Posted by John Nicholas
Over the past eight years I have interviewed scores of foodservice manufacturers. At some point in the conversation, I ask them whether their sales and marketing efforts and trade spend dollars are primarily geared toward operators or distributors? Every manufacturer recognizes the value of their distributor partners, and the need to support the distributor’s efforts in getting their products to market. Having said that, most manufacturers feel more than a little queasy about casting their fate on a distributor’s effectiveness in driving sales. Therefore manufacturers will almost universally contend that their sales and marketing strategy centers on operators not distributors. Manufacturers tell me almost without exception that they have an “Operator Based Sales and Marketing Strategy." They want to believe that the lion’s share of their sales efforts and trade spend dollars are targeted toward operators. There is a huge disconnect here! Deep down, most manufacturers recognize that they do not have the information they need to effectively reach their operator customers. A successful sales strategy must be founded on good information. Everyone in the manufacturer’s organization, whether it be sales, marketing, or finance keeps telling each other they have an Operator Based Sales and Marketing strategy when it is obvious on close inspection they do not. It is like the old story by Han Christian Anderson, “The Emperor Has No Clothes”, everyone is afraid to admit to the truth. What is the inconvenient truth? The truth is that most manufacturers don’t even know who their operators are! While they are aware of a few operators and groups, they don’t have a full handle on what individual units make up these groups. Manufacturers, more often than not, do not know whether their customers are in compliance with their contracts. Because they lack knowledge (data) they don’t know how effective they are in various business segments i.e. Healthcare, Colleges and Universities, Business and Industry, Restaurants, etc. This leaves them unaware of what price points are working and where they are working, they don’t have a good feel for SKU penetration or geographic preferences. Their Operator Based Sales Strategy is more accurately stated as less of a strategy, and more of a hope and dream!
Then, with the added tension between manufacturers, distributors and brokers arises that age old question “Whose Customer Is It?,” manufacturers are left wondering who is buying what? And so, manufacturers blindly throw money and people at their operator business, not really having the information they need to know whether it is well spent or not. Where you spend most of your money does not necessarily determine your sales strategy! You can have on paper pricing incentives for operators, and other so called targeted marketing programs, but if you don’t have the ability to see the sales into the individual units, track effectiveness of promotion dollars, and make specific course corrections, then you are just throwing money on the proverbial wall and hoping something sticks.
Now I know a lot of this is sales and marketing 101, and that I have stated some pretty obvious stuff that most people in the foodservice business understand very well. Still, my point is that without having a well-developed trade spend process and the systems to support it, an Operator Based Sales and Marketing strategy is impossible.
So what must manufacturers do to truly have an Operator Based Sales strategy AND get the data needed from distributors? The truth is that manufacturers get more information about their operators than they think they do. Much of this information is coming in on the claims against the price deviations and various programs that you have in the marketplace. The challenge is filtering this data out of the claim and making it usable. Understand this, you can get what information is owed you. You are entitled to anything that you have a deviation against. Even so, in case you haven’t noticed, the data doesn’t just fall into your lap. There are several critical components here if you are to harvest the data that is available to you. First of all, when you set your deals up with an operator make sure that as part of your agreement, you require a breakdown of sales to the individual units on the claim. Once you have the agreements in place, the next thing you have to do is ask for the data that is owed you. Next you need to collect the billback information from distributors, from operator direct programs, from buying groups, from contract management companies etc. Unless you are able to map the data, and scrub it, and convert it all into an electronic format it is going to be a big pile of useless data. You must understand, even if you map it, scrub it, convert it to electronic data, unless you have a way to effectively view the data and use the data then it remains an untapped resource. Interpreting the data with an effective reporting system can literally be the difference between piloting the ship to home port or ending up on the rocks. You cannot have any kind of successful sales and marketing strategy to operators without some transparency into unit level sales.
Another key component of managing sales and marketing to your operators is effectively managing your contracts/deals to them. You also must be able to put deals and contracts into a centralized electronic file cabinet and bounce your claiming data against it, so you can monitor how effectively you are spending your money and identify compliance issues, etc.
So to recap, to have an effective Operator Based Strategy you need to have a trade management process that effectively manages contracts, acquires maps and scrubs sales and billback data, and harvests valuable information from claims. You need to have an integrated system that has all these parts talking to each other and as a result generates reporting and analytics that provide the foundation of your strategy. Once you can see where you are selling what, and can see what is working where, then you can marry some of this information to a CRM tool with actionable items for your sales force. Your marketing efforts can truly be targerted and you can start spending money only on what works. You can have a successful Operator Based Sales Strategy and just maybe the emperor can get his clothes back on!
Technorati tags: foodservice manufacturers, trade spend
Technorati tags: operator based sales strategy, buying groups, billback