New Rules of Thumb for Building Quality Distribution

Our already-crowded marketplace for adult beverages gets more congested every day. The American Craft Spirits Association recently reported there are now more than 1,300 craft spirits producers in the US. According to the Brewers Association, 4,144 craft brewers boil and toil daily across the fruited plain. But these figures pale in comparison to the staggering array of entrants in the wine category. In December of 2015, Nielsen reported 4,200 new wines were added to the 33,000+ wines already on shelves, wine lists, and websites.shutterstock_82995619

Contrast this with the shrinking number of wine and spirits wholesalers miraculously juggling this surfeit of intoxicants. The Wine & Spirits Wholesalers of America counts 354 members among its ranks. If you factor in all the tiny operations that are not members of WSWA, you might be able to reach 700 wholesalers in total. Twenty years ago, there were almost 3,000.

Even if you don’t possess Pythagorian math skills, it’s easy to appreciate the dilemma adult beverage producers face in trying to build quality distribution for their brands. If you are still operating under the illusion that all you have to do is find a great wholesaler and your brand-building problems are over, you are in for a very rude awakening.

It’s a new day, a new era, and it calls for a new set of rules for the game. While the modern strategies presented in this blog post don’t necessarily make the task any easier, they will at least provide some much needed hope for those willing to adapt to the new reality.

If it’s important to you, you’ll have to do it yourself

The days of selecting a distributor and then having them build distribution for you are long gone. When it comes to building quality points of distribution for your most important SKU’s, you’ll need to do most of the pick-and-shovel work yourself. Having the “right wines in the right places” nowadays calls for a much more surgical approach.

It starts with aiming your limited sales resources (people, time and money) more precisely. It’s time to embrace the 80/20 rule. Narrow the focus of your sales activity to only the most attractive accounts. For some, “attractiveness” has to do with potential volume per placement (velocity). For others, it means gaining distribution of your high-image wines in the high-image accounts. Either way, you need to separate the functions of your sales team into three distinct groups: 1) those who manage distributors, 2) those who work the market selling directly to accounts and 3) those who call on the headquarters of major on and off premise chains.

Help your distributor help you

Today’s distributors are covered up with things to do. They do the best they can to serve all of the masters they have but, at the end of the day, they are quite overwhelmed. They like to see suppliers take more ownership for their outcomes in the market. That includes coming to the table with a solid plan, investing in sales people to work the street, and setting realistic expectations. Here’s a helpful mantra you should immediately adopt (if you haven’t already): if you don’t show up in the market, your distributor won’t show up.

The best you can expect from your distributor is to match your efforts. Let me pause here to make an important point. Distributors are more capable, have more (and more talented) people, possess more business intelligence, and leverage more technology than ever before. They exist to assist, enable, and empower their suppliers and they are very, very good at it. But, suppliers have to do their part. Help them help you.

The more you act like a salesperson, the less you will sell

Walking into an account “cold,” having no relationship with the buyer, and toting a sample bag full of stuff you need to sell is so yesterday’s news it hurts. Distributors aren’t the only ones overwhelmed these days. So are the buyers! But, here’s the kicker: not only are they excessively busy, they’re incredibly well informed. It shows a tremendous lack of respect for a buyer’s time to sit there and spout off features and benefits of your product which, quite honestly, aren’t a whole lot different than the wares of the person who’ll be coming in behind you.

There are three things that every buyer wants: increase revenue, lower costs, and improve guest satisfaction. Train your sales team how to bring real business value to the relationship. Train your sales people how to be relevant. Product knowledge is important but not nearly as critical as business acumen in today’s hyper-competitive environment.

If there’s one universal truth in sales it’s that relationships matter. No one cares how much you know until they know how much you care. Building relationships takes time, however. It may take many “touches” before someone is ready to buy. Jeff Thull, author of Mastering the Complex Sale, says presentations have 3 fundamental flaws: too much info presented too early in the sales cycle and, typically, to the wrong person. So stop presenting and start making meaningful contributions to your customers’ business.

Leverage Technology
In a competitive marketplace, technology can be a real game changer – especially for the early adopters. A great sales leader once told me that every salesperson has only two assets: his time and the good will of his customers. Utilizing CRM software along with real-time data (business intelligence) allows producers to fully maximize the ROI of customers’ time and good will. If you combine these tools with razor-sharp, key account targeting, you’ve created a winning game plan that will not only lift you head and shoulders above your competition, but will position you to rely less and less on your distributors.
Modern CRM systems save oodles of time by drastically reducing the administrative load that comes with running a sales team. Consider how much time is spent requesting information, sharing information and searching for information inside your company. When you add in all of the external info that modern sales teams are expected to manage (accounts, contacts, distributors, sales data, category data, chain authorizations, etc.), it doesn’t leave much time for real interaction with customers. Cloud-based CRM systems turn days into hours and hours to minutes. No exaggeration. Just ask someone who’s using one well now. It’s amazing to me how blind many companies are to the administrative load they place on their sales teams, wondering all the while why nothing gets sold.
In case you didn’t already know this, CRM stands for “Customer Relationship Management.” If the good will of your customers holds any value you to (and it most certainly should), why in the world would you not invest in the care and feeding of it? Is CRM expensive? Yes. Is it complicated to learn? Yes. Is it worth it? Let me just say not only is it worth it, it’s absolutely essential if you want to have a fighting chance of survival. Welcome to the new reality.