The High Plains Drifter

July 17, 2006

Hey…At least I Gave it a Try…

In the second Star Wars movie (5^th if you are a Star Wars Geek), The Empire Strikes Back, we are introduced to the Jedi Master named Yoda.  During one scene he is working with Luke Skywalker, helping him to master the power of the force.  After receiving some instruction, Luke responds with:  “All right, I’ll give it a try”

Yoda’s response to Luke sums up one of the greatest lessons anyone could receive, and an approach to business that would instantly make any company much more profitable:

Yoda:       No. Try not.   Do... or do not.   There is no try.

How many times as a marketing or sales director have you taken the approach that ‘we need to try something new’?  The definition of try implies trial, uncertainty, and lack of consequences.  Usually this approach is taken because what you tried the year before didn’t work.  In the end the result is always the same…sub-par results.

There is a cause and effect reason this happens.  Nothing you TRY for the first time will ever work as well as the tenth, or twentieth, or 50^th time you DO it.   This is because if you had the opportunity to do the same thing 10 or 20 or 50 times like specialists do, you would at some point make all the mistakes, learn all the shortcuts, master all the subtleties, and get to a point where your results are predictable, consistent, and WAY ABOVE the results you would get “trying” anything new. 

If the predictable failure of trying something new is this obvious, and outside assistance with proven successes readily available, why do so many distributors continue the cycle of trying to invent the next new thing that ‘might work’ every year?

As the business world changes, gets faster and less forgiving, there are still way too many foodservice distributors who handcuff themselves with their approach to outsourcing.  I call it the Not Invented Here Syndrome, and it costs businesses more & more money every year.   If you understand the concept of opportunity cost, the real, actual costs of this approach are several hundred thousand dollars minimum, possibly much more, depending on the scale of your operation.

 Not Invented Here Syndrome is when a company takes the approach that there is no value in hiring outside the company for project assistance.  Rather, the people on the internal staff are expected to have the same expertise as an outside expert in a specific area, even though at most they may have 10% of the experience of the outside expert, and even less exposure to what is cutting edge in that specific discipline.

Many employees operate in this manner because they are threatened by how it might appear if they suggest they need to go outside for help.  This is compounded by shortsighted business owners who say things like “that’s what I pay you to do”.  The fact is, there is no way that a full time marketing director can have anywhere near the experience and tools at his disposal as a fulltime specialist who spends 100% of their time building on a concentrated discipline of success in a specific industry. 

As a business owner, why would you care where an idea came from if it made you more money?  And why would you continue to employ or tolerate a marketing person who wasted your opportunity time trying new, untested, unproven marketing concepts?

What would be a better approach?  For starters, eliminate the culture of TRY from your company or department.  By doing this you instantly raise your standards.  You create accountability that does not currently exist with your approach to marketing.  Secondly, take a realistic approach.  You can’t fix everything at once.  It’s likely the marketing activities in your annual plan have a range of success or performance.  Which one is the least successful?  Eliminate it.  Finally, replace it with something that is proven, guaranteed, and likely available from the outside.

Congratulations!  You have just made the weakest part of your annual marketing plan the strongest.  Next year, rinse & repeat.  Start building on a culture of high standards and successes.  It’s much more fun building on annual successes, than trying to pull something out of thin air that might work year after year after year.  And much more profitable too.

My name is Jim Egan, and as the High Plains Drifter, I’ll see you again, sooner than you think…

June 22, 2006

How Do You Define Too Good to Be True?

Recently I attended a business seminar put on by Action International.  The seminar did not charge admission, and was basically an introduction to the services that they offer.  The purpose for putting on these types of seminars at no charge is to hopefully give people enough information to get them interested in your service, without providing enough detail so someone could go out and do it on their own without hiring the company hosting the event.

As far as these types of seminars go, this one was pretty good.  I know.  I participated and presented in very similar seminars as an agent for Y2Marketing during my hiatus from the foodservice industry.  I have attended and conducted enough marketing seminars over the last several years to know that the good ones give you a couple things to walk away with that you can use in your business right away.  They help you see a new way to solve a problem or communicate an idea that you just have not been able to get across.

The payoff for me came about midway through the seminar, when the presenter pulled his wallet out of his pocket, and removed a $20 bill.  He held up the $20 bill, and asked who in the room would give him ten dollars for it, and then was quiet.  Initially, about half the hands in the room went up, followed shortly by almost all the rest.  The presenter stood still with the $20 bill in his hand.  One attendee in the last row got out of his seat as soon as the question was asked, pulled a $10 bill from his money clip on the way to the front of the room, and made a clean exchange with the presenter as others near the front of the room started to get up out of their seats.

The presenter then asked the people near the front of the room why they had not taken advantage of his offer, as they could easily have gotten to him first to take advantage of the $10 for $20 swap, making an instant $10 profit.  The consensus answer was that they hesitated because they didn’t think he was really going to exchange a $20 for a $10.  They thought the offer was too good to be true.  Then he asked me what I was thinking when I hopped out of my chair to get to the front of the room to make the exchange before anyone else.  I replied that I took his offer at face value.  I didn’t really evaluate it too much, because the upside was clear, and the downside was minimal.

In business, opportunities that come up require more evaluation, because there can be a real and costly downside.  That being said, there are also many opportunities offered by innovative companies that could provide great benefit to you and your business.  What if an opportunity that seems good, is good?  What do you cost yourself by dismissing it outright because it seems too good to be true, if it is true?  Sometimes, a little evaluation can go a long way.

My name is Jim Egan, and as the High Plains Drifter, I’ll see you again, sooner than you think…

June 7, 2006

 Is 2006 Over Yet?

Warning:  Near the end of this posting, there is a blatant, self-promoting paragraph by the author of this column.  The fact that he is promoting a program that consistently drives sustainable street growth of 20% to 30% or more should not take away from the fact that it is very self serving, unless you decide to take advantage of it.  Then you also could be accused of being self serving.  Or just plain smart.

It’s the first week of June 2006 as I write this, but for many in foodservice distribution, the year is already over.  The plans for the 2006 calendar were launched in January, and everything from here on out is on autopilot.  And I’m not saying that’s all bad.  If the plan you worked on in late 2005 is meeting the objectives you set for your company, enjoy the summer!  However, if things are not working out quite as you had hoped, or if you could handle a little more activity, there is still time to impact your results for 2006.

Many distributors take their one shot at putting in a game plan for the year, and then feel that no matter what comes along during the course of that year, they do not dare adjust it to what is going on in their market.  In the NFL, many teams go in with a game plan that they will not alter for the first 15 or 20 plays.  One of the reasons they do this is to gauge how sharp their players are that day and also to see how their competition reacts to a controlled situation.  For the balance of the game, and especially at half time, they are constantly making adjustments to what is happening on the field, to take advantage of any opportunities they discover in how their players or their opponents are performing that day.

If the coach said that he was going to call 100% of the plays before the game started and then not vary from that plan no matter what happened on the field or what opportunities presented themselves, he certainly would not be the coach for very long.  However, this approach is more common than not in businesses of all stripes.  The point is, if the original plan is not getting it done, do something about it while you still can.  If the execution of the annual plan delivers satisfactory or above industry growth rates, stay with it.  It should be that simple.

The disconnect occurs when it becomes apparent that the current path you are on will not get you to where you want or need to be, and nothing is done because of “the plan”.  That’s why this time of year is so important.  There’s still time to do something that can positively impact your results if the annual marketing plan is not getting it done.  Three months from now, this window of opportunity is closed.

My name is Jim Egan, and as the High Plains Drifter, I’ll see you again, sooner than you think…

May 30, 2006

Did You Find One Thing at the NRA that Will Make You More Money?

The 87^th annual National Restaurant Association show was held May 20-23 at McCormick Place in Chicago, and anyone who attended was treated to the best that the restaurant industry has to offer.  If you have never gone and have anything to do with foodservice, you need to go there at least one time.  Every innovation from new ingredients, to equipment, to samples of the latest new taste sensations, to software was available in multiple locations throughout the show.  But for many attendees, the most common takeaway from the NRA was information overload and sore feet.  Although they come away with a full tummy, they may not have done anything to top off their bank account.

Years ago I exhibited at this event, and was very excited at the opportunity to get my service in front of as many as 70,000 prospects.  The potential upside was huge, and the ability to touch even a fraction of that many people made the event irresistible.  A supplier of mine further hyped the potential of the event to me, and convinced me that because of the scale of the show itself, to get noticed we needed to go in with a large booth in a great location, and staff it with some form of an attention getter that would make sure a steady flow of interested prospects was always hanging on our every word.

In the end, we did all of the above.  We had a 20 x 30 foot booth that straddled two aisles, hired an extremely talented close-up magician named Danny Orleans, who was perfect for an event like the NRA.  We had meaningful conversations with countless decision makers who expressed a genuine interest in the restaurant frequent diner program we were promoting at the show.  At the end of the four day event, we had walked away with approximately 120 business cards of people we identified as A prospects based on our conversations with them.  We also had a list of another 600 or so people whose badges we had run through our badge scanner, and who expressed an interest in talking with us after the show.

We were ecstatic.  The show had done everything we had hoped it would, and we totally believed that almost everyone who told us they were very interested in our program would become customers, and everyone who told us to follow up with them right after the show would actually want to talk with us after the show.

As we began the follow up process after the show, we slowly discovered a cruel reality of exhibiting at a mega show attended by thousands of people.  After spending one or two or three days attending a mega show, meeting hundreds of new people and getting exposed to thousands of new ideas, despite the best of intentions, most people’s brains turn to mush. 

When people get back to the office, they go back to doing what it is they do every other day, and talking about or being inspired by new innovations or ideas is just not in the job description.  Those things you thought you could not live without a week or two before have been diluted by all the other great ideas you saw at the show, and the time that has passed since you saw them.  Your phone has rung 200 times since you got back, and the last thing you want to do is waste your time letting a salesman try and recreate the excitement he insists you felt when you were almost hugging him two weeks prior in his booth at the show.

In the end, we didn’t come close to covering the investment we had made in the NRA, and the people we had met with at the show never benefited from having greater traffic counts in their restaurants that our program would have provided.   My guess is that in reality, most people do not get anywhere near the benefit they could realize out of what they are exposed to at events like the NRA.  They see so many things that they like and believe could help them, but never have the bandwidth to ultimately understand and implement the innovations that seemed so right at the time they were exposed to them. 

When I go to any event today, whichever side of the aisle I’m on, I take a very different approach.  I look and prepare for one good, solid contact or conversation that will move my business forward.  Sure, I will likely interact with tens or even hundreds of people or ideas over the course of a multi-day event, but the goal is always the same.  ONE.  One idea, product, service, or contact, that I can put to use as soon as I get home.  The result?  I always get one, and usually that one leads to several additional opportunities.  I’m not ever looking or settling for less than I was before.  It’s just that I’ve discovered that all great projects or endeavors begin with one conversation, and if I can make sure that conversation occurs, the rest takes care of itself.

My name is Jim Egan, and as the High Plains Drifter, I’ll see you again, sooner than you think…

May 12, 2006

What is the Cost of Inaction?

In an internet newsletter I received recently from justsell.com, there was a quote that resonated with me, and applies to many foodservice distributors I have met with over the years.  The quote, which was not attributed to anyone simply said:

“Always seeking certainty before taking action can severely limit productivity. In fact, in many cases, the evaluation and search for certainty is more costly than a potential failure due to action. Worst-case scenario for a wrong move is generally nothing more than an education.”

In almost every industry, ideas present themselves everyday to do or try something new or different.  You are regularly presented with these types of choices.  Each option presented for consideration is an opportunity, and opportunity costs are real.  Even though they do not appear on balance sheets or P & Ls, anytime there is a choice made between two distinct courses of action, the potential revenue lost from a course of action not taken must be accounted for when measuring the benefit from the action taken. 

How real are opportunity costs?  How does $277,249.00 sound?  That’s the amount one foodservice distributor recently took to the bottom line by saying yes to a new idea, and the amount several others gave up by taking the course of inaction when presented with the same opportunity (for a one page case study of this example, send an email to GrowMyStreetSales@wi.rr.com, and put Case Study in the Subject line)  That’s right, $277,249.00 in additional gross profit, with an initial expenditure of only $93,111.52, which was recouped through profit on the incremental sales the program generated before arriving at the $277,249.00 bottom line contribution.

The real value in a promotion if it is designed and executed properly is that almost all incremental profit drops straight to the bottom line.  This is because it creates no additional costs to your operation, other than those funded by the promotion itself.  Costs for your time, equipment, warehouse, fuel & drivers are all fixed.  Other than reducing costs, the incremental profit driven by a sound promotional effort is likely the most direct route to increasing the bottom line you have available to you.

As the example above clearly demonstrates, a distributor that chooses inaction when presented with a viable new opportunity has potentially made a very costly mistake.  This is compounded exponentially if that approach is your standard way of doing business.  There are companies that view promotions as necessary evils, not profit centers.  These are also usually the same companies that will not hire outside expertise, saying that’s what they pay their marketing people to do.

The message here is that there are great ideas out there that can make you a lot of money, if you are open and receptive to them.  There are books, seminars, and other sources of information that can help you get a significant advantage over your competition as well.  If you view outside ideas as unnecessary expenses and/or wastes of money, it’s likely you are comfortable competing on price and living on very low margins.

If on the other hand, you are actively looking for ideas that can help you profitably drive sustainable street sales growth, go to www.GrowYourStreetSales.com, and take a look at the Line Drive promotion.  The most recent distributor edition of the Line Drive promotion delivered 34% street growth over an 8 week promotion period, and threw a significant amount of dollars to the bottom line. 

Another great place to go for innovative and cutting edge ideas is the National Restaurant Association Show in Chicago, May 20-22.  This annual event showcases a wide variety of the latest foodservice products and ideas, and supports it all with non-stop seminars that provide a wealth of valuable information.  I’ll be there, and will share some thoughts from the NRA in my next posting.  Until then,

My name is Jim Egan, and as the High Plains Drifter, I’ll see you again, sooner than you think…

Is There a Great Big Bertha in Your Bag?

In the northern part of the country, golf season is getting under way.  As the days grow longer and the temperatures rise, a trip to the driving range and maybe a few lessons are the order of the day to shake the rust off from the long winter hibernation.

In going through this annual ritual not too long ago, my instructor made a statement that really made me stop and think.  I share his comments in this space because the logic of what he said applies to any organization that goes out and competes everyday against adversaries that are equally motivated to get more than their fair share of the business.

To provide a little background, about 4 or 5 years ago I bought a new set of clubs, made up of a full set of Ping Irons, and a Callaway Great Big Bertha driver.  There were no other metals in the set, but that didn’t really bother me, because I could never hit a fairway wood worth a darn, and I didn’t miss them.  When I got ready to begin a series of golf lessons this spring, I threw an old 3 and 5 wood that I had in the bag, and hoped that maybe my instructor would reveal the magic required to make these un-hittable clubs more productive.

When we got to the fourth or fifth lesson of the series and were moving up to hitting the bigger clubs, my instructor looked at what I had in the bag, and let me have it pretty good.  He pointed out that I had invested several hundred dollars in lessons, had for the most part  a decent swing, and good mechanics overall, yet I was willing to cheat myself by not taking advantage of the latest equipment and technology that was available.  The fact that I showed up with two antiquated fairway woods was inexcusable to him.

I thought about what he said, and what it really meant.  In the book I recommended in my last posting, Blue Ocean Strategies, they profile Callaway Golf, and how they created a Blue Ocean of opportunity by realizing that many people did not play golf because it was too hard to master all the clubs in the bag with the tiny “sweet spot” that many of them had.  It was just too hard for many to get good at golf, so they gave up the game entirely.

Callaway Golf realized that if they made the club heads bigger, the size of the sweet spot would also increase, making almost everyone who swung one of their clubs better, almost instantly.  This innovation helped grow the golf industry exponentially, and in turn the demand for state of the art equipment.  It also brought technology to the masses, and enabled many more people to enjoy the game of golf without having to put the time and effort in of a touring professional.

I have since upgraded my equipment so that when I’m out on the golf course I am no longer cheating myself.  I want to benefit from every single advancement that is available, because otherwise I’m making it easier for my opponent to win.  It’s the same in business.  If there are new innovations that can exponentially grow your sales and profits, but you do not take advantage of them, you are cheating yourself.

Want to start the innovation process, but not sure where to look?  Go to my website at www.GrowYourStreetSales.com.  The last distributor program we worked on delivered a 34% street sales increase and dropped a considerable amount of income to the bottom line, while paying for itself 100% through incremental profit and new supplier contributions.  Can you expect the same kind of results from your next promotion?  Don’t know.  Can’t really tell until we know what you’ve got in the bag.

My name is Jim Egan, and as the High Plains Drifter, I’ll see you again, sooner than you think…

April 17, 2006

Has it Really Been Almost Three Years?

Sometimes sooner than you think is later then you would ever imagine…  A little less than three years ago I signed off as the High Plains Drifter with my usual closing line which always stated that I’ll see you again, sooner than you think… 

There was an irony built into that line that was likely lost on everyone but me.  At the time, I was working full time for an incentive company that specialized in foodservice distributor frequent buyer programs.  Over the course of the 2 plus years that I penned the High Plains Drifter column, I would regularly see people all over the country that would read the column.  However, as an anonymous author, I could never out myself, or even state an opinion if the topic of the latest from the “Drifter” came up in conversation.

The last column that appeared in this space addressed the “Devils’ Advocate”, an unofficial position that almost every company seemed to have, and likely still has on the payroll.  The point of the article was to ask you as a company owner or principal, ‘how much money has this guy cost you, by killing every new idea that someone brings in the front door?’  At the bottom of this article you will find the solution I found to eliminate this guy.  And after that, is the reposting of the original article.

In the almost three years since the last piece appeared in this space, a lot has changed.  I’m not going to try and rehash what has occurred.  Instead, my approach will be to move forward from where we are today.  The one constant that remains in the approach for this column is the firm belief that good marketing and innovation win every time.  Couple that with the fact that in almost any industry, very few companies understand & practice this, so the opportunities to win big are everywhere for those that want to get it, and are willing to embrace new ways of doing the same things they have always done.

A good place to start if you are looking for fresh ideas is a business book that came out in 2005.  The name of the book is Blue Ocean Strategy, by W. Chan Kim & Renée Mauborgne.  It puts a new perspective on the tried & true concept of benchmarking, and suggests that it’s possible there is a better way to compete & win in the complex world we compete in today.  Instead of duplicating what your competition is doing and competing in the same way for the same shrinking piece of the pie with everyone else, find a different path where you get to make the rules and compete on your own level.  Hmmmmmm…

And now for a little personal info.  My name is Jim Egan, and I wrote the High Plains Drifter column from 2001 through 2003.  Why did I go away, why did I come back, and why am I taking the mask off now?  The answers to the first two questions will be provided in a later column if anyone really cares.  The answer to the third question is actually very simple.  As an anonymous columnist, I had the freedom to say certain things without any real fear of repercussions, but I also had to live up to a very high standard of accuracy & diligence due to the very small circle of trusted friends and business associates who knew I wrote the HPD column.  In my mind, their standards were the highest, and I never took the chance of taking shortcuts that would disappoint my virtual Board of Directors.

Being anonymous limited my ability to interact with the readers, and made it almost impossible to connect with forward thinking distributors that may have wanted to put some of the concepts and strategies discussed into practice.  I brought over 25 years of solid marketing experience to this process, and developed some of the most successful street promotional concepts rolled out in the foodservice industry in the last 17 years.  In coming back to write this column, I decided it is time to make that available to those that are interested, and eliminate the cat and mouse process that is normally involved in client acquisition.  If there was a way to cut through the normal BS, it would save a lot of time, and make both sides of the table more money, much faster.

Which brings me to how I finally beat the “Devils’ Advocate” at his own game.  Conventional wisdom in most industries will tell you never to guarantee results.  Too many variables can come into play.  Devils’ Advocates bank on this.  They know as long as they can create enough doubt or question the credibility of the concept under consideration, if it doesn’t come with a 100% money-back guarantee, they will be able to ensure it will never see the light of day.  

But what if the concept or topic under consideration was, by design, immune to all but the most catastrophic events (hurricanes, mudslides, mass political stupidity), and could demonstrate over a sustained period of time that it could always deliver a level of performance and value?  If the design of the concept ensured the deliverable, why wouldn’t you want to shout from the roof top that it was guaranteed?  I’ve yet to meet a Devil’s Advocate who can effectively counter this approach. 

So to close, if you have an interest in a proven street promotion concept that guarantees it will deliver double digit street growth and also be 100% self funding, go to my website at www.GrowYourStreetSales.com .  Blatant self-promotion?  You bet.  Beneficial to a forward thinking distributor that would otherwise not be aware this opportunity was out there?  Yes, definitely.  The power of the pen, when coupled with a channel of targeted mass communication, (Inside Food), can be truly powerful and mutually beneficial at the same time.  A Blue Ocean Strategy, in practice.

My name is Jim Egan, and as the High Plains Drifter, I’ll see you again, way sooner than the last time!

May 3, 2003, Saturday

How much has this guy cost you?

Almost every company has one.  He’s the self-appointed expert that knows better than everyone else what’s best for the company.  He’s a guy that has risen to middle management usually by switching jobs and companies a few times, and has settled into this role because it was available.  He relies on his previous experience outside of his current company to justify any position he takes, so it cannot be verified.  He’s the Devils Advocate, and he very likely is costing your company a lot of money.

The reason people who take on this role are so detrimental to a company is they make innovating your company almost impossible.  Because of the posture they take and the “previous experience” they site that cannot be verified, they usually can kill any new or innovative marketing initiative with very little effort. 

Famed author and management guru Peter Drucker once said “Because of the nature of business it has just two functions and only two.  Marketing and Innovation.  Marketing and Innovation make money.  Everything else is just a cost.”  For a close to home example of how this impacts the foodservice industry, ask your self if the following scenario sounds familiar:

Meetings are called to discuss what direction the marketing should go for the following year.  At the outset it is stated that the foodshow, trip program, or some other major marketing initiative is not effective.  It is not impacting sales at all.  Everyone on the marketing team and management committee is in total agreement.  “We need to do something that works” is the mindset.  The assignment is given to find an alternative.  Several outside marketing companies are invited in to present what they have to offer.  Many of them have impeccable track records within foodservice.  Some can even provide objective proof that what they have to offer has delivered the stated results every time it has been on the street.

Something happens between the day the assignment goes out to innovate, and the day a course of action is decided upon.  No matter how beneficial or proven any new program or concept is that is offered up for consideration, they do not have a chance.  How could that be?  Simple.  The guy with the little chin beard who has positioned himself as the one who knows best will not let it see the light of day.  If he lets an idea in from the outside, he has lost his power and influence.

So instead of acting in the best interest of the company, which is his whole justification for doing what he does as a Devils Advocate, his actual motivation is to protect his artificial position of influence.  No matter what is brought to the committee for consideration, it will be shot down based on supposed experience somewhere else where an almost identical program was a disaster.   

The end result?  The marketing committee will run out of time to do anything different.  The focus will change from finding something new that might work, to saying that the old thing was not really that bad, and it just needs to be tweaked a little bit to make it all better.  What a bunch of crap!  In the end, you wind up doing basically the same thing that you declared a failure the last time around, and the results are always the same. 

The need to innovate in foodservice distribution is urgent, and the opportunity to do so is great.  To not aggressively pursue innovation at a time when it’s obvious the basic foodservice model is not working and is unsustainable is folly.  Opportunity costs are real.  Anytime there is a choice made between two distinct courses of action, the potential revenue lost from a course of action not taken must be accounted for when measuring the benefit from the action taken.   To not innovate, because the Devil's Advocate shot a concept down based on  questionable evidence, may be the most expensive mistake you make all year.

Devils Advocates are allowed to exist because---by the way they have positioned themselves---they cannot be held accountable.  If you are the owner, ask yourself how much this guy has cost you over the last five years.  How many times did you like something you saw initially, only to be talked out of it by this guy?  How many times have you gone back and retooled a program that you knew was not effective, because every innovation considered was shot down?  If the answer is more than once, and the need to innovate has not been met, you may want to put a pencil to it and see how much longer you can afford to have a Devil’s Advocate on your payroll.

I’m the High Plains Drifter, and I’ll see you again, sooner than you think…

March 25, 2003, Tuesday

How’s Your Paradigm Doing?

The events of the last two weeks regarding Royal Ahold and U.S. Foodservice have forever changed the landscape of foodservice distribution.  There is no way that the change will not be for the better.  Whether or not U.S. Foodservice survives in their current form is secondary to the changes this will force on the industry.  The hardship this will create for individuals is troublesome.  However, everyone involved had plenty of warning. 

The first area to be impacted will be the level of deception which fuels the marketing plans rolled out by almost every foodservice distributor on an annual basis.  Marketing has nothing to do with the plans that top-level foodservice executives spend a good part of the 4^th quarter putting together every year.  In the purest sense, the term marketing refers to a process that would make a customer want to buy from you!  In foodservice, the definition of marketing is an elaborate scheme or plan to deceive a supplier into providing a significant amount of dollars that you redirect to the bottom line, despite what you told them you were actually going to use the dollars for.

The next area that will be altered forever will be the term cost plus.  To all but those blessed with the interpretive skills of former President Clinton, the term cost plus means that your price is determined by the net cost of a product, plus an agreed upon percentage to provide for expenses and a mutually acceptable amount of profit.  When a supplier provides back door money based on product movement, that affects the cost.  In a cost plus arrangement, that payment should be passed on directly to the end user.  Period.  With the fallout that the Ahold debacle will create, practices which are deceptive by design such as cost plus pricing will most likely be eliminated.  What does this mean?

Prices will go up.   And they should.  .  When your business model calls for you to make the majority of your transactions below your cost of doing business, your demise is inevitable.  You have to raise your prices to reflect what it costs to be in business.  Because of a complete lack of marketing skills by supposed marketing professionals in foodservice, competing on price became the standard.  “When you compete on price, you are only as smart as your dumbest competitor”.  That quote came from an executive from Continental Airlines, describing the current condition of the airline industry.  If you want to see where competing on price gets you, simply look over there.  (A complete comparison of the eerie similarities between foodservice distribution and air travel has been written, but will remain on the shelf until the current USF drama is played out.)

So where does this put us today?  Our current paradigm is:  Screw our suppliers as much as possible through the use of fraudulent marketing plans; lie to our largest customers through the use of cost plus purchasing agreements where we hide what our actual costs are; and try and trick everyone else into buying through a series of price focused loss leaders, ridiculous food shows, and big gaudy promotional contests where the winners are usually determined before the promotion gets off the ground.

We need to change our paradigm.  Because the bar is currently set so low, the opportunity to compete is huge.  Most of the issues cited above will ultimately be decided in a courtroom.  The marketing however, will win or lose on the street.  For starters, how about trying to come up with a marketing endeavor that does not require a supplier to pay for it.  Something that might actually help your customer do more business.  Something that a restaurant owner would gladly pay you for, because of the impact it would have on his business.  Something that would convert a minimum of 500 items a week to your warehouse from your competition without dropping your price a nickel. 

Impossible?  Not really.  This weapon already exists, and a few early adapting distributors are already taking advantage of it.  Look for it.  It is out there and can have a major positive impact on your business.

Ever since the first words were written in this space, the message has been the same:  Selling wins every time.  Sometimes it takes a debacle like what has occurred at U.S. Foodservice to wake an industry up.  At this point, I don’t think going back to the way we were is an option.

March 1, 2003, The Weekend!

February 6, 2003, Thursday

The Debit Card Debacle…

In the posting on this space on January 5^th, 2003, the ineffectiveness of any marketing plan that relies on gimmicks such as debit cards to try and build the loyalty of a foodservice operator was discussed.  Below is an email that came in after that posting appeared:

I revisit the topic of the Debit-Card again at this time because it is so detrimental to any distributor that builds their annual marketing plan around it.  Secondly, with economic conditions being what they currently are, very few independent distributors have the margin of error to lose a years worth of credibility with suppliers and customers alike as a result of an ill conceived customer incentive program that becomes their main offensive weapon.

Debit cards first came on the scene about ten years ago, and have been gaining strength over the last few years as more and more marketing people have less and less imagination, and resort to simply throwing dollars at every challenge they face.  They work well when the holder of the card has the opportunity to earn several hundred dollars or more over a fairly short period of time, say, one to two months.  When the earning period is extended, and the potential earning amount is limited, the impact of the card is non-existent. 

A Debit Card based promo rolled out to a foodservice distributor’s customer base will never be effective because there is simply not enough money available to have an impact, and your competition can counter it with very little effort.  

Almost anything other than a cash or debit card based promo will have more impact.  The real damage these programs inflict is often many times greater than the sales gains they do not produce.  They put a sales force on the hook for an extended period, going into battle with inadequate ammunition.  The DSRs will know almost immediately that the program is ineffective.  Within 2 to 4 weeks of it being launched, your competition will counter the promotion with any accounts that matter.   Because of management ego and unwillingness to admit they made a mistake, you are now stuck with a promo your competition can beat at will for anywhere from 4 to 12 more months.

Instead of selling on price, demonstrate value.  Look for things that can legitimately reduce the operator’s cost of doing business, or find a way to drive more customers through his front door.  There are some distributors that understand this, but not many.  You will go out of business before you win the battle being the low cost provider.   Spend your energies finding ways to compete that are not tied to the cost of a case of green beans, and you greatly increase you chances of winning every time.  Compete on price, and before too long you may find yourself debit (dead) on arrival.

I’m the High Plains Drifter, and I’ll see you again, sooner than you think…

January 27, 2003, Monday

January 5, 2003, Monday