Great Expectations

10/1/2012

Have these five things on your checklist for vendors.

More money, right? Wrong. Your vendors have more to offer than cash, which, after all, is constrained not only by their budgets, but also by legal considerations. Here are five things you should expect from your vendors:

  1. Certified Account Teams: It's no secret that vendors' account personnel vary in experience and competence. It's only logical that the better your rep or team, the better the service you'll get. Now there's an easy way to assure you're getting qualified personnel. The Category Management Association (CMA) "certifies" the complete skill levels against rigorous industry standards. If your account rep carries a CMA certification "bug" on his business card, clients know he has taken and passed certain courses necessary to performing category management at a specific level.
  2. A Voice of the Shopper (VOS) report: Retailers are justifiably proud of their own shopper data, but this is but a sliver of the information a retailer needs to understand the shopper. The vendor has a lot more than you do, because his whole existence depends upon understanding the shopper of one specific category. If you as a retailer had comparable files from several vendors, your understanding of the category would be exponentially increased. The problem is that many retailers don't know what a VOS is, and haven't gone to the trouble of organizing their data in a sensible way. The CMA has taxonomy for the VOS that we would be happy to share, and we can even help you as a retailer or vendor assemble one according to best practice standards.
  3. A More Strategic Line Review: Many line reviews are jokes or an exercise in obfuscation; in many cases, everything the vendor says is a setup to sell a new SKU, or it's a number-juggling exercise to explain the inexplicable. Worse still, two vendors in the same category will paint a similar situation in different, confusing ways. Retailers should require stable presentations of category data so that everyone can at least agree on the facts. But more importantly, every line review should begin with two insightful, stimulating questions: What's the single most important thing your company has learned about the shopper since our last line review, and what are the three most important trends that have occurred or recurred since we last talked?
  4. Show Me Your Success Models: Vendors spend a lot of money testing tactical variations in assortment, pricing, in-store merchandising and promotions. We call the things that work "success models." Retailers should aggressively collaborate to help vendors develop these models, but should expect vendors to share them wherever they develop them. Pricing is the first place I would look for better success models, especially given the capability to execute private pricing to individual consumers. But pricing is the third rail of marketing, so few retailers or manufacturers are willing to touch it for fear of fatal burns.
  5. I'll Show You What I Have If: Data is valuable, but it's even more valuable in the context of comparable data from another source. I'm constantly amazed when retailers make a decision without asking for critical information from a vendor. The classic here was Walmart's billion-dollar failure to ask a simple question about the thousands of items eliminated in its great suicide attempt known as "assortment optimization": What percentage of this brand's volume comes from exclusive users? For most brands, that's a number around 25 percent — in some cases, as much as 40 percent. So if you remove the brand, get ready to lose a substantial part of this exclusive volume.

Retailers, make your checklist and tell your vendors what you expect of them. It isn't about the money.

Gordon Wade is CEO and director of best practices of the Wimberley, Texas-based Category Management Association (www.cpgcatnet.org).

"Retailers should aggressively collaborate to help vendors develop success models.

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