Sometimes, starting a conversation in business with a Peter Drucker quote feels like cheating. Yes, I know it’s about as cliché around the office as a motivational picture of a sculling crew, but the man really does have a one liner for everything. The one I’m talking about today is:
Drucker believed it was important to draw a distinction between efficiency and effectiveness. After all, your engineering team can probably come up with an extremely efficient way to fire your next product line into low earth orbit, but that’s probably not what you wanted when you asked for a “great launch.”
Retailing brands know all about efficiency. During the last decade of e-commerce, they’ve striven to battle off-price competitors by rooting out sources of friction between the factory and the customers’ hands. Unproductive departments have been shuttered, distribution networks have been sharpened, and customer wait times at stores have been radically shortened.
But have all these efforts at efficiency been effective? It seems not. Across the United States, retail growth rates have been on a downward trend since the mid ‘90s.
So maybe retail has been creating more efficiency, but hasn’t been doing it in an effective way.
I’ve spoken to hundreds of retailers, retail brands and retail customers, and the common theme I hear is this: retail lives and dies on customer experience.
I’m far from the only one to think so. In fact, according to Salesforce, 40 percent of retail and consumer goods marketers are focused on customer experience initiatives in 2018. But where are the results?
The problem is cross-company collaboration, or rather the lack thereof. Any brand can put together a great vision statement about the importance of sustainability in its product line, or share a memo about the benefits of the Gidget 200 over the cheaper 100. But, most of the time, it’s far easier to get that message to your C-Suite than to your sales floor.
And, it’s not just the sales floor – many brands I’ve spoken to have a devil of a time communicating the essence of their brand to their own distributors. How can Acme Anvils properly communicate to a retail sales associate if they can barely get a clear message to the regional distributor schlepping all those anvils?
That’s why I focus my time on finding ways global brands, distributors and retailers can collaborate up and down their product supply chains to properly express a brand and product experience all the way to the point of sale. In other words, it’s more effective to seek efficiency in communication than in distribution.
But I don’t expect you to take it for granted that there are huge benefits to finding ways to make sure brands, distributors and retailers aren’t dropping the ball on communication. There are four major ways everyone loses when the left hand isn’t talking to the right.
1 – Merchandising
Retailers can tell those stories in the way they display and showcase products at their stores to sell the ‘experience’ of the product the brand set out to convey when they designed the product, and brands need access to knowledge from those retailers to understand how their merchandising is being received. But one broken link in the chain means you’ll be stuck throwing cardboard promotional pieces at a problem you don’t understand.
My Tip: Get your vendors to share the “why” behind their merchandising ideas or tips with the teams in store that have to deploy them. It will enhance buy-in and you’ll see those frontline teams giving feedback to the vendors on how shoppers are responding to the story.
2 – Product and Brand Education
Sales associates who receive more product training sell more products. It’s simple fact. One Harvard Business Review study found that sales staff with access to product training sell an average of 46 percent more per hour than peers without that access.
But pipelines of training from brands to retailers are normally fractured or nonexistent. Global brands often need to play an obtuse game of telephone to try to transfer training materials through distributors to retail headquarters all the way to sales floors. Even smaller brands that are able to send out sales coaches to meet with sales teams are normally only able to reach a fraction of the people who are out there selling their products.
It doesn’t matter how low you can get your shipping costs, how efficient your marketing spend is, if the sales associates who sell your product lack the critical info they need to sell it when the critical moment comes.
My Tip: Leverage technology to work with your vendors to make sure all, yes all, your customer-facing teams are getting the product education they need to close the sale with the customer every time. Hint: it’s not a spec sheet, it’s all about the experience the product will give the shopper. It’s impossible to do this with just humans, but thankfully we all carry around an amazing communication device in our pockets too!
3 – Range and Product Mix
It’s often easy to explain to someone why it’s important for a brand to be able to speak easily with its retail partners, but many overlook the equal importance of that retailer being able to pass data back to the brand, both quantitative and qualitative.
That’s where the data is, after all – the sales numbers and the foot traffic, product preferences and key customer objections that might tell a brand why one product is selling and why another is not. If brands ever want to bring their product mixing strategies into the 21st century, they need to radically boost the efficiency with which data can be transferred from the sales floor at their dealers to their headquarters.
My Tip: Don’t hold data and front line feedback hostage from your vendors, and vendors shouldn’t do the same. Leveraging each other’s technology stack, or using tools that allow collaboration on data and qualitative feedback, will help you succeed, together.
4 – Promotion and Launches
I live in a rainy city, and there’s one thing that I’ve noticed mom and pop shops do that major retailers never can: promote umbrellas when it’s raining.
Poor execution on promotions and launches is a black mark on retail-brand relations that’s almost as old as time, and it has driven many brands to invest billions of dollars in building up their own subsidiary store locations. Imagine how much of a hassle could be avoided if it was just easier for a brand to better communicate and provide resources for an upcoming launch or special day to its retailers?
My Tip: Work together across these launches and promotions and don’t forget the store level team when you’re running a promotion with your vendors, or launching a new product. It’s the perfect time to capture momentum, increase close rates and quickly adapt if you need to by using front line feedback or data.
My intent is not to claim that efficient distribution networks are not important, or the current way you work with your vendors is totally shot, but hopefully by 2019 we’ve realized that retail cannot price its way back into the black. The efficiency that we should be focusing on is in communication and collaboration on the product experience. When systems that let brands, distributors and retailers speak like members of the same team, we’ll truly have the tools to give shoppers the experiences that push them to choose to spend a day at the shops.
About the writer: Simon Turner is the co-founder and president of Myagi, the leading employee training software that taps into the network of brands to educate retail’s workforce and improve product sales. Follow Simon on both Twitter and LinkedIn.
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