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Trade Terms Optimizer

Walk a 10-term, $320M trade portfolio through the 3-phase optimization program (restructure, tighten, reduce) and watch four diagnostic sentinels grade whether the savings come from real restructuring or from face-value inflation in disguise. The same interactive model the full RGM Academy course uses for Trade Terms Lesson 5, no auth, no paywall.

Updated 30 April 2026Extracted from the Trade Terms module, lesson 5: Trade Terms Optimization
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Scenario walkthrough

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5.1Scenario setup

The starting SKU, market, and assumptions the model makes.

You are the Key Account Director for a top-3 European grocery customer at a mainstream FMCG manufacturer. The annual trade portfolio runs at 24.5% of gross sales across 10 named terms: structural (Channel and Customer at 5.0% and 4.0%), efficiency (Logistics 1.5%, Payment 1.0%), volume-linked (Volume Overrider 3.0%), performance (Growth Bonus and Distribution Fee, both at 0% today), promotional (Promo Allowance 5.0%), and consumer activation (Consumer Promo 3.0%). Annual gross sales on this customer: $320M.

The baseline state lands at conditional share 42.9%, expected net GTN 21.35%, ~$10.08M of annual savings already accruing through the conditionality embedded in the existing portfolio. The four diagnostic sentinels read [B, MATERIAL, DISCIPLINED, TRANSITIONAL] at default. The CFO has asked for a credible 3-year program that lifts conditional share to 55%+ (Grade A), banks meaningful additional savings, and avoids an open-letter retailer-pushback that destroys the customer relationship. The simulator is the tool that shows which moves clear the bar and which trip the warnings.

Your objective

Use the simulator to walk the 3-phase trade-terms optimization program. Phase 1 restructures unconditional terms to conditional without touching face values; Phase 2 tightens earn rates from 70% to 60%; Phase 3 reduces face on low-ROI terms. Land Grade A on Restructuring Progress, MATERIAL on Conditional Savings Depth, DISCIPLINED on Face Value Discipline, and ALIGNED on Phase Alignment by the end of the walkthrough.

Key assumptions

  • Earn rate by phase: Phase 1 70%, Phase 2 60%, Phase 3 60%. Conditional terms are paid at the phase earn rate; unconditional terms are always paid at 100% of face. The earn-rate gap is where the savings come from.

  • Sentinel thresholds verbatim from the lesson. Restructuring Progress A ≥55%, B 35 to 55%, C 20 to 35%, D <20% (conditional share). Conditional Savings Depth MATERIAL ≥3pp, MEANINGFUL 1 to 3pp, LIGHT <1pp (savings as pp of GSV). Face Value Discipline DISCIPLINED ≤0.1pp, DRIFTING >0.1 to 1.0pp, INFLATING >1.0pp (face drift vs baseline). Phase Alignment is phase-conditional. Phase 1 ALIGNED requires face stable (drift ≤0.2pp absolute) AND conditional-share lift ≥5pp. Phase 2 ALIGNED requires face stable AND conditional share ≥30%. Phase 3 ALIGNED requires face REDUCED by ≥0.3pp AND conditional share ≥35%. Any phase flips INVERTED if face is INFLATING (drift >1.0pp).

  • $320M annual gross sales is fixed. The 10-term anatomy and 24.5% baseline GTN is intentionally more granular than a typical 8-term anatomy (the lesson unbundles the volume-linked and growth-incentive buckets so the restructure levers are exposed).

  • Drop-through to operating profit on every 1pp of trade-cost saved sits at 80 to 100 percent at typical FMCG margins. That is roughly equivalent to a 1% list-price lift, which lifts operating profit by about 8.7% on the cross-industry 1992 HBR benchmark. Use this as the opportunity-cost yardstick on every dollar of trade spend.

  • No competitive response and no retailer pushback are modelled. The simulator is a manufacturer-side optimization view; in real annual customer planning, retailer reaction (delisting threats, off-shelf displays cut, JBP renegotiation) needs to be sequenced separately. The Tool's purpose is to find the manufacturer-side ceiling, not to model the negotiation game.

5.2Controls & toggles

Every input the calculator exposes, its range, and what it changes.

ControlRangeDefaultWhat it changes
Phase SelectorPhase 1 (Restructure 70%) / Phase 2 (Tighten 60%) / Phase 3 (Reduce 60%)Phase 1 (Restructure)Switches the earn-rate regime conditional terms are paid at. Phase 1 assumes 70% of conditional face is paid; Phases 2 and 3 both run 60%. Phase 3 is differentiated by the Phase Alignment sentinel, which expects face REDUCED by ≥0.3pp AND conditional share ≥35% (the prerequisite is that the restructure has already happened in Phases 1 and 2).
Per-term Face-Value Sliders (10 terms)0% to 10% of GSV per term, 0.25pp stepBaseline 24.5% total: Channel 5.0, Customer 4.0, Logistics 1.5, Payment 1.0, Vol Override 3.0, Growth 0, Assortment 2.0, Distribution 0, Promo 5.0, Consumer 3.0Change the headline rate on any term. In Phases 1 and 2 these should stay close to baseline. Face Value Discipline flips DISCIPLINED → DRIFTING once total drift exceeds 0.1pp and DRIFTING → INFLATING once it exceeds 1.0pp. Phase 3 expects face REDUCTIONS on low-earn-rate terms (Assortment, Growth, Distribution).
Conditionality Toggles (Uncond. / Cond. per term)Binary per termChannel, Customer, Vol Override, Assortment = Uncond. Others = Cond. (4 unconditional, 6 conditional)The core restructure mechanism. Toggling a term Uncond. → Cond. delivers savings without cutting any face. At Phase 1 earn rate 70%, every 1pp of face shifted from Uncond. to Cond. is worth 0.3pp of GSV in immediate savings. The largest single moves are the two structural terms (Channel 5pp + Customer 4pp = 9pp of face available).
Invoice-Type Toggles (On-inv. / Off-inv. per term)Binary per termOn-inv: Channel, Customer, Logistics, Payment. Off-inv: Vol Override, Growth, Assortment, Distribution, Promo, Consumer.Where the discount sits in the gross-to-net waterfall. On-invoice terms deduct at point of sale; off-invoice terms pay on rebate against conditions. Off-invoice is easier to make conditional because the payment mechanics already support performance evaluation. Useful as a second-order signal; does not affect the math but flags what kind of operational change the restructure requires.
ResetSingle clickSnaps all states back to OPT_TERMS defaults and Phase 1Use it between experiments to compare scenarios from a clean baseline. The Tool's URL also accepts ?ph=&r=&c= for share-able pre-loaded scenarios.
5.3Step-by-step exploration

7-step guided exploration of the scenario.

  1. Read the default state to anchor the baseline

    The Tool initialises in Phase 1 (earn rate 70%) at OPT_TERMS defaults: 24.5% total face, 14.0% unconditional, 10.5% conditional, conditional share 42.9%. Look at the right column. KPI tiles read Face Value GTN 24.5%, Expected Net GTN 21.35%, Annual Savings ~$10.1M, Conditional Share 42.9%. The four sentinels read [B, MATERIAL, DISCIPLINED, TRANSITIONAL]: the portfolio already runs at MATERIAL savings depth (3.15pp of GSV at default conditionality), but conditional share sits in Grade B (between 35% and 55%) and Phase Alignment is TRANSITIONAL because no restructuring has happened yet.

    Expected outcome: Default reading: Annual Savings ~$10.1M, Conditional Share 42.9%, Sentinels [B, MATERIAL, DISCIPLINED, TRANSITIONAL]. The Term-Level Analysis table shows 6 conditional terms paying at 70% (Logistics, Payment, Promo, Consumer earning savings; Growth and Distribution at 0% face contributing nothing). The Before/After composition chart shows identical Before and After bars (no restructure applied). This is your reference state. Anything from here either lifts or trips the diagnostics.
  2. Run the structural restructure: shift the two largest unconditional terms to conditional

    Toggle Channel Structural (5.0% face) from Uncond. to Cond. Toggle Customer Structural (4.0% face) from Uncond. to Cond. Do not touch any face-value slider. Both terms are now in the conditional bucket at the same 5.0% and 4.0% face values. Conditional Share jumps from 42.9% to 79.6%; Restructuring Progress moves from B to A; Phase Alignment moves TRANSITIONAL to ALIGNED because conditional-share lift (+36.7pp) far exceeds the 5pp threshold and face is unchanged. Annual Savings climb from ~$10.1M to ~$18.7M, all at the same 24.5% face. The Term-Level Analysis table now shows the two new conditional terms with NEW flags and the cyan tint. This is what restructure-before-reduce looks like.

    Expected outcome: Annual Savings ~$18.7M, an extra ~$8.6M on the same face base. Conditional Share 79.6%. Sentinels [A, MATERIAL, DISCIPLINED, ALIGNED], all green. The Before/After composition chart now shows the After bar at 5.0% slate (unconditional) plus 19.5% cyan (conditional) versus the 14.0/10.5 baseline, and two NEW flags appear in the term breakdown table for Channel and Customer. Underneath the band shift sits simple arithmetic: shifting 9pp of face from unconditional to conditional at a 70% earn rate delivers 9pp × 30% = 2.7pp of GSV savings, on top of the 3.15pp already accruing at default conditionality.
  3. Spring the inflation trap to feel the warning system

    From the restructured state in Step 2, raise Promo Allowance from 5.0% to 7.0% (face drift +2.0pp). Now total face is 26.5% (above baseline by 2.0pp). Face Value Discipline flips DISCIPLINED → INFLATING. Phase Alignment flips ALIGNED → INVERTED because face-inflation overrides the conditionality progress. The red warning bar fires: 'Total face value increased by 2.0pp. Optimization should reduce cost, not raise it.' Annual Savings actually climb (because Promo Allowance is conditional), but the diagnostics correctly flag that the headline 'savings' came from raising the commitment, not from real restructuring.

    Expected outcome: Face Value GTN 26.5% (warning amber). Sentinels [A, MATERIAL, INFLATING, INVERTED]. Annual Savings still climbing versus baseline because the conditional pool grew, but the program has lost integrity in the process. A Conditional Share at Grade A and savings at MATERIAL DEPTH are not enough on their own; the Face Value Discipline sentinel is the integrity check that catches optimization theatre, and CFOs and retailers can both spot this pattern within one cycle.
  4. Reset and run earn-rate compression in Phase 2

    Click Reset (or set Promo Allowance back to 5.0% and re-toggle Channel + Customer to conditional). Confirm the [A, MATERIAL, DISCIPLINED, ALIGNED] state from Step 2. Now click Phase 2 (Tighten). Earn rate drops from 70% to 60% on the same 19.5pp of conditional face. Expected Net GTN drops from 18.65% to 16.7% (a further 1.95pp of GSV saved). Annual Savings climb from ~$18.7M to ~$25.0M, all without toggling a single new term. Sentinels read [A, MATERIAL, DISCIPLINED, ALIGNED] (Phase 2 ALIGNED requires face stable AND conditional share ≥30%, both satisfied). This is the earn-rate compression payoff: free money, but only after Phase 1 has done the restructure work that put the conditionality there.

    Expected outcome: Annual Savings ~$25.0M, an extra ~$6.3M on top of the Phase 1 restructured state. Conditional Share unchanged at 79.6%. The Term-Level Analysis table now shows conditional terms paying at 60% earn rate, the column updates live, and the sentinels stay green throughout. Each phase is a multiplier on the previous phase's work, so skipping Phase 1 and jumping straight to Phase 2 leaves the bulk of the value uncaptured because the earn-rate compression only applies to the conditional pool you have already built.
  5. Phase 3 face reduction on a proven base

    From the Phase 2 state in Step 4, click Phase 3 (Reduce). Earn rate stays at 60%. Now reduce Assortment Allowance from 2.0% to 0.5% (a 1.5pp face cut on a low-ROI term). Total face drops to 23.0% (below baseline by 1.5pp). Expected Net GTN drops from 16.7% to ~15.2%. The Annual Savings KPI tile reads ~$25.0M, the same as Phase 2, because the Tool's KPI is gap-based and a face cut on an unconditional term reduces face AND expected by the same 1.5pp. The face reduction itself is real commercial value (1.5pp × $320M = ~$4.8M of unconditional commitment removed from the portfolio); it shows up as Total Face dropping to 23.0%, not as a KPI-tile climb. Phase Alignment stays ALIGNED because Phase 3 specifically rewards face reduction (the rule requires face REDUCED by ≥0.3pp AND conditional share ≥35%, both satisfied). All four sentinels stay green at this disciplined Phase 3 state.

    Expected outcome: Annual Savings KPI ~$25.0M (gap-based, unchanged from Phase 2). Total Face Value drops to 23.0% with the sublabel reading '−1.5pp vs baseline', and the face cut itself adds ~$4.8M of additional commercial savings on top of the gap KPI, for ~$29.8M of total annual commercial impact at this state. Sentinels [A, MATERIAL, DISCIPLINED, ALIGNED]. Face reduction is sequenced last for a reason, because cutting Assortment in Phase 1 would have triggered retailer pushback (the unconditional entitlement was real money the retailer was banking), but cutting it in Phase 3 after two cycles of conditional-share growth and earn-rate tightening is a defensible cut both internally (the savings argument is made) and externally (the retailer has earned proportionally more conditional money to offset).
  6. Compare the composition chart vs face-vs-expected chart

    Look at the two diagnostic charts side by side. The Before/After Composition chart shows the unconditional vs conditional split moving from baseline 14.0/10.5 to current 5.0/19.5 (after Step 2 onwards). The Face Value vs Expected Cost chart shows where the savings actually live: the gap between grey (face) and cyan (expected) bars on each conditional term. Channel, Customer, Logistics, Payment, Promo, and Consumer all show meaningful gaps; Volume Overrider, Growth Bonus, and Distribution Fee show no gap (Vol Override is still unconditional; Growth and Distribution have 0% face). The chart is the single best slide for an internal CFO or retailer JBP discussion: it shows that the restructure delivers per-term, not just in aggregate.

    Expected outcome: Composition chart: After bar at 5.0% slate plus 19.5% cyan, total 24.5% (or 23.0% if Step 5 was applied). Face-vs-Expected chart: 6 to 7 visible cyan-versus-grey gaps depending on phase. The two charts together answer the two questions a committee will always ask. Composition: 'Is the conditionality real?' Face-vs-Expected: 'Where in the portfolio does the saving actually come from?' Both questions get a defensible chart-based answer.
  7. Read the 3-Year Roadmap and build the committee recommendation

    Scroll to the 3-Year Optimization Roadmap chart. The line chart shows the program shape from Year 0 (baseline) through Year 3, with three series: Expected GTN (red, falling), Conditional Share (cyan, rising), Pocket Realization (green, rising). The roadmap uses a fixed projection from baseline (not the live sandbox math); the conditional-share series is capped at 55% in Year 1, 65% in Year 2, and 70% in Year 3 to model realistic program shape. Use it as the committee slide. Year 0: 24.5% GTN, 42.9% conditional share, 75.5% pocket realization. Year 1 (Restructure): face unchanged, conditional share to 55%, expected GTN drops to ~20.5%, pocket to ~79.5%. Year 2 (Tighten): conditional share to 65%, expected GTN to ~18.1%, pocket to ~81.9%. Year 3 (Reduce): face down to 23.0%, conditional share to 70%, expected GTN to ~16.6%, pocket to ~83.4%. The committee recommendation writes itself: 'Run a 3-year phased trade-terms restructure. Year 1 Channel and Customer Uncond. → Cond. (no face cut). Year 2 tighten earn-rate thresholds 70% → 60%. Year 3 reduce face on Assortment by 1.5pp on the strength of the conditional-share growth. Combined annual commercial impact at Year 3: roughly 7.9pp of GSV from the gap (~$25.3M) plus 1.5pp from the face cut (~$4.8M), for ~$30M total on the $320M base.'

    Expected outcome: Live sandbox at Step 5 state: Annual Savings KPI ~$25.0M (gap-based), Total Face 23.0% (a 1.5pp face cut on top adds another ~$4.8M of P&L impact). Roadmap chart projection at Year 3: 16.6% expected GTN versus 23.0% face = 6.4pp of pocket-recovery on the projection (the projection caps conditional share at 70%, so it ends slightly below the live sandbox's 79.6% conditional share). The two readings should be in the same neighbourhood (the roadmap is a fixed approximation, not the live calc). Committee-ready recommendation: a 3-year phased program with named moves per phase, anchored on roughly $30M of total annual commercial impact at Year 3, protected from retailer pushback because face reductions only happen in Year 3 after two cycles of conditional-share investment. Drop-through to operating profit at 80 to 100 percent translates the savings into roughly +$24M to +$30M of incremental annual operating profit, which is the single most important number to land in the committee deck.
5.4Reading the output

Every KPI, the formula behind it, and how to interpret a positive or negative value.

KPIFormulaHow to read it
Conditional ShareSum of conditional term face values / Sum of all term face values × 100**The headline restructure metric.** Default sits at 42.9% (Grade B). Best-in-class trade portfolios clear 55% (Grade A). Below 20% (Grade D) means the portfolio is an entitlement, not an investment. The single most important number for any annual customer-investment review. A retailer paid 100% of face on the entire envelope is a customer the manufacturer cannot incentivise; raising conditional share is what converts the trade envelope from passive to active capital.
Annual Savings (KPI tile, in $K)(Total Face Value − Expected Net GTN) / 100 × $320M (annual gross sales base)**The dollar yardstick.** Default ~$10.08M at Phase 1. Phase 1 fully restructured (Channel + Customer Uncond → Cond) ~$18.72M. Phase 2 same restructured state ~$24.96M. Phase 3 with a 1.5pp Assortment cut ~$29.8M. Drop-through to operating profit at 80 to 100 percent at typical FMCG margins. Every 1pp saved here is roughly equivalent to a 1% list-price lift on the cross-industry 1% to 8.7% operating-profit math.
Face Drift (sublabel on the Face Value GTN tile)Total Face Value − Baseline Face Value (24.5%, fixed)**The integrity check.** Negative drift means the program is genuinely reducing the headline commitment (Phase 3 territory). Drift between 0 and 0.1pp means DISCIPLINED (the savings are real). Drift between 0.1 and 1.0pp means DRIFTING (a yellow flag; the headline is creeping up under the radar). Drift above 1.0pp means INFLATING (red flag; the savings are a fiction because the commitment grew faster than the conditionality saved).
Phase Alignment (named band)Phase-conditional rule. Phase 1: ALIGNED if face stable AND conditional share lift ≥5pp. Phase 2: ALIGNED if face stable AND conditional share ≥30%. Phase 3: ALIGNED if face REDUCED by ≥0.3pp AND conditional share ≥35%. INVERTED if face is INFLATING (>1.0pp) in any phase.**The diagnostic that catches mis-sequencing.** A Phase 3 click without prior Phase 1 restructure produces TRANSITIONAL or INVERTED, not ALIGNED. A Phase 1 with face inflation produces INVERTED, not TRANSITIONAL. The sentinel encodes the principle that the 3-phase program is a sequence, not a menu. Skipping ahead is a categorical failure pattern committees should be able to spot in two minutes flat.

Read the Tool's right column as a stack of three layers. KPI tiles at the top tell you the headline economics: face value, expected net GTN, dollar savings, conditional share. Sentinel tiles below them grade the program quality on the four diagnostic dimensions (Restructuring Progress, Conditional Savings Depth, Face Value Discipline, Phase Alignment). Term-Level Analysis table shows where the savings actually come from, term by term, with the NEW flag highlighting recently-restructured terms.

The two diagnostic charts answer the two questions every committee asks. The Before/After Composition chart answers 'Is the conditionality real?' (a flat slate-cyan stack means the restructure is paper-only; a dramatic shift means it is structural). The Face Value vs Expected Cost chart answers 'Where exactly do the savings come from?' (the per-term grey-cyan gaps make it visible at a glance which terms carry the program).

The 3-Year Optimization Roadmap is the committee-slide chart. It uses a fixed projection from baseline rather than the live sandbox math, so it always shows the canonical phased shape regardless of where the user has dragged the sliders. Use it as the program-shape framing chart; use the live KPIs and sentinels as the current-state evidence.

A disciplined run lands all four sentinels green at Phase 1 (Restructuring Progress A, Conditional Savings Depth MATERIAL, Face Value Discipline DISCIPLINED, Phase Alignment ALIGNED) before advancing to Phase 2. A run that lands MATERIAL Conditional Savings Depth with INFLATING Face Value Discipline is a red flag: the headline savings came from raising the commitment, not from restructuring the existing one. The Tool teaches that distinction explicitly so the program can be approved on math instead of on slide-aesthetic.

5.55 common mistakes to avoid

Diagnostic patterns that catch most misuse of this calculator in practice.

  1. Mistake 1Inflating face value while restructuring conditionality
    Symptom: Conditional Share moved from 42.9% to 60%+, looking like a strong Phase 1 result. But Total Face moved from 24.5% to 26.5% at the same time because Promo Allowance was raised from 5.0% to 7.0% to 'fund the restructure'. Face Value Discipline reads INFLATING. Phase Alignment reads INVERTED. The CFO's first question 'is the saving real?' answers itself: the headline number grew because the commitment grew, not because it was restructured.
    Fix: **Hold face value constant in Phase 1.** The Tool's Face Value Discipline sentinel encodes this rule: drift above 0.1pp flips DISCIPLINED → DRIFTING; drift above 1.0pp flips DRIFTING → INFLATING. The structural fix when a team feels they need to 'sweeten' the deal to get retailer agreement on conditionality: the agreement is happening for the wrong reasons. Restructure-before-reduce only works when the face value is the constant; if the deal requires raising the headline to win, the conditionality is too aggressive (lower the criteria, not the bar) or the relationship is the wrong substrate for the restructure (sequence other accounts first).
  2. Mistake 2Advancing to Phase 2 without finishing Phase 1 restructure
    Symptom: A team clicked Phase 2 to claim the earn-rate compression (70% → 60%) but had only toggled one structural term to conditional. Conditional Share is at 50% (still Grade B). Annual Savings at Phase 2 default lever state: roughly $14M instead of $25M. The team booked the smaller number and moved on. A year later, a different team rediscovers that 9pp of face are still unconditional and the bulk of the program value was never captured.
    Fix: **Earn-rate compression is a multiplier on the conditional pool you have built. If the pool is small, the multiplier is small.** Phase 2's gain over Phase 1 at the same restructured state is roughly (face × 0.10 × earn-rate-delta). At a 19.5pp conditional pool, Phase 2 adds ~6.3M annual; at a 9pp pool, it adds ~2.9M. Always finish the Phase 1 restructure (Conditional Share ≥55%, Grade A) before clicking Phase 2. The Phase Alignment sentinel will tell you when Phase 1 is genuinely complete.
  3. Mistake 3Reducing face in Phase 1 to 'show the CFO something quickly'
    Symptom: A new RGM lead under pressure to show savings in the first 90 days reduces Promo Allowance from 5.0% to 4.0% in the current contract year. The retailer protests; the next JBP is 12 weeks of relationship repair. By Year 2 the face cut has been reversed and the program has lost a cycle. Phase Alignment in the Tool reads TRANSITIONAL because face is reducing in Phase 1, which is premature. The sequencing rule was broken.
    Fix: **Phase 3 face cuts only work after Phases 1 and 2 have run.** The structural reason: face reductions hit retailer cash flow immediately and visibly; conditional-share lifts are invisible to the retailer in the first cycle (they earn the same money if they perform). Cutting face before establishing the conditionality means the retailer sees the cut and not the trade; they fight it. Cutting face in Phase 3, after two cycles of conditional-share growth, means the retailer has already been earning more for performing well, and a face cut on a low-ROI term reads as discipline, not as cost-cutting. The Tool's Phase 3 is gated on prior phase completion for a reason.
  4. Mistake 4Treating Volume Overrider as 'conditional' because it sounds conditional
    Symptom: A team shifted Volume Overrider (3.0%) from Uncond. to Cond. expecting a Phase 1 win. Conditional Share lifts and savings climb in the Tool. In real execution, the Volume Overrider was paid on baseline volume that the retailer was always going to deliver. The 'condition' (volume threshold) was set so low that the term paid out at 100% of face anyway. The savings are paper savings, not real ones.
    Fix: **Conditionality only counts if the criterion is actually binding.** The Tool defaults Volume Overrider to unconditional explicitly to flag this trap. A volume threshold below the customer's natural baseline is mathematically equivalent to an unconditional payment with extra paperwork. The structural fix: when shifting Volume Overrider to Cond., the threshold must sit ABOVE the current baseline (50 to 70% of growth-target volume is a typical starting position). The Tool does not model the threshold setting (that is a retailer-negotiation question), but the sentinel logic assumes the conditionality is real. If your real-world earn rate on a Cond. term sits at 95%+, the term is unconditional in disguise.
  5. Mistake 5Ignoring Promo Allowance + Consumer Promo as the largest restructure target
    Symptom: A team focused all Phase 1 effort on Channel and Customer (the two structural terms at 5.0% and 4.0%). Conditional Share lifted from 42.9% to 79.6% at Phase 1, all four sentinels green. But Promo Allowance and Consumer Promo (5.0% + 3.0% = 8.0% of face) sit in the conditional bucket already at default and earn at the phase rate. Together they represent the largest single conditional pool in the portfolio. The team treated them as 'already restructured' and ignored the bigger lever: tightening the conditions on those two terms (lower earn rate, harder thresholds) at Phase 2 to compress earn rate from 70% to 50% on that 8pp specifically.
    Fix: **The conditional pool already in the portfolio is where the highest-impact Phase 2 work happens.** Promo Allowance and Consumer Promo together are 8pp of face, paid at 70% in Phase 1 (5.6pp expected) and 60% in Phase 2 (4.8pp expected). Tightening criteria further than Phase 2 (a notional Phase 4 of harder thresholds beyond the 60% the Tool models, illustrative) could drive an effective earn rate of 50% (4.0pp expected) on this pool without touching face. That is an additional 0.8pp of GSV savings on top of the structural restructure. Use the Term-Level Analysis table to identify the largest conditional pools by face and target them first in Phase 2 thresholds.
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This calculator is the sandbox slice of Lesson 5: Trade Terms Optimization. Each of the other 6 Trade Terms lessons teaches a complementary concept that sharpens how you read the output above.

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