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« Part 4 - The Evolution of Beer Wholesaling | Main | Part 6 - The Evolution of Beer Wholesaling »

Part 5 - The Evolution of Beer Wholesaling

The Evolution of the Selling Function

The retail selling environment has changed dramatically over the past years.  This has been driven primarily by the incredible growth in national and regional chains.  Long gone are the days where a significant decision-maker was available in almost every retail account on the street.  Today in many accounts the person “in charge” has very limited decision-making powers… if any at all.  And those in charge are extremely busy and are unlikely to give any single sales reps much time on a regular basis.

The suppliers have taken over a great deal of the higher-level selling activities – in many cases to the detriment of the local markets.  This isn’t a rap on the supplier’s chain folks, just an observation that in almost all cases, the wholesaler in the local market can, and will do a better job.  But unfortunately this also isn’t what the chain market structure demands.  Those chain decision-makers simply don’t want to, and won’t see market-specific wholesalers when the chain covers a lot of additional territory.  From the chain’s perspective this is completely understandable; it isn’t their job to ensure all the wholesalers in a state are on the same page.  The chains have tremendous market power and if you want to reach the eyes and ears of their customers, you will play by their rules.  Simple as that. 

Yeah, I know a lot of people give lip service to the idea of taking marketing to the account level but very few actually practice it – it is easier to talk about than actually do (I just shake my head when chain groceries talk about local marketing, yet do state-wide sets!), and it requires people to relinquish power, not a high point on the list of human nature’s desires.

So how does the beer wholesaler address these market realities?  First let us examine the reality of the average beer sales rep (or as I prefer to call them, account managers).  If you analyze a typical beer sales call, you will find that very, very little time is actually consumed in true selling activities.  As a percent of the sales call, or sales day what is it?  5%?  10%?  Not much more.  This isn’t a poor reflection of the account manager; it is simply the reality of the street.  In many retail accounts, the account manager doesn’t even see a decision-maker on a regular basis.  They do their job, create the order, and move on down the street.  Again, this isn’t a reflection of poor performance, just reality. 

Look at it from the retailer’s perspective.  They couldn’t care less about having a great sales rep call on them, they want someone who can write good orders (no out-of-stocks or excess inventory), who understand the retailer’s customers so they know what product to sell through them, who are great at merchandising (helping the retailer with pull-thru), who do a great job with pull-up, fill-up, and face-up, and who properly communicate with the driver and perhaps merchandiser so everything in the account works like clockwork.  They want a great account manager to call on them. In our industry, a person with a tremendous customer service attitude (but perhaps weak “selling skills”) will sell a lot more beer than a person who is a great sales person but weak in customer service.   It is the nature of the world in which we live.

Ultimately the retailer wants their account manager to focus on one thing – maximizing the net gross profit dollars generated by the space they are given in the retail account.  This maximizes the gross profit dollars for the store AND the wholesaler.  It is ultimately a win-win, as it must be.

And in all likelihood, this industry will seldom attract individuals who are at the very top in selling.  These types of individuals can sell real estate or high tech or any of a number of other items and make far more money than they will ever make at any level in the beer industry.  Again, this is neither good nor bad; it simply is the way it is.

In addition, the situation at retail for the account manager is becoming more and more complicated as the “beer” wholesaler expands into more categories.  Just the beer category alone is getting pretty complicated.  Add in malternatives, energy drinks, carbonated beverages, waters, juices, perhaps even wine and spirits – beer wholesalers are playing in all – and you have a much different landscape than existed even just a few years back.  In any single retail account can one person service all of them? – I think yes. Can one person sell all of them? – I think no.  You can send in different account managers for each category type but this is rather expensive, and if you want to retain delivery efficiencies (and you do), they all have to call on the retailer on the same day (or call with different delivery cycles – 24 versus 48 hour).  Retailers also have a demanding day and are highly unlikely to give time to each of your category account managers, especially when they know the product is going to be coming from the same warehouse on the same truck the following day.

So how should a beer distributor design their sales organizations to maximize their sales results while addressing the realities of the street?  I believe in many markets the correct evolution is to one of full-line account managers (perhaps specialized by type of retailer), supplemented by category-specific higher level sales reps.  The account managers lead the opportunistic selling effort, backed up by opportunistic merchandising and delivery.  Ideally I want an opportunistic selling attitude throughout my company, in every person who works for me, regardless of position.  The category-specific higher level sales rep supplements the store-level account manager and provides a scheduled, focused true selling effort at retail – although at a much lower contact frequency than the account manager.

For the full-line account manager – the emphasis is on properly supporting their entire product line at the account level.  They are ultimately responsible for every aspect of the retail account. 

·                    Order replenishment – MUST be a master of their route book (the most important tool an account manager possesses).  Retailers don’t give a damn about how well their sales reps can sell them, they want good orders taken and delivered.

·                    Pull-up, fill-up, face-up (taking care of all product needs in all areas of the retail section of the store)

·                    Merchandising – all aspects

·                    Opportunistic selling – jumping on whatever opportunities present themselves – additional displays, new placements, etc.

·                    Obviously in some accounts, some of these tasks might be shared with a merchandiser

·                    Skill set

o       An understanding of retail

o       General knowledge of all relevant product categories

o       Intelligence and training in the use of a route book

o       Strong customer service focus – this factor alone will probably determine the success or failure of the individual in this position

o       Excellent people skills

o       Desire and ability to perform demanding physical labor

o       Strong communication skills – in addition to retail contact, must be able to communicate clearly to delivery and merchandisers

o       Good time management skills (organized, efficient) – this is a fast paced position which is demanding each and every day

These account managers can be even further specialize by retailer type.  If it can be afforded, I always prefer to see on- and off-premise account mangers.  I think the nature of the on- and off-premise market is such that it makes sense to differentiate the two.  Perhaps chain groceries require their own sales effort – just remember this will probably increase merchandising needs since a small group of grocery chain account managers will not be able to be at all grocery chains first thing in the morning… thus pull-up needs in some accounts will have to be handled by someone else.  If we don’t specialize, the much larger account manager sales force starts their days at the chains and can cover these pull-up demands without additional manpower.  In some c-store heavy markets (where the selling opportunities are often nonexistent), specialization of c-store “order takers” might make sense.  These account managers can be paid slightly less, freeing up payroll for other positions.  In addition, this might be the first step in the progression of your sales reps.

Of course all specialization creates inefficiencies in routing and higher costs.  But the other side of the coin is that all specialization should also generate better sales results.  You have to analyze whether the additional costs are off-set by the better performance.  To do this, you must build both organizations on paper and put some costs to each.

Regardless of the specialization we provide at the account manager level, we supplement the account manager with a “super sales rep” who can even be further specialized as a “Senior Category (beer, craft and import, wine and spirits, NA, etc.) Sales Rep.  This individual calls on retail at a much lower frequency of contact than the account manager and has only one goal – selling.  No pull-up, no facing, no order replenishment… only making scheduled, high-level sales calls on a regular basis.  Although this position will not be able to make nearly as many daily calls as the account manager, an organization can get by with relatively few because of the lower frequency of account contact.  Therefore, they can be responsible for a relatively large number of retailers.  Please note that this lower frequency of contact is simply a reflection of the realities at retail – I’d gladly have them sell the retailer at a much higher frequency but few, if any retailers will give us that time commitment.  Therefore we take what we can get and maximize the selling time the retailer allows us.

The skill set of the category manager is pretty straightforward:

·                    Superior selling skills

·                    Detailed understanding of retail

·                    Extensive category knowledge

We specialize these high-level reps by category for two reasons.  The first being the complexity of the typical “beer” wholesaler’s product line.  It is the rare sales person who can truly sell and service everything you might have at retail.  Domestics, imports, crafts, malternatives, energy drinks, waters, juices, carbonated beverages, wine, spirits, etc.  Instead we allow the account manager to service the full product line (while still being an opportunistic sales animal), while offering supplemented sales effort with a category specialization.  Even if the category specialists aren’t required to do anything but sell, it is still a tall sales order to ask a sales rep to become an expert in every category and to be able to sell everything you might carry.

Second, the reality of retail - and human nature - is that you are not going to get everything you ask for.  Just not going to happen.  If you ask for 5 things, you might get one or two or even three… but you generally won’t get everything.  Your category specialists will also face this reality but instead of only sending in one rep – and getting 2 to 3 things, you might send in multiple reps each focusing on their category… with each one getting their 2-3 things… leaving the total company with a net gain of perhaps 10 sales accomplishments rather than 2 in any retail account.  This is of course more expensive, so each wholesaler has to examine their specific marketplace, their share, goals, etc. prior to implementing this type of selling effort.

In addition, retailers often become “immune” to the account manager – they see him/her probably at least once per week, perhaps more.  The selling effectiveness of the account manager is severely hampered by this familiarity.  It can be a tough “sales call” when it starts off with the retailer yelling, “what the hell do you want!?”  Often with much more colorful language ;-)

Many wholesalers in the past have had their sales management team fill the senior selling role but the above is the next step in the formalization of this process.  It ensures it is done on a regular basis and sales management can still continue to make their trade/sales calls.  It also can change the dynamic when management calls on retail.  Instead of being seen as “sales” visits (and tell me, who likes to be “sold”?), management’s visits can be reframed as customer service calls… primarily focused on thanking the retailer for their business and asking how we can do a better job in helping the retailer become even more successful.  Leave it to the category specialists for product education and “arm twisting”, management is now seen in a different light and this reframing of their role can have a profound impact with the retailer.  Retailers will be much more open to these management calls, and they will let you know if you are having sales/delivery/merchandising problems long before they become major problems.  And of course when management is not “selling”, they can become incredibly effective in selling!  It is amazing how changing the role of management on the street can fundamentally change this relationship.

Evolving your sales effort in this manner also allows you to better match your employee’s skill set, both for today and for career advancement.  Not everyone is a super sales rep… not everyone has a detailed customer service focus… not everyone has the desire and ability to do the physical labor required at retail by the account manager… not everyone has the artistic eye for incredible merchandising… play to your’s and your people’s strengths.

You can still of course have your sales blitzes, hand selling, etc. but they are generally less structured than what I describe above.  Above is the way your business is operated each and every day.  Account managers handling all aspects of the retail account and fully supporting everything we sell into that account… category specialists coordinating with the account manager and funneling new products and placements to the account manager who then takes the ball and runs with it… and sales management reframing their role at retail and in the process becoming even more powerful sales agents… all operating as a seamless, integrated system.  Tie this in with a great delivery and merchandising effort and you have built a sales organization for today’s and tomorrow’s beer wholesaler reality.

Next and final piece – thinking completely outside the box – Creating a Consumer Brand via Distribution

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