02 Jan 10

Beat the Year End Rush to Make Your Sales Goals

When the end of the calendar year approaches, approximately 70 percent of consumer goods sales teams scramble to pull up their numbers in a frantic chase to meet their targets. In this rush to hit short-term targets, they make decisions that often won’t deliver sustainable results—which means they will once again go searching for a quick fix at the end of next quarter. How do we know this is true? Well, we’ve been there, too!

Of course, it would be so much better if we didn’t have to chase sales in Q4—and we’ll share more about how to make that happen in other articles—but now that we’re here, what should we do? Hitting your targets is non-negotiable, but the opportunity exists to choose the best course of action as we move forward; that is, how to hit the target for this year and minimize the possible negative impact on next year.

You have three clear steps to take:

1. Evaluate the situation.
2. Develop and evaluate options.
3. Mitigate where possible.

Before you launch your year-end promotions activities, it is beneficial to invest the time to evaluate your current situation. What are your short- and long-term goals? Where are you and your customer in relation to hitting your year-end goals? You are likely in one of four scenarios:

1. You’ve fallen behind your target sales goal, but your customer is really happy. This outcome signals an imbalance. Unless you can offer something really interesting to the retailer, chances are, you will have to pay a high price for help in hitting your targets. Seek other things your customer might need, but watch out for setting precedents by being generous now when your back is against the wall.
2. Your customer has under-performed, but you’ve achieved your goals. Your customer is looking to you for help, and as a professional customer manager, naturally, we should help. However, as you are also about to enter annual negotiations with this customer, there is an opportunity to leverage this position in pursuit of better trade terms. Push for a slightly better deal to set a new precedent. For example, if much of your investment is unconditional, now would be a time to push for conditionality. If you always pay a mailer fee; now is the time to try not to.
3. You and your customer are falling short of your goals. You both need a win here. Look for a solution that will boost sales without loading up the trade. Maybe your customer needs that extra 10 percent, which puts you in the same boat. Make sure you and your customer are aligned here, making deals conditional on performance.
4. You and your customer are both going to hit your year-end numbers. Congratulations. You don’t need to push hard. However, it is worth considering where your competitors stand right now. If they are behind, they might be offering unprecedented deals which could impact your last month’s numbers. Ask your customer about his total plans, and keep close. If you lose sales in December, there isn’t any time to make it up next month!

Now that we understand the situation, let’s decide what to do with this knowledge. This is about making better decisions, which you can do when you have more attractive options. When building and evaluating options, here are our killer questions to help you make the best choices for your business

• What activities are most likely to change shopper behavior? Activity that pushes shoppers to buy more will move inventory out of your customer’s stores and warehouses, and thus improves the chances of getting normal order volumes in January.
• What activities are most likely to increase consumption of your brand? Moving product out of the store is only part of the problem; we need the product to be used—consumed—if we want the shopper to be back, buying again in January. Any activity that drives incremental consumption, rather than just stocking up at home, should be prioritized
• What activities are least likely to set a precedent with your shoppers? Offering promotional deals too frequently will condition shoppers to wait for the lower price, which rewards the behavior you don’t want.
• Which activities are least likely to set a precedent for later trading relations with your customer? Retailers have long memories, and it is much harder to say “no” to something when you’ve said “yes” to it before. Prioritize those deals that do not set new precedents.
• Which retailers will give you more of the shoppers you want? Identify those customers who deliver the segment of shoppers you are seeking. Quality trumps quantity here.
• Are there other retailer relationships you can expand to fill in the year-end sales gaps? It is often tempting to pick up the phone to your biggest customer—be it retailer, wholesaler or distributor. But other customers may have different shoppers, which might have a bigger impact on your long-term— without setting such painful precedents.

Every scenario and every option has an upside and a downside. Lastly, consider if there is a way to mitigate the risk. If we must offer an unprecedented deal, let’s make it clear that it is a one-off, not the start of a trend. If we have to load up the trade, let’s start planning now for ways to move that stock through in January. It’s a tough time of year, and those targets are non-negotiable. Let’s hit them, but in the best way possible.

Are you going to hit for target this year? What are your biggest concerns for 2011? If you need help building a plan that will drive you to the actionable results you want, contact me, and avoid the year-end rush to the finish line.