I am old enough to remember life before computers. There was no real information to guide business decisions. I had to rely strictly on my good looks and personality. Okay, I exaggerated; I just had my personality to work with. But the point is that I remember a time when everything was based on relationship, not numbers.
“Back in the day”, as a foodservice manufacturer rep, if I had a great relationship with a distributor or operator buyer, many times I could get any number of SKU’s into the distribution house regardless of whether anybody was buying them! The buyer did not have the information he/she needed to have a good handle on what was going out the door. What he did know was that I was his friend. I played golf with him, knew his wife and kids, and remembered his birthday. Trade Promotion Management or Trade Spend Dollars in those days were much more geared toward relationship oriented events. Hunting, fishing and golf events with buyers and brokers were a big part of the marketing budget. In a lot of cases, gifts to buyers were more common than sheltered or earned income programs. Even though there were abuses, I sometimes miss the days where things seemed more personal. I still think, for instance, that a good sales person focuses on the person they are selling to, and not just on making the sale. It is still a people business! I still think it is important to have relationship with the people you do business with. It is good to know the person that is sitting across the desk from you is a person who can be trusted. Knowing that a person’s word is their bond is still a very valuable commodity. Integrity means your words & your actions line up with each other. If a person of integrity begins a job, they finish it. If a person of integrity makes a promise, they keep it. If a person of integrity makes a mistake, they admit it. A promise is a promise whether it is to prospective buyer or seller, to your boss or to your husband or wife or children. Integrity means you do everything within your power to keep commitments. Those things used to have more weight and importance than they seem to have these days. I hope the content of our character will always be more important to us than spreadsheets and graphs.
So now that I have taken a trip down memory lane and extolled the virtues of the good old days, allow me to shift gears. I am not suggesting that you should run your business on blind trust. Relationship and the personal element should never just be thrown out the window, but the story the numbers tell is an absolutely necessary consideration in making intelligent business decisions. The relationship part comes in when for instance a SKU is dipping below some hurdle rate that has been set by a distribution house. Rather than a buyer just dropping the product, when they know it is represented by a rep who has busted their butt for them, the broker orfoodservice manufacturer rep is given a chance to turn things around. I believe numbers alone should not produce dogmatic and arbitrary decisions. Forget the people who brought you to the dance and it will eventually come back to bite you. Perhaps this all sounds somewhat schizophrenic, but I believe that keeping sight of people and having the information you need are both critical elements to a successful business.
The information part has been slow in coming. As information technologies emerged, distributor and operator buyers were some of the first ones to benefit from them. They started having information at their fingertips, that was a pipe dream twenty years ago. No more does a SKU sit month after month without any sales and nobody even notices. The numbers tell a story. The problem in recent years is the information was one sided. The distributor was the only one that had any! The distributor has total visibility into sales by SKU by location. The foodservice manufacturer in many cases only knows what is sold into the distributor. It makes any negotiation about bracket pricing, earned income, sheltered income, commitment to distributor trade shows, promotional pricing, spiffs for the distributor sales reps, etc., pretty one sided. Until recently, the foodservice manufacturer or broker has had nothing to use in negotiating the increasing price tag of these support programs. The game, however, is changing!
With trade promotion management applications such as what we offer at Answers Systems, a foodservice manufacturer now can have visibility into their business like never before. For the first time they can lay a report on a buyer’s desk that shows an analysis of contracted business compared to street business. If a lion’s share of the business going through a distributor is driven by the contracts that a foodservice manufacturer has in place with buying groups, GPO’s, contract management companies, or operator chains or groups, then that certainly needs to be part of the conversation. Information is power. It is the critical component in any good negotiation and can be used to leverage much better deals.
There are several critical components needed to enable a foodservice manufacturer to harvest the data that is needed to produce these kinds of reports. You need to centralize your deal or contract information in an electronic file cabinet. You also need to acquire, map and scrub the billback information. You need to know who bought what. Even after all of this, unless you have an integrated system that gets all these critical parts talking to each other, then the information remains an untapped resource. Interpreting the data with an effective reporting system is the key that unlocks the door.
Foodservice manufacturers can now see which operators and operator groups, buying groups and contact management companies are in compliance with their contracts. They can know whether to renew a deal or not based on the actual past performance. They can also have a much better picture of market penetration. They can target promotional dollars on what actually works.
While strong relationships are still the backbone of successful business; numbers, information, analytics and reporting have changed the game and made us all a lot better at what we do. As Bob Dylan once declared “The Times They Are a Changin!”