What Context-Driven Testing Can Teach Us About Trade Spend.

We are less than two weeks away from Expo West and I can’t wait to see old friends and meet new people in person. 

Expo West is always a great reminder of why I love this industry and the main reason is touching base with all the great people I have gotten to know over the past nine years of going to the show. 

I am going to write next week on the macro mood of the industry going into Expo West and why although on the surface it might seem like a normal happy go lucky show, but if we dig into the conversations that are occurring,  the tone might be a bit more somber. 

Today though we are going to dive into context driven testing or in-context testing and why this methodology of testing new products might not be reasonable for you to deploy at the moment, but the reasoning behind it might be transformational in how you view your current trade spend strategy. 

First of all, I have only recently been exposed to context-driven testing and until a few weeks ago, I thought it was only applicable to software. 

When it comes to software, context-driven testing is based on seven key principles:

1. The value of any practice depends on its context.

2. There are good practices in context, but there are no best practices.

3. People, working together, are the most important part of any project’s context.

4. Projects unfold over time in ways that are often not predictable.

5. The product is a solution. If the problem isn’t solved, the product doesn’t work.

6. Good software testing is a challenging intellectual process.

7. Only through judgment and skill, exercised cooperatively throughout the entire project, are we able to do the right things at the right times to effectively test our products.

Source: https://context-driven-testing.com/

For the purposes of today, we are going to focus mostly on point number four.

 I recently spoke to a large CPG company and their in-context team. I was intrigued to take the call because I had no experience working with these types of teams in the past and I was interested to see how WeStock could help. 

The company explained that given their size, they have partnerships with retailers across the country where they have space inside the store that is allocated to new products that the company develops.

These are not emerging brands that the company is creating, but instead this shelf space is reserved for legacy brand innovation.

Think of Rice Krispies Ice Cream Sandwiches or Protein Cheerios. 

I thought I would pitch on the fact that we could bring more attention to those launches to increase both the traffic to them and the feedback funnel, but I was surprised when they mentioned that they didn’t want to draw attention to these items. 

They wanted to see how the product would succeed on shelf, on its own. They then had a CTA inside the package to scan a QR code and provide feedback. 

The response rate was low, but it didn’t matter much since the customer who was filling out the form was a highly qualified one being that they organically interacted with the product, bought it, and then thought enough of it to engage in a survey. 

The sell through data also plays a huge role here since the company wants to see how the innovation performs without any trade spend help. 

In the end, if a product hits the companies internal metrics it continues into the product mix and graduates into an everyday item for brand and retailer. 

But the team is open to any result happening, as I highlighted in point four, projects unfold over time in ways that are often not predictable. The team goes into an experiment with a handful of hypotheses around how a product might perform and they simply let the organic customer experience inside the store dictate whether a project continues or not. 

This is such a 180 from how our emerging brand brains work. All we think about is how to manufacture demand once the product hits the shelf. 

Emerging brands will pull any lever available to them to show the initial sell-through they need to stay on shelf, and the buyer expects you to put together an aggressive promotional plan to support their stores. This often gets brands thinking only about propping up their movement in any way possible, even if it’s not sustainable long term. 

Carrie Bradshaw internal voice over, I couldn’t help but wonder after learning about in-context testing.. is manufacturing velocity for the sake of moving units actually hurting brands long-term. 

I believe most brands approach trade spend from a standpoint of short term panic to get results instead of widening the exposure of their brand to customers who will continue to buy their product when it is off-promotion. 

I understand brands don’t have the same runway to test and see if products will organically fly off the shelf like legacy CPG companies do, but maybe instead of fully adjusting to a context-driven launch approach, we can have a bit more practicality in the way we approach trade spend at least. 

As a company who actively sells a rebate tool as part of our platform, we often express caution to brands about rebates. We tell them that you want to be responsible in your approach and ensure that you have a plan behind your promotions (and we lose potential business many times by doing so). 

I would caution everyone to think responsibly about their trade spend and not just look at ways to artificially inflate your sell through when those customers will never convert to long term customers. 

In-store promotions should be viewed as a tool to get your core customers to buy more and get customers off the sidelines who are thinking about trying your brand, but have been waiting for their entry point. 

Before ending, I want to go to value number one, the value of any practice depends on its context.

This is the north star for these context-driven teams, to prove that the product will resonate with customers in an environment where the context is not influenced by any outside multipliers like a promotion or marketing campaign.

The engagement and trial is organic, making it a signal to the team that it’s a potential winner. 

The point here is not to stop everything and let your product succeed on its own because that's the best practice. If you're an emerging brand, you're simply playing a different game than a legacy brand launching new innovation. 

You need to manufacture trial in the early days and spend on velocity as an emerging brand, especially if you haven’t built the brand to the point where excitement and velocity are in place ahead of new distribution. 

The lesson is that you need to think of trade spend as a way to eventually get your organic velocity baseline to a level where you're hitting your weekly units per sku, per week, per store metrics.

This can only be achieved by constructing your trade spend strategy in a way that hits new potential core customers and empowers current core customers to buy more when you're on promotion - not to get non-core customers to buy once and never again. 

Again, the value of any practice depends on its context. If your sales are high, but the context behind those sales aren’t sustainable, it’s simply not as valuable.