Effective CPG sales strategy planning requires a knowledge of, and respect for, the harsh realities of the retail marketplace. It’s a multifaceted landscape into which your product must fit, survive, and thrive. Due to the physical nature of the distribution system, there is a ridged process already in place. It is the state-of-the-art way that any product gets to any retail customer.
Sure, there have been some challenges from online sales, but here are the realities. If your product weighs a lot or is relatively inexpensive, it will sell better in an environment that causes the customer to compromise and meet the product halfway. In other words, if the customer goes to a physical bricks-and-mortar store. Why, because the delivery cost of heavy, inexpensive items is a much greater percentage of the total cost. Also, it’s simply more convenient to drive to a store and buy 50 items instead of having 50 separate items delivered to your door with the all the liability, packaging, invoicing, and timing issues involved.
So, now you are in the physical products distribution game. And just like any other game, there are rules you must abide by. What if you had a strategy that did not comply with the rules of the game? You’d fail! So, the essential part of any CPG sales strategy is understanding the rules and their implications.
For one thing, because it’s a physical product that requires shipping, handling, processing, and merchandising, your sales strategy must recognize that you can’t sell your product if it’s not physically there. It must be in the store in order to sell. Sounds obvious, but many CPG brand builders fail to grasp this simple fact.
As a corollary
Unlike e-commerce where you are selling direct to consumer, now your opportunity for sales is territory-by-territory. In other words, your sales strategy is very much a region-by-region challenge, and then within that region, store-by-store.
So, the question is: What stores are you in and how well are you selling in those stores? Too many CPG brand builders overextend themselves right here. They grossly underestimate the physical work that is necessary to get into the stores and stay there long enough to gain traction within the local market. Many brand builders can’t service what they have sold and thus get discontinued.
The most common time to get discontinued is right after you gain initial placement. The retailer never made the reorder and you don’t notice it until you are discontinued. The sales aren’t fast enough for the retailer, so your products are marked down and closed out – never to be returned!
A sales strategy that worked for us can be used as a Sales Strategy Template of sorts for any CPG branded product:
1. Market Access
Identify your access to market. Where is the low hanging fruit? Where is a store or stores you can physically manage? Start there!
Work out a new product roll-out program with the retailer and try to get the distributor involved. This will involve special introductory pricing.
Negotiate with the store for a floor display of your new products. (It’s OK if you are not in any other store in the country; just do a great job right at the beginning.) Your goal is to get a reputation for being a “Hot Mover.” That reputation will precede you as you expand. Caution: a “Slow Mover” reputation can haunt you! So make sure you are a fast seller right from the start. Use big compelling signage and be noticeable on the floor. Shelf space alone won’t make them “trip over” your product.
Do an in-store demo. Have a representative who knows your product and is sociable. Make sure you have a product at the demo table. Don’t send prospects back to the shelf – they won’t go. Put it in their cart. Your goal is to create lift. That means that your sales increase in that store, presumably because you have created new customers in the neighborhood who frequent that store.
Critical: Get the reorder! Do not do all that work and expect the store or your distributor to get the reorder. They are not used to your new branded product yet, so they have no proven history of sales. Caution: Many retailers and distributors will view the demo as a way of getting rid of your inventory with no intention of ever increasing volume as a result. In fact, the distributer’s salespeople will actually say to the retailer, “Don’t worry about buying so much, they are going to do a demo to get rid of it for you!”
Take lots of notes! A key part of this strategy is learning by doing. Find out exactly what you need to do and when, so you can use that intel as you go forward. Learn what it actually takes to stay in the store and increase sales in that store. Those lessons are priceless. They will give you the know-how to succeed in other stores in other territories. Don’t expand out there so much that you spread yourself too thin. Grow slowly and surely.
Now you can take your “Hot Mover” reputation that you have gained in those few stores on the road. After all, this is exactly what the retailers want, even more than a great product or low prices. They want Hot Movers that will make their investment in expensive shelf space pay off.
There are hundreds of Sales Strategy Templates out there, but if you have a physical product that is sold in a physical store, the best strategy is to increase demand among the retailer’s local customers, be vigilant, do the merchandising, and get the golden reputation of being a “Hot Mover!” Happy selling!