People often ask us, “What was the one thing that made Barefoot Wine successful?” Our answer, “It was multifaceted!” Sorry, it’s usually not just “the one thing” that makes any CPG brand successful. However, we guess if you really want to boil it down to just the one thing, it would have to be sales.
But sales are a result of a multifaceted effort that has but one purpose, and that is to drive those sales. In other words, “What drove the sales that made Barefoot, or for that matter, any successful CPG brand?” What factors compelled those sales to happen?
Most new startup CPG brand producers believe erroneously that sales will be driven by the product itself. They double down on this popular misconception by spending too much time and money on production and not enough time on sales and what drives sales.
Sure, your product has to satisfy a real need, distinguish itself from the competition, and be a great value. But unfortunately, that’s not enough, by a long shot! All that just gets you in the game. Now the challenge is to actually sell it, sell it at a profit, and grow your sales.
There are countless marketing firms who will gladly take your money to develop glitzy marketing and commercial advertising programs that may or may not be effective. But, from our two decades of real-world experience in the retail marketplace, we have learned that none of those programs will help drive sales unless your house is in order in the retail store in a very tactile, physical, and practical way.
Here are nine ways that we used successfully in driving sales:
(Market readiness, missionary work, placement opportunities, continued relevance, and events that create demand)
Timing will always be the #1 factor affecting sales. You can have the best product in the world, one that the market will benefit from. But for one reason or another, the gatekeepers and even the customers themselves may not be ready for it. They may not recognize the value in your product because they are thinking in a paradigm that is based on their past history. Henry Ford said if he had asked his customers what they wanted at the time, they would’ve said faster horses!
Market readiness & missionary work
Many startup producers really are disrupting the market, but that’s just it! The market simply may not know they have a need for their product … yet! The missionary work that may be required can take years before your market begins to realize they have a need for your product. You have to convince them that they have a heretofore unaddressed need that you have the solution to. This is a tall order and can kill many startups because they just don’t have the funds to hang out long enough for the market to catch up with their solution.
So when we talk about a product-market fit, we’re not just talking about finding your ideal target market. We’re talking about whether or not your ideal target market already realizes that they have a need for your product!
This is the key to effective marketing materials. They must not only communicate the features and benefits, but they must also educate the consumers about their need for the product. If customers recognize the problem your product solves, that recognition can drive sales.
From our own painful experience of trying to convince gatekeepers for four years that they had a need for an everyday non-vintage varietal wine at popular price points, we highly recommend that your product addresses a need already recognized by consumers and gatekeepers alike. You may not have time to convince them, wait for them to come around to it, or pay your overhead until they get it.
Another factor that can affect timing might be an event or widely publicized information on a subject that affects your customers’ health and welfare. For instance, all of a sudden there’s a report that indicates certain ingredients, features, or packaging of your competitors’ products is detrimental. You then have the opportunity to market your products as free of those unwanted characteristics and rich in the desirable ones. We see this happening in the food industry on an almost daily basis.
Timing can also happen because of changes in distribution where the distributor may lose a branded product they had been successful in building in their retail territory. This may be your opportunity to offer that distributor an alternative to maintain their sales with those retailers. This happened to us in several markets and resulted in driving sales significantly.
2. Stellar Distribution
(Sales effectiveness, relationship selling, prevention of out-of-stocks, smooth product flow, doing what is necessary, and seasonal selling)
You can have perfect timing and still fail if you don’t couple it with stellar distribution. We like to say, “You can’t sell it if it ain’t there!” And there are lots of reasons why your product may not be on the shelf. Most of them have to do with ineffective distribution management.
The people in your distribution chain between your warehouse and the retail store shelf all have different needs that must be satisfied and, surprisingly, have nothing to do with your product! But they have everything to do with your relationship with them.
In order for them to move your product along through the retailers’ supply chain, they have to believe that you have their best interests at heart. This means you have to know what their interests are and take actions that convince them that you are the kind of partner they want to work with.
The number one reason why customers buy your product is because it is in stock. They see it visit after visit. Even if they don’t buy it at first sighting, they become familiar with it by its constant presence. This sends a message of stability and dependability.
When your customer goes back to buy your product the second time, or even the ninth time, and it’s out of stock, they will say your product is “undependable” and buy another product that is in stock. Even if it’s not your fault, they will blame you! Even when your product gets back in stock, they will think twice about buying it because you’ve let them down.
Relationships with Decision Makers
We found that the biggest factor driving sales was the development and maintenance of excellent relationships with every decision maker from the owner of the distributor, to his sales manager, to their salespeople, to the warehouse people, to the retail buyer, and even to the clerk who put it back on the shelf when it sold. Those relationships were a key to driving sales in the retail stores.
If it was necessary for us to make the sales for the distributor’s salesperson, if it was necessary for us to break our own product out of the back room, price it and put it on the shelf, if was necessary for us to correct and replace product codes, if it was necessary for us to notice low inventories and ask for the reorders, we did it! We did it all! It’s not something we signed up for or even expecting to have to do but it was absolutely necessary to drive sales.
One of the many things we did to drive sales was seasonal selling. We realized that retailers were competing to create an entertaining environment that would not only provide their customers with products but give them a fun experience. We made sure our marketing materials helped our retail partners drive sales with different seasonal themes throughout the year.
(Absence of competition, limited supply, or a perfect fit)
If the market is ready for your product, if there’s a widely recognized unsatisfied demand, and if there is no or limited competition in your category or at your price point, it’s a beautiful thing!
Congratulations! You may have a perfect product-market fit! Nothing drives sales like existing and recognized demand.
The problem is that you can easily become a commodity, an also-ran, or just another offering in a race to the bottom pricewise.
Another problem can be supplying the demand without interruption. You may run out of product, your distributor may run out of product, and your retailer may run out of product. Once again, in the CPG world, distribution management is King.
4. Brand Reputation
(Your performance, dependability, and history)
As far as the retailers are concerned, your branded products must have the reputation of being a “Hot Mover.” They are paying for expensive shelf space and want a return on their investment. They can’t afford to take on “Dogs” (i.e. slow movers).
How do you get the reputation of being a hot mover? Start small with just a few stores. Visit those stores regularly. Repair and remove any “sales stoppers.”These include wrong pricing, poor signage, out of stock, damaged goods, and other products blocking your customers view of your products. You will be surprised at how many merchandising problems you discover. What if you never went in those stores? What if you believed what you are being told, that your product was “just not moving”? And what if you thought that the distributor or the retailer would take care of those sales stoppers?
Do whatever it takes to get customers in the door to buy your products. Take copious notes. Don’t depend on your distributors’ or your retailers’ clerks to get the reorders. Go out of your way to be a big hit in your first few stores. You want those first retailers to sing your praises. You want them to say you are a hot mover! This reputation will open many doors for you as you expand your market.
As far as your end-user customers are concerned, your branded products must have the reputation of being dependable, a good value, and being products that fill their elsewise unaddressed needs. You must build a history of stellar quality control, excellent customer service, and socially acceptable corporate behavior. You will be depending on your customers’ opinions moving forward.
5. Effective Marketing
(3rd party endorsements, compelling materials, marketing campaigns, and the buyers’ journey)
Marketing materials in the retail space must be specifically designed to be effective in a relatively harsh commercial environment where there is extremely limited space, short attention spans, longer viewing distances, relatively poor lighting, and thousands of competing branded products.
Your job is to overcome all these obstacles with attention-getting graphics and messaging that distinguish your products and compel your customer to make the purchase. It’s not easy, even for professionals. Effective marketing means sales. It’s that simple. It doesn’t matter how cool it is or if your friends like it. It has to do the job in the retail environment.
Sure, there’s a lot you can do outside the store with commercial advertising, social network marketing, coupons, email marketing campaigns and sampling. All of this assumes that your customer will remember all those efforts and be moved enough by them to come into the store, recognize your product, and make the purchase.
But we have found that the point of purchase is the only place where your product, your customer, their money, and their decision, all come together. This is one of the reasons why bricks-and-mortar retail is such an effective format at introducing and promoting relatively new branded products. Retail stores significantly shorten the buyers journey. The customer can go from awareness of your product, to recognition, to familiarity, to trial, to regular purchaser in a relatively short period of time with the right visibility and marketing materials. Thus, the buyer’s journey is shorter.
Marketing materials at the point of purchase can be more effective than any marketing done outside the store. Unlike other marketing efforts, in the store, your customer can pick up, examine, and compare your products to others in a physical and tactile way.
6. Floor Displays
(End-aisles, waterfalls, side stacks, islands and simultaneous promotions)
Probably the most effective form of in-store marketing is the floor display. It’s big, it’s in their face, and they have to push their cart around it or trip over it! It’s hard not to notice. It has multiple cases of inventory. It’s strategically placed to take full advantage of store traffic. But what’s most important is that, because of its sheer size, it provides you with your best opportunity for large, distinguishing, and compelling signage and marketing materials.
Floor displays are the best way to introduce product. Negotiate with your distributor and your retailer to achieve special introductory pricing with a corresponding floor display program. In the trade, generally these floor displays have nicknames starting with the smallest, known as “side stacks” or “waterfalls,” to the medium, freestanding, mid-aisle displays known as “islands,” to the largest, most desirable multi-case displays known as “end-aisles” or “bay ends.”
New CPG brand builders typically are lucky to get a side stack or a waterfall. The bigger and better located floor displays are reserved for the established brands that have an already proven sales track record.
7. Demos and Samples
(Local lift, target markets, and execution)
The purpose of an in-store demo or sampling is driving sales to create “lift.” Lift simply means that the average number of sales of your product to that store increases after your demonstration or sampling.
The idea of the demo is simple. Give the prospects an opportunity to try out your products so they will buy them. The reason this form of marketing is so effective is because the buyer’s journey is vastly accelerated. They can go from not knowing anything about your product to buying it in less than 60 seconds.
But for demos to be successful, they must be done right:
- The venue’s shoppers have to be appropriate for your products and price points.
- Schedule your demos far enough in advance that you will have time to announce them with in-store advertising, and schedule the personnel, materials, and additional inventory needed.
- Time them to coincide with busy shopping days, paycheck dates, holidays, and the time of the year.
- Reserve a high-trafficked location within the store.
- Carefully select representatives who will be on time, presentable, sociable, product knowledgeable, practical, and friendly (their behavior can affect your reputation with the store).
- Provide compelling signage and marketing materials.
- Ensure adequate inventory and sell it directly from your table.
- Keep track of how many customers visited the table, who made the purchase, how much they bought, and any significant suggestions or comments they made.
- Secure a reorder for more inventory than the stores’ average purchase before the demo to satisfy the increased demand of the new customers the demo has created.
(Value perception and the velocity price point)
Driving sales with pricing requires an understanding of the pre-existing benchmark velocity price point for products like yours in your category. The velocity price point is the price at which products in that category move the quickest. These prices have been established over time. Your price, whether at, above, or below the velocity price point can affect your customers’ value perception of your products.
If for instance, your price is higher than the velocity price point, you may be able to convince your customers that your higher price denotes higher quality or exclusivity. If your price is the same as the velocity price point, you will have to demonstrate higher value with your marketing materials to convince your customers that you are the best value for the money. And if your price is lower than the velocity price point, you will attract customers who are looking for economy.
Temporary Price Reductions
You can also drive sales with pricing using temporary price reductions (TPR). These are most effective when your regular price has been established for a period of time. Then your prospective customers will notice the price reduction and may be compelled to give your products a try. The TPR is a great way to attract new customers.
Another way to use pricing to drive sales is to offer special limited time value pricing such as buy two for the price of one, also known as “twofers”, or, by one, get one free. Value pricing can also just offer more quantity for the same price.
Most retailers feel that the customer thinks that $3.99 for instance, is a whole dollar less than $4.00. That’s why most of the prices you see end in 99, 98, 95, or even 88 to take advantage of this popular misconception. When pricing your products you must work backwards from the desired shelf price, allow for the stores’ profit on sale, the distributors’ profit on sale, and not leave any money on the table!
(Cause marketing, customer service, referrals, and brand loyalty)
The best way to effective sales is to drive them through customer advocacy. Your prospects are more likely to believe the people they know rather than any form of commercial marketing. They know that their friend is putting their personal reputation on the line when they advocate your products.
Advocacy is a natural part of the discovery process. When your customers are satisfied with their experience with your products, they feel compelled to share their discovery with their friends. They know their friends will thank them for the turn on. Messaging and Instagram are great vehicles to convey discovery and advocacy through personal networks.
In order to turn your customers into advocates, you must provide consistent quality, dependable availability, excellent customer service, and compelling pricing.
The most effective way we have found to turn customers into advocates is to stand for something more important to your customers than the goods and services you are selling them. For instance, Nielsen has proven with sales data analysis that customers prefer products that advertise and deliver sustainability practices. In today’s increasingly transparent world, how you stand on health, the environment, and labor practices can drive or hurt your sales.
Another effective way to drive sales in the retail environment is to support local neighborhood worthy causes. By donating product, helping them with fundraising, and marketing their causes in association with your products, you give the members of those organizations a social reason to buy your products. This can be a more compelling reason for them to advocate your products than commercial advertising. And the worthy cause gives you access to a pre-existing group of followers.
If you want advocacy, brand loyalty, and referrals, support your community and be on the right side of history. People vote with their purchases. Why not drive your sales by being leaders in the next big megatrend, socially responsible products?
If you want to have effective sales of your CPG products in bricks-and-mortar stores, you must have a multi-faceted approach to driving sales. And you must first respect the practicality of the retail environment which puts severe limitations on your marketing materials and promotional programs. But nothing shortens the buyer’s journey like tactile content and physical comparison. When it comes to retail success, it‘s not “just the one thing” – it’s is “the whole nine yards!”
Who We Are
Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.
Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.
They offer their Guiding Principles for Success (GPS) & Shelf Smarts courses to help consumer product brand builders achieve success. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.
Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular business site at www.thebarefootspirit.com.
To make inquiries for keynote speaking, trainings or consulting, please contact firstname.lastname@example.org.