Profitability for FMCG suppliers is in no small part reliant on their ability to effectively understand and manage Retailer relationships, particularly in the grocery channel. So, what are the key Account Management capabilities FMCG companies need in order to maintain and grow the relationship for mutual benefit?
Peter Huskins of ShopAbilityoffers some tips for the relationship weary!
#1 Know your Retail Partner
An in-depth understanding of each account – each Retailer’s ‘hot buttons’, is important to develop a model for creating mutual value.
How much do you know about your key accounts? Do you know:
- Their strategic direction and how that parallels your Company (or not)
- Key financial data – how are they performing?
- Basket and scan data – who is buying what, there and how much of it?
- Category performance metrics
- Stock turns – what is moving, what’s hot?
- KPIs and trade maths – how are they measuring success?
- What are their key issues and objectives – how can you help?
Knowing your Retail partner enables you to develop proposals from a Retailer perspective that are still consistent with your own organisational goals. So, how do you obtain this information if you don’t already have it? See #8: Trade Relationships.
#2 Integrate your Strategic Planning Process
By ‘integration’ here, we mean ensuring your annual planning process is both top down and Customer up.
Your planning process needs to:
- Be informed by comprehensive consultation with your Retail partners
- Include Customer objectives by category
- Reflect joint objectives and KPIS for all brand activity and NPD in both the Company and Customer Business Development Plan targets
By writing your Customer’s objectives and KPIs into your strategic plans along with your own, you are ensuring that as you meet your own targets, you meet your Customer targets as well, building relationships and value for the longer term.
#3 Know your Category
Increasingly, Retailers are looking to suppliers for in-depth category understanding and leadership. This can present an excellent opportunity to drive growth for both parties. So what does knowing your category look like?
- A comprehensive knowledge of category dynamics of your own and all other competitive or complementary store departments, including fresh
- The ability to identify gaps and opportunities for Category Development (the next phase to category management) based on this knowledge
- A focus on creating and presenting options that are totally consistent with Retailers and Company strategies, policies and category goals
Having a bird’s eye view of all store departments in addition to your own helps build credibility with the Retailer and leads to realistic and informed strategies for growth and category development that fit in with the ‘bigger picture’.
# 4 Know your Shopper
How much do you really understand about Shoppers for your category and brand / product portfolio? Shopper insights are a Retail hot button, and you need to know which insights to leverage for the most Retailer and category benefit, not just your own brand.
This particular topic is a book in itself, but some key things to think about include:
- What the shopper missions are for your category (these are not the same as the consumption occasions)
- The difference between each mission, including the categories found in different types of shopping missions
- Likely shopper profiles in your category
- Category sales drivers and purchase decision hierarchy (e.g. price may not be a priority sales driver for your particular product and shopper research that proves this can help build your case with Retailers for different in store execution)
- Triggers and barriers to purchase in store
By knowing your shopper, you can build plans for growth that optimize the opportunities for both you and your Retail partner.
# 5 Know your Supply Chain
How effective is your current supply chain arrangement from the Retailer’s point of view as well as your own? How well do you know the Retailer’s supply chain strategy? Things the Retailer may look for from you:
- A clear supply chain strategy with processes that are well communicated
- Customer service levels monitored on a daily basis
- Diligence in meeting standards and influencing Out of Stocks
Knowing your supply chain enhances your ability to leverage high performance to your (and the Retailer’s) advantage.
# 6 Power to your People
Some FMCG companies overlook the need for operating authority by members of the Account Management team. If you are not confident in their skillsets, then the focus needs to be on training and increasing skills rather than diminishing authority.
To create relationships of mutual benefit, individuals need to be empowered and encouraged to negotiate to the same degree as the Retailer contact. Your people also need to know how to use this authority to advantage in gaining trade-offs in the process.
# 7 Company-wide Trade Relationships
Whilst it can be a challenging process, successful suppliers have developed an open partnership style with each major Retailer. Achieving this involves:
- A strong network of contacts up and down and across the Retailer functions
- Top to Top contacts being leveraged to develop and enhance Company performance and reputation
- A culture that is comfortable with change to obtain a win / win result
By spreading the relationship across multiple levels and functions, you help to reduce the reliance on one particular contact or contacts that may be a roadblock to the relationship.
# 8 Be a Responsive Partner
This one seems like a ‘hygiene factor’ but is surprisingly often overlooked. Everyone is busy – you, your Retail partners, your supply chain – everybody. It’s never an excuse for tardy responsiveness. To optimize your Retailer relationships:
- Ensure your whole company fully understands the importance of responding to Retailer’s questions and doing so in a timely and professional manner, and that this is embedded into performance measures
- Ensure your systems and processes are up to date and fully utilised
- Focus on direct, transparent contact where the background to the response is clearly explained and a way forward is mutually agreed with the Retailer
Often, the quality of your response in a trying situation can serve to actually build and strengthen your relationship in the longer term.
# 9 Horses for Courses
The importance of account specific planning cannot be underestimated. Positioning yourself as a strategic supplier / partner involves:
- Working towards an agreed joint Customer Business Development Plan and KPI’s for each customer – each created in a highly individualistic way for each Retailer
- Each plan also consistent with the Company’s marketing plan with a focus on addressing each Retailer’s “Hot Buttons”
In this way, the Retailer’s success is measured along with yours, and you can demonstrate mutual value as the foundation for future growth.
# 10 Collaborative Category Reviews
Transparent, objective and thorough category reviews can go a long way to building better Retailer relationships. Key factors:
- The category plan is carefully evaluated from a wide range of perspectives
- Reasons for success or failure are carefully noted and factually summarised
- This evaluation is then presented to the Retailers for their input
- The focus of the review is on new strategic options and modifications for the next planning cycle. 20% rear view mirror and 80% looking forward should be the rule of thumb.
Your category review process will also feed in to your longer term category vision and development plan, creating a feedback loop that allows your development plan to continue to evolve and adapt as the market changes.
# 11 Communication & Information Sharing
This one is the acid test of where your relationships are at versus where you want them to be. Do you have:
- Regular internal full and open cross functional discussions?
- Strategic sessions with Retailers on a category by category basis to discuss Company and Retailer aspirations as the ‘norm’?
- Are both parties are prepared to share sensitive information and plans?
Strong Account Management capability is a whole-of-company issue, rather than restricted to the job descriptions of a select few. Creating mutual value and improving the quality of the Retailer relationship is possible with a clear picture of what best practice looks like, what is still needed to achieve it, and a practical development roadmap to get there.
For more information about ShopAbility company and people capability development contact Peter Huskins on 0412 574 793, visit our CAPABILITY & TRAINING page or contact us via enquiries@shop-ability.com
