Stop Depending So Much on Your Distributors
There’s a popular but delusional belief in the wine industry that distributors will build your brand for you. Same goes for spirits and beer suppliers. It seems a reasonable assumption on the surface. After all, that’s how it’s been done since the repeal of Prohibition.
The best supplier sales leaders in America have built outstanding careers and stellar reputations on their ability to leverage relationships they’ve worked hard to build over the years with their distributor partners. It used to be that a national sales manager with strong ties to the largest distributors in the country was worth his weight in gold. But, not anymore and here’s why: distributors are constitutionally incapable of doing for you what they used to do. Let the hate mail ensue, but just because something is hard to accept, it doesn’t make it any less true.
Don’t get me wrong. Distributors play an indispensable role in these United States and always will. But times and circumstances have changed considerably in the last 20 years. It’s just crazy, though, how few people have woken up to this new reality, let alone accepted it. If you are a national sales manager and you’re still using the same playbook that got you to where you are today, you are in for a rude awakening. But don’t just take my word for it; consider the facts.
Twenty years ago, there were 2,600 wine companies peddling their wares in the US and about 3,000 distributors. During these glory years, distributors excelled at placing your products in thousands of restaurants, hotels, liquor stores, and grocery chains. And smart suppliers actively participated in the process by investing in education of the distributor sales teams, creating exciting incentives, organizing crew drives and sales blitzes, and bringing sales people out to the wine country so they could capture the magic for themselves. And, of course, nothing was as valuable as spending time in salespeople’s cars and calling on accounts with them; teaching them to sell your brands when you weren’t around. The suppliers who did these things well prospered magnificently.
But this isn’t 1995. It’s 2016 and these tactics are no longer near enough. There are now fewer than 700 distributors and almost 9,000 wine companies competing for space on the retail shelves and restaurant wine lists. While they’ll never come right out and say it, distributors are completely overwhelmed. They have too many suppliers to satisfy. Ongoing consolidation has only exacerbated things. It has made life miserable for the small-to-medium sized suppliers and most have no clue what to do about it. A good start would be to accept the current reality and adjust your expectations accordingly. You need to start taking more responsibility for your own outcomes instead of expecting your distributors to do it all for you. They will certainly do what they can to help but the best you can expect is for them to match YOUR efforts. If you don’t show up in the market, they won’t show up.
It’s time for you to throw out the old playbook and upgrade to the new, modern approach. And here it is in a nutshell: First, invest in your own Retail Account Depletion (RAD) data and the tools to analyze it so you’ll have full visibility into the quality of your distribution. Knowledge is power and you can’t leave this up to anyone else. You’ll be amazed at what you discover when you bring this data “in house.” Second, before you hire another sales person, invest in a CRM system to give yourself power and control of your own destiny. We’re talking beyond-your-wildest-dreams power and control. Lastly, toss out the hollow, useless metric of “Accounts Sold” and replace it with “Accounts sold Against Targeted Accounts” because not all accounts are equal. Identify the 20% of the accounts that are capable of delivering 80% of the volume. If you’re not sure how or where to get this information, give us a ring. We call this Key Account Targeting (KAT) and we do it all day, every day for many suppliers. By narrowing the focus of your sales resources to only the most attractive and responsive accounts, you will achieve two things: 1) dramatically accelerate your distribution growth and depletions and 2) start relying less and less on your distributors. Careful here - I’m not saying you don’t need distributors. That day will never come. But you can adjust your expectations to better fit reality.
Now here’s the kicker: most people reading this blog post will not accept what I’ve just written. The gray-haired leaders of our industry think they already know it all. There’s nothing new under the sun in their minds. Hey, if doing things the old fashioned way is still working for you, more power to you. But, for the rest of you who aren’t happy with your current level of sales, are frustrated with the quality of your distribution, and aren’t entirely sure what to do about it, there IS hope. If you’re open to completely transforming your business and ready to join the small band of us who are already doing it, we’re ready to welcome you into the tribe.