TRADEONE MANUAL CLAIMS PROCESS AND DETAILED AUDIT SAVES MILLIONS FOR MATTRESS MANUFACTURER

Situation
In 1996, this category-leading client identified a group of dealers that followed guidelines and consistently claimed the correct amounts on co-op claims. As a cost-cutting measure, the client initiated a plan to pay these “platinum” dealers’ MDF claims without the usual audit for guideline compliance or market data capture. The initial group consisted of smaller stores. However, over time the list grew to over 750 dealers including many large national department stores. More importantly, TradeOne observed and communicated that dealers were taking advantage of their status by claiming their total accrual instead of an ad’s value, and literally cost this client millions of dollars. At the same time, the client’s national consumer franchise tarnished from poor creative execution and inconsistent logo treatment.

Action
TradeOne recommended a study of 26 questionable "platinum" dealers and retailers including a more detailed audit during the fourth quarter of 2000. That study showed that this client had paid more than $4 million dollars above the audited value of the advertising claimed. The audit continued into the first quarter of 2001 with the next tier of eleven dealers, and the report showed a payout of over $500,000 that was 269% above the audited value. TradeOne reported that a handful of dealers were apparently abusing the program and using it as a profit center. For example, one large department store submitted claims for more than $3,000,000 against an audited value less than $85,000 (2.5% of the total claim). Based on the results TradeOne recommended a round table discussion to develop a strategy to manage this client’s largest retailers without damaging these long-standing relationships. The round table represented the client’s marketing and sales departments along with the TradeOne co-marketing team. TradeOne made several recommendations to help this client regain control:

• Implement training to help representatives better explain program objectives and policies including: upholding brand image objectives; understanding current program guidelines; and measuring advertising to calculate claimed amounts.
• Contact questionable retailers and dealers about their claiming ‘mistakes,’ explain the program parameters and offer on-site training.
• Continue the detailed audit to monitor the progress of these dealers.

Results
The client has agreed to put these recommendations in place and TradeOne is currently supporting the field sales team with training and customer service support to manage these difficult customers’ expectations. Moving forward, we will continue to monitor these dealers and track those who continually abuse the program through quarterly reviews. Our client clearly recognizes the abuses that existed in their program and is successfully using the resources and expertise of TradeOne to guide their program into the future.