One Blog |June 11, 2012 | POS Tracking Software
What Business Are You In? - Using POS Marketing to Make a Sale
As a beverage alcohol distributor, you probably see yourself involved in two broad functions - logistics and sales. I wonder if you were asked to order these two functions by their importance if you would say, “sales and logistics” or “logistics and sales?”
A Customer’s Perspective
I recently met with the top executive of one of our customers - a sub-$100M distributor who serves a mid-west urban area with a population of over 1 million.
We were talking about one of OnTrak’s products – PermaTrak, which would allow her to put controls on her multi-million dollar inventory of signs, mirrors, wine racks, and tap pulls, but we veered into a more general conversation.
She began by saying, “The distributor’s role went largely unchanged for over 70 years – then about three years ago, all hell broke loose. Margin pressure from above and below, increased competition and distributor consolidation all changed our business from demand fulfillment and distribution operations to demand generation and operations management.”
She went on to say, “To remain competitive, I need warehouse management software, supply chain managment software, and a POS management system.”
In addition she must shift her sales force focus from order takers to proactive sales people. This she says has been the most difficult aspect of the changes these last three years.
The Distribution Cycle
When you look at the following image, you realize the “Making a sale” is the most important step in the Distribution Cycle. Sales reps lose sight of this fact.
For years, the distributor sales rep's primary functions were to record retailer’s inventory levels (to determine sales), write down the retailer’s order, then submit the order to the order entry department. As needed they would fill emergency orders when there was a sales spike. Our customer called this “the good old days.”
Now, distributors deal with many suppliers, numerous brands, and additional brand categories. Our customer described a time when there were “only a couple hundred SKU’s”, and most of them were size and package item-number differentiators.
Today, many alcohol beverage distributors carry an increasing number of craft and import beers, wines and spirits. These distributors have broadened their product lines to include mixers, waters and energy drinks to wring every last ounce of revenue from their customers while optimizing delivery costs.
As our customer said, “My truck is going to be delivering to Applebee’s anyway, so I might as well 'sell' them the beer, wine, liquor, mixers, waters and energy drinks, rather than watch my truck pull away and then watch the Red Bull van pull in and deliver products that I can deliver. I can sell more beverages and cut my delivery costs in the process.”
Demand Fulfillment vs. Demand Generation
Getting back our customer’s recurring theme, I asked her, “What is the difficulty in getting your sales people to transition from demand fulfillment (order taking) to demand generation?”
The discussion that followed could be the subject of a white paper or case study, but it can be summarized as follows: Beverage sales reps with any tenure have never had to actually sell. Instead, they recorded orders and provided in-store merchandising services. Some provided detailed product information or offered product samples to their customers, but none of them, strictly speaking, were truly 'sales' people.
Within a few years of the turn of the century, over 13,000 beers and 100,000 wines became widely available to the buying public. Much of the sales growth since 2006 has been in craft and import beers. Wine, as a category, has become a dominant part of most grocery retailer’s in-store real estate. Additionally, there are thousands of restaurants, bars and wine specialty stores that spring up every year, providing ever more retail outlets for alcohol beverage sales.
Because of these changes in the market, true 'sales' reps are exactly what beverage distributors require.
A True Sales Representative
A according to our customer, “Sales reps need to understand their primary function is to sell, not simply take orders or become sommeliers.”
“We believe sales reps must utilize trade promotions, and in-store marketing as an offensive weapon. Placing signs, providing menus and samples, or putting out wine racks, just because the competition does, isn’t sufficient. They need to manage their POS materials to increase sales and maintain an advantage over their competition.”
I couldn’t have said it any better myself.
And how do our customers use POS Marketing to accomplish their sales goals?
By efficiently and effectively tracking and managing their POS marketing campaigns with solutions like those available from OnTrak Software.
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