Talk Retailer and Make More Money
by Paul Russell

What’s the biggest mistake distributors make? Teaching their sales force about the beers they sell. Surprised?

Actually, your sales force needs to know something vastly more important than that. And, odds are, you’re not teaching it. You’ve got a good excuse—you can’t teach what you don’t know yourself.

Beer sellers need to set their brands and packages aside for a moment and put themselves in their customers’ shoes. That’s because retailers don’t care what brand of beer they sell. They’ll happily sell Bud Light, Miller Lite, Coors Light or a nightlight.

What do they care about? They care about revenues exceeding costs. That’s why they complain about prices (to keep cost of goods—or food costs—down). That’s why they ask for more service (to keep labor costs and inventory expense down). If you’re in a credit state, that’s why they pay you as late as they can (to keep cost of money down). That’s why they do a lot of things that cost you money,so they can save money. But you haven’t got much more to give on prices, service, credit (where legal), and all the rest.

It doesn’t matter. If you and your team learn to “Speak Retailer,” you can change the rules, alter the playing field, and stop raising your own operating costs to placate—and then delight—your customers.

Speak Retailer?

Have you been to France? I was in Paris a few months back with a group of friends. I found the City of Lights to be unbelievably expensive (thanks to a weak US dollar) and Parisians to be unbelievably rude (thanks to my own ignorance). My problem is that I don’t speak French. Parisians feel that, if I am in their country, I ought to learn to speak their language. Plus, their current impression of Americans is that we are the arrogant ones. I learned that if I ever intend to return to France, I need to learn to speak French.

Have you been to Wal-Mart headquarters? I was there a few years back with a group of key account reps for a large beverage company. I found the Wal-Mart folks to be unbelievably price-sensitive (thanks to a Low Prices, Always attitude) and the Wal-Mart buyers to be unbelievably rude (thanks to the ignorance of our sales team). Our problem was that we didn’t speak Wal-Mart. Wal-Mart folks feel that, if we are in their stores, we ought to learn to speak their language. Plus, their then-current impression of the vendor I was with that they were the arrogant ones.

I learned, on that disastrous day in Bentonville, that I needed to learn to “Speak Retailer.” So, I did. I spent time learning about Wal-Mart, Applebee’s, Pizza Hut, Chili’s, Kroger, Hy-Vee, Ralphs, and many more. By asking them questions and listening, really listening, to their answers, I began to “Speak Retailer.” As I I got better at that, I found that I also began to “Think Retailer.” The next brand extension the manufacturer developed brought from me a series of questions that were unfamiliar to my client.

You see, my client was an expert on consumers. They knew taste, consumer demographics, advertising, packaging and quality. What they didn’t know was how to use that brand extension to drive traffic into one of their customer’s accounts without stealing that traffic from another one of their customer’s accounts. They didn’t know how—or care about—using that brand extension to get the consumer to buy not only the new offering, but to also buy another product or two at the same time. They didn’t know about how to use the new package to drive consumers into the retailer’s stores more frequently. They didn’t know how to “Speak Retailer.” So, they didn’t “Think Retailer.” (They also didn’t know about—or care about—distribution; but that’s a column for another day.)

The result? The retailers said what they always say, “I don’t need another brand! Cut it into your own space. Give me a deep discount to introduce the product.” Gimme, gimme, gimme. And, if they don’t get a “Yes,” to the “Gimme,” what follows is “Get out.” So, we call them the arrogant ones and begin to think of them as adversaries, a necessary evil to our business or, worse, as someone to “get back at” sometime in the future.

“They’ll get theirs someday,” we think. “I hope the jerks go out of business,” we think. “That’ll serve them.” Well, if they go out of business, our sales will fall. If consumers go to the store less frequently, they’ll buy less beer.

It reminds me of the relationship I have with airlines. I hate them. They hate me. Their employees hate both of us. Traveling has never been less fun. Some distributors tell me that selling beer has never been less fun.

Would you like to get the fun back? Learn to “Speak Retailer.” Then teach your people. What follows is your phrasebook. Master it.

Retailers care about traffic. We don’t talk about traffic. We talk about our product. That’s because we know a lot about our product because we are well trained on that.

Retailers care about average transaction size. We don’t talk about transaction sizes because that metric doesn’t even register on our radar. We aren’t well trained on this critical retailer metric and what actions we can take to positively impact it.

Retailers care about items per customer. We only care if their customer buys one of our items. That’s the kind of arrogance that causes retailers to want to throw us out of their store or, worse, their headquarters.

Retailers care about customer frequency. Huh? On-premise retailers care about party size. Beg your pardon? They all care about reach. Whoa; that’s not my job and I don’t really understand it anyway.

That must change. As beer distributors, we have to quit selling beer to the retailer. We’ve got to begin selling beer through the retailer. To do that, we are going to have to become experts on the five hot buttons that directly impact retailer revenue: Reach, Frequency, Party Size (for on-premise), Items per Customer and Price per Item. Said another way, we’ve got to learn to “Speak Retailer” so we can begin to “Think Retailer” when we come up with new brands, packages, advertising, distribution schemes, service levels, merchandising tactics, and on and on and on.

If we become experts on that, we won’t have to be so expert on cutting their costs. That’s a win/win if I ever heard one.

And, it’s a heck of a lot easier to learn to “Speak Retailer” than it is to learn to speak French. I am living proof of that.

Paul Russell is a founding partner of BeerCampus.com, a Kansas City-based e-learning and consulting firm specializing in beverage industry video training solutions. He has taught and consulted for beer wholesalers since 1987. (www.beercampus.com, 314.878.6700)