve a certain goal. Due to a number of factors, some chains or brands have difficulty measuring the effectiveness of their promotional campaigns.

The goal of this new Promotion Effectiveness solution is in the name – to review historical promotions and evaluate their overall effectiveness. Equipped with this information, retailers can then decide which specific promotional vehicles should be redeployed, which could benefit from modification, and which are unlikely to achieve future goals.

How Does Promotion Effectiveness Work?

When evaluating performance of promotional campaigns, it can be difficult to tease out the relevant patterns and draw meaningful conclusions. For one, data pulled from different business systems may require substantial effort to merge, clean, and analyze. Even after that, noisy sales data can produce conflicting results, depending on how it is sliced. It is not uncommon to observe individual promotional campaigns with products that flew off the shelves as well as others whose sales barely budged.

Using Machine Learning and AI, the Promotion Effectiveness solution can provide accurate assessments of promotional performance. First, by controlling for factors unrelated to the promotion (e.g. seasonal trends), we get a more meaningful accounting of a promotion’s ability to generate additional sales, revenue, and margin. Additionally, we can provide insight into the impact of supply chain decisions made to support the promotion – inventory overhang, increased out-of-stocks, etc. Finally, rather than simply measuring individual products independently, this process considers an entire promotional campaign to evaluate the overall strategy.

Essentially, the service produces various metrics that can then be compared to promotions’ goals. For instance, after being analyzed with machine learning, a promotion with a temporary 20% price reduction was estimated to have increased sales volume by only 15% due to increased out-of-stocks. Using revenue or margin as yardsticks, the campaign would likely be deemed ineffective. However, from the perspective of inventory sell-through, the promotion may have indeed achieved its objective.

Get on the Path to Profit

Ready to improve your bottom line in as little as 3 to 6 weeks? To get started with Promotion Effectiveness, or to learn more about the other 4R Navigator solutions, call us at (610) 644-1234 or email info@4rsystems.com.