One of the most important numbers in your business
Your sales people should know your customer’s definition of success
We are starting our series on the role of your sales department. This week we spent some time planning topics for our SKUFood newsletter to share insights into what your sales people should be doing. Believe it or not, we have compiled a list with over 40 topics. We encourage you to explore the topics each week and really challenge yourself and your business as to whether someone in your business owns the tasks and if they are delivering the results.
We will start with one question that is fundamental to your success…
Do your sales people understand how your customers define success?
If you are selling direct to consumers (in person or online), you have to determine what success looks like. How many units do you need to sell each week or each month to deliver the results you want in your business.
If you are selling into any other channels such as retail, food service, institutional, distributors or wholesalers, it is the customer who decides if you stay on the shelf, on the menu or in the warehouse. You might have an idea of what you want to sell, but if it does not line up with your customer’s expectations, there will be problems. You might think 5 units per store per week is a good number. If your customer believes the product should sell 8 units per store week, you are in for problems.
Most retailers have expectations for items in a category. They have experience with other items in the space, and your item sales will be compared to your competition. Perhaps the competition spends more money and has better retail coverage than you do. Reality is shelf space is a premium and your products need to perform. If they do not meet sales expectations…your time on the shelf will be limited.
How to get this number
Retailers do not post this number or send you an email with it clearly defined. You need to use the relationships you have developed to ensure you get the number. We are big fans of starting the conversation. That means you need to do some homework to put a starting point or an initial number on the table.
If you have experience selling into stores you can use the history, you should develop a forecast. If you are selling in specialty channels and you average 8 units per store per week you need to factor in the differences if you are trying to get listed in conventional retail:
Customer count in the store can be 5-10x higher each week. More potential customers so you could sell more.
The competition in the category is more intense. You are now up against bigger brands who are investing in trade spend and have national mass media campaigns. This might hurt your sales.
In conventional retail there are programs for you to participate in such as in store specials and loyalty programs. These investments are designed to bring attention to participating products and sell more. This could increase your sales during promotional periods you participate in.
This environment is much more complex to operate in. Your distributor leaving the product at the back door is no guarantee of success. It needs to get to the shelf, and you might or might not be in the plan o gram. If you do not have store coverage your product could sit out back where it does not sell.
We could go on…you need to consider the factors for your products and the stores where you want to be on the shelf. Use the facts you have to create an estimate for the new shelf. Share your thought process with the new retailer and put a number on the table. Let’s say you were doing 8 units per store per week. After you have considered all of the positives and negatives, you believe the average will be 10 units per store per week. Put that in your presentation and see what they say. If they want to be a good partner, they will give you feedback and let you know. Probably the most important number you will get out of the meeting.
Once you get them to share their definition of success you know what you need to deliver. The it becomes building programs and execution to meet or exceed expectations.
Other sources of information
If you can afford it, category information is one great source of the information you need to understand success in the category. This can be expensive and one advantage the big consumer packaged goods (CPG) companies have. They do buy the data, and they use it to assess their performance.
People working in stores have a good idea of what they are selling each week. They put the product on the shelf and usually know how many cases they are ‘putting up’. You probably do not have time to go to every store but if you can get an idea in big/medium and small stores in the chain you can make some estimates for volume. One area people in the store can be helpful is promotional activity. They can usually tell you the lift and what works best. They might tell you when they put up a secondary display the cases are 5X a regular week.
Channel partners should have some insights to help you with your customer’s definition of success. If you are working with a broker and/or a distributor they should understand what is expected. You should all be on the same page with regards to this. You, your broker, your distributor and the customer should have a common definition of success.
Once your product is listed, you should be doing an annual review with your customers. Their expectations might change so use the data you have, including trends in the category to look into the future. If you averaged 10 units per store per week and the trend in the last 3 months is +20% then they will probably be looking for 12 units per store per week next year.
Speak their language
You might need to measure the definition of success in units per store per week. This is how you can find the underperforming stores and see progress. Your category manager probably thinks in cases and perhaps months or quarters. Remember they manage a lot of SKUS. Some retailers do work in cases and some in units so make sure you understand how they think. When you talk to them, use their language.
This should live in your business
Your sales people should be working with people throughout your business to ensure they understand the definition of success and how you are doing. It starts right at the beginning. If you need to average 10 units per store per week across 150 stores and your product is packed 12, you need to be producing an average of 125 cases per week for this customer. Given shelf inventory and distribution, this might need to increase to 140 cases, and you will be lower some other weeks. If you have 3 of these customers you need to have ingredients, packaging and everything else in place to produce 520 cases. The you factor in promotion weeks, and you might need to have the ability to produce 800 cases but drop to 200 the following week. This is easy for sales people to talk about. Much harder for production people who need to deliver efficiencies and keep staff busy. You need financing in place to order inputs and wait 30-45 days to get paid.
Your sales people and the rest of your business need to understand the definition of success, and be working together to deliver it.
In the upcoming weeks we are going to dive into sales in food and beverage. It is a critical component of your business. If you do not believe you have the expertise, give us a call or send an email-we can help.
If you will be at CHFA in Toronto in September let me know! Looking forward to connecting with many people that weekend.
Peter
SKUFood Recipes for Success Podcast
In this episode of Recipes for Success, we sit down with Kristyn Carriere, co-founder of 7 Summits Snacks and a food innovator with over a decade of experience shaping some of the world’s best-known chocolate brands. Before launching her own venture, Kristyn worked in Europe with global leaders including Cadbury, Milka, Green & Black’s, and Godiva, where she mastered the art of product development and international market launches.
In 2019, Kristyn returned to Canada and, alongside her sister Leanna, created 7 Summits Snacks, a women-owned Canadian brand that merges performance nutrition with premium chocolate. What started as a bold idea has grown into a company with products in over 200 retailers across Canada, supported by national distribution and plans to expand into the U.S. in 2025.
Kristyn shares her journey of translating global experience into local entrepreneurship, the challenges of scaling a better-for-you snack brand, and how 7 Summits is committed to sustainability, empowering women in business and sport, and redefining chocolate’s role in functional nutrition.
If you’re a food entrepreneur looking for inspiration or a chocolate lover curious about innovation in the category, this conversation is packed with insights on building a brand with purpose, passion, and plenty of adventure.
Listen and subscribe wherever you get your podcasts.
If you would like to be a guest send us a note. We are always working on the upcoming episodes.
Recently the Weston family has announced they have created a $100 million investment fund to focus on Canadian food and beverage. It is one the big challenges for food and beverage entrepreneurs. Getting reliable financing in place and finding good equity partners is not easy. Often it is a combination of several sources.
It is good to see more options for Canadian businesses in the current environment.
Excited to be participating in the FCC Food and Beverage Summit in Saskatoon in September. The FCC team have put together a great agenda. If you are food producer or processor on the prairies this is a great day to get some great insights and keep moving your business forward.
It's back!
Back by popular demand, the FCC Food and Beverage summit is your chance to see what's new, get inspired and gain valuable insights to take your food and beverage business to the next level. Learn from industry experts, network with other entrepreneurs and make connections to expand your market and grow your business.
We're thrilled to present and exciting lineup of speakers, along with complementary booths for food and beverage processors to showcase and demo their exceptional products. Curious who is showcasing this year?
Meet our vendors
It's all happening in our backyard. Bigger skies. Bigger ideas. Bigger opportunities. Everything is bigger on the prairies!
Last year sold out quick- register early.
Tuesday, September 23
Prairieland Park, Saskatoon
Where is Peter speaking?
With the focus on Canadian food and beverage we wanted to share a program we have developed with Alain Bosse, the Kilted Chef. We partner to share insights about Canadian food and beverage at conferences and events. We talk about where products come from, share insights about some hidden gems and of course Chef Alain has great tips for using the products at home. This is designed to be entertaining and engaging. Not just for food industry audiences, it works for everyone.
I do have travel coming up to Toronto, Saskatoon, and Fredericton so if you want to connect or have an event in any of these locations give me a call or send me an email.
