Let’s contrast the retail execution approaches of two different alcoholic beverage product sales teams to illustrate the critical importance of strong retail execution. Both beverage sellers are attempting to increase sales by optimizing their on/off-premise retail execution. Here’s what they did and how they fared.
Distributor A engaged the following three broad execution strategies to drive retail sales.
- First, they focused efforts on volume, setting goals and incentives for their reps.
- Next, they attempted to increase distribution using a “shotgun” approach instead of targeting execution efforts by strategic account segment and product.
- Lastly, they relied on the use of spreadsheets to log and track progress toward the goals they’d established.
Predictably, these three activities delivered average results at best. First, volume pushed into accounts by reps eager to earn commissions and incentives without proper brand visibility and activation with consumers in the account, delivered excess product that had no pull-through mechanism in place to deplete the inventory. This resulted in bitterness among retailers and restaurateurs who wound up sitting on excess product in the backroom. Feeling burned and left with a bad taste in their mouth, these retailers complained that the product wasn’t selling through, and were not motivated to reorder. Though the reps earned incentive dollars for meeting their goal, Distributor A ultimately wasted money paying retail incentives that resulted in killing future sales.
Next, the shotgun approach to targeting accounts was doomed to fail. Studies show the vast majority of new distribution into non-strategic accounts fails to sell through. Stuck with products unattractive to and never meant for their customers, retailers were forced to pour off the liquid or discount their prices down to cost, just to get rid of the product. Poor account targeting to focus and limit the distribution net yielded wasted incentive dollars, sales rep time, and damaged retailer relationships. See recent article “Cost Analysis of Your Distribution Program”, which estimates 50% of new accounts sold and incentive dollars are wasted on these shotgun style programs.
Lastly, over simplifying the process of goal-setting and tracking using basic spreadsheets resulted in poorly-defined targets, and limited visibility into true, real-time performance. Not to mention the hours of wasted time fiddling with Excel. Neither reps nor managers could identify how close they were to their goals. Nor could they even determine if goals were being achieved in the correct accounts. Wasting money on salary for sales admin work to put the flawed data into spreadsheets added to the pain.
Distributor B leveraged the best practices within the GreatVines retail execution process including the following:
- First they set goals for leading indicators of sales like Displays and Menu Placements in clearly identified strategic accounts.
- Next, they targeted specific, high-value accounts for distribution by leveraging historical sales data, account segmentation and attributes keeping the efforts in line with the brand strategy.
- And, they planned, executed and measured their sales efforts using a beverage alcohol sales execution solution across their entire company.
As a result, Distributor B:
- Achieved highly-rewarding visibility and activation of brands in the right accounts, which resulted in increased consumer pull which in turn grew sales volumes in a sustainable manner.
- Fielded more productive sales teams producing fewer new points of distribution, but ensuring all new distribution points were in accounts where their brands were certain to sell through leading to truly incremental and sustainable growth.
- Created a well-oiled retail selling machine efficiently and precisely executing against strategic initiatives with better visibility to all stakeholders and better performance.
For Distributor B, this strategy was a “Win. Win. Win.” It delivered happy reps, happy retailers and happy suppliers.