17 Jan 11

3 Things You Can Do to Improve Customer Engagements in the New Year

It’s a new year, which means you’ve probably made some resolutions. And, if you’re like me, by February those will be history. But here’s one that you may just want to make and keep: “Maximise customer engagements”.

This will enable you to effectively persuade your buyers to drive change for your brand at a lower cost, using your plan - which means more profitability for you.

This sounds like an admirable resolution, right? But how do you actually make it happen?

Fortunately it’s not as difficult as it may seem. In this article I’ve outlined three areas that have worked for me that you can use to improve your customer engagement.

Before we begin, have a think about what is motiving your customer. “What’s in it for me” is the question that every buyer asks when a supplier enters their office. For the buyer to support and get behind the initiative, it has to be worth their while. If it’s not, why would they bother?

Put yourself in the buyer’s shoes. They are incentivized to drive the retailer’s strategies and commercial objectives, not yours. If the retailer can’t see how your proposition helps them they will either say “no” or they will charge higher fees, perhaps hiking margins to support their objectives.

1. Understand and reflect your buyer’s KPIs and propositions.

Every buyer has key performance indicators (KPIs) that are fairly consistent from one retailer to the next: improve margin, category growth, and stock holding. In other words, these buyers have an incentive to make more money, sell more products, and hold less inventory. Create a strategy that supports any or all of those objectives and you’ll have a very supportive customer. If it doesn’t meet at least one or, worse yet, undermines a KPI, you’re likely to get a “no”— and that translates into you giving higher margins and paying more fees.

As you can see, understanding the KPIs is critical. Your customer will be evaluating you and your plan against their KPIs. If you are unsure about what they are, ask, don’t just guess.

As you are discussing KPIs, try and get specifics. Knowing that the KPI is margin is not enough. The precise measure is so much more valuable. What is the actual margin percentage that they are seeking? For example, knowing that the Tesco wants 12 percent and currently the margin in your brand’s category is 11 percent, you have something tangible to work with. If the KPI is sales growth, what is the growth target? If your buyer says the KPI is to increase category sales, ask which category are they looking to grow and how is it defined by the retailer?

Now that you have this knowledge, be prepared to clearly articulate how your activity or plan will help your customer reach their goals. The better you support a buyer’s specific KPIs, the greater your success.

2. Utilize your consumer and shopper understanding to build a compelling proposition.

Just as your knowledge of the buyer’s KPIs demonstrates your focus on supporting the retailer’s goals, your understanding of your brand’s consumers and shoppers will show that you grasp how their behavior impacts the path to purchase in-store. The first two steps of the 5-Step Shopper Marketing Model articulate how to be tuned into the mindsets of your desired consumer, the person who actually uses your product, and the shopper who purchases it.

When presenting your plan to the buyer, clearly demonstrate the consumer demand, because that’s the trigger for the shopper’s interest in making the purchase. An effective way to accomplish this is to: (a) identify the opportunities you are creating for this retailer to capitalize on the consumer’s desire; (b) show how your plan will change shopper behavior so that it can meet that demand; and (c) articulate the implications for the retailer in this scenario. Integrate these three ingredients and you will have a winning proposition.

3. Calculate the true financial benefits of your proposition for the retailer.

As anything you do with your brand is going to have an impact on other brands, SKUs, and categories, the retailer will certainly weigh your proposition in this context. Demonstrate how and where your plan is going to steal from another brand’s share or even cannibalize your own brand portfolio. For example, if you’re launching Dove® Peanut Butter chocolate the retailer would be interested to know how the launch would increase category sales.

Keep in mind that you can’t support your buyer’s KPI to increase category sales by taking market share away from another product. If there is no incremental benefit to the category overall, you may want to rethink your plan or find an alternative benefit. For example, if you are Pepsi® and your plan steals market share away from Coke® and the retailer is making a higher margin on Pepsi®, you could be supporting another of their KPIs.

Make it a point to know: (a) how much this particular category or segment is selling today; (b) the actual value of the expected results from what you are proposing to do; (c) where your sales are going to steal from; and (d) if the proposition is going to deliver incremental sales to the retailer. If you can’t define these four points, expect a tougher negotiation.

When you can bring these three aspects into all of your interactions with your trade customers - whether on a sales call with a key account manager or an annual business review - you will significantly reduce the cost of concluding a deal and improve the chances of excellent execution.