Transcript
Mike (00:00):
Try to get yourself outside of the box. It's easy to get into kind of the monotony of, we've always done it this way. We're just going to keep hammering it out in the same cookie cutter fashion that we've always done. But one of the worst sentences in the English language is we've always done it this way. So don't let that happen with your team and your manufacturing processes. Start to think outside of the box. If something's not working, don't be afraid to kind of break it down and try something new.
(00:34):
Hey, retail fans. Welcome back to Retail Oriented. I am your host, Mike Fowler. I am the VP of sales strategy here at the Sales Factory. We've got an exciting episode today, but first I want to start off by saying thank you. If you've tuned into any of our podcasts, either on Spotify or Apple or wherever you get your podcasts, you've watched one of the videos. We hope that it's been helpful for you guys. We hope that it's been insightful. We've tried to have on some guests from different areas and different backgrounds, so we hope that the content, the discussions we've had, have sparked some conversations for you guys. Maybe been some good food for thought within your team. So we have a little bit of a different episode today, so we're really excited about it. A couple weeks back, I sent out an email. We asked for your questions.
(01:19):
We've also been keeping an eye on all the comments. We want to understand what it is that's keeping you guys up at night. What are the problems and the challenges you have with your retail program, and what do you want to ask us about? And you guys sent some great feedback in. So we're going to tackle some of those questions today. I went around to our office and gathered some insights, talked to some of our team, got some different perspectives from the insights group, the marketing strategy group, the sales group. We kind of wanted to bring in a lot of different perspectives on this. So we're going to try to give you some answers that cover a pretty broad range of thoughts. It's not just my thoughts. Thank goodness for you guys. So without further ado, let's jump into the questions. All right, first question is, Hi Mike.
(02:01):
You've talked a lot about creating consumer responsive retail strategies. What are the best practical ways for getting high quality consumer feedback? It's a great question, and I'll probably say that on all the questions because you guys sent some really good questions in understanding the consumer in your particular category and also at the particular retailer that you're talking to, is really valuable information, not only for you as a brand, but also for your merchant. They are relying on you to be the expert in your category. So understanding consumers, how they're making decisions in your category, how they're shopping your category, what they're looking for, what they like and don't like. It's huge and it's really important to prove that out in consumer research. So having good qual and quant research where you can point to it and tell your merchant, this is what the consumers that are shopping in your stores think and care about, and here's how we're going to answer that with our brand and our products and how we're going to help you sell more at retail.
(03:04):
It's something that you have to do to be successful in the retail environment. So I would start off by saying invest in consumer research. Now is a great time to do it because as with everything, consumers are changing also, they've changed how they approach the market. So your consumer research from five years ago is probably outdated. It's probably not valid, and that's probably not how consumers are approaching the market today. So constantly be out. Being out there and talking to consumers in your category is really important. We also do a lot of focus groups, qualitative research, and I take that a little bit beyond just qual in the sense that we've kind of traditionally thought about it, and we look at store walks as a really vital tool for understanding your category, understanding how consumers approach your category. You can learn a ton about your category, about the competitive landscape in your category price progression.
(04:04):
You can understand how the merchandising is set up and what your merchant thinks in a lot of cases and what they think is important. So understanding the consumer and how your merchant is approaching merchandising in your category. You can find out a ton of information in store walks. You can also talk to people in the store. So if you happen to be in the plumbing aisle and there's a plumber in there at 6:00 AM and they're getting their materials for the day, have a conversation, play dumb, ask some questions, try to understand how they're making decisions and what they're looking for, what they like, what they don't like. You can learn so much by talking to somebody in the store. You can also learn a ton by talking to associates. They're experiencing consumers in your category daily. So they're talking to people, they're observing people, they understand what's happening in the store.
(04:56):
And so ask 'em some questions. Ask them what they like and what they don't like, what brands they're familiar with, why do they like one brand versus the other? So getting in there asking some questions and not always leading with answers is a great way to understand the consumer and get some really high quality feedback. Site visits is another one on the qual side of things where we like to go out to job sites and see the materials, the tools, things that professionals are using day in and day out and talk to 'em while they're doing the job because it's really easy for a professional to give feedback on a product or a category when they're actually in the middle of using it. They have got real time feedback, something that may trigger a thought or really insightful piece of information may happen while they're doing the job, but it may not happen in a focus group room or on the internet doing a quantitative survey.
(05:58):
So being out there in the field, understanding how it really happens in the real world is a great way to get good, really good consumer feedback. And the last thing is using POS data. So this is something that my team specifically preaches quite a bit. Investigate your POS data. A lot of answers there into what's moving and what's not moving. You can start to dissect by skew, by store, by market, what's working and what isn't working. And so when you start to look at your POS data in a more granular fashion, you can draw some insights out of that and tie it directly into your program and what changes and things that you're going to either lean into or make changes to really take the opportunity and move your program forward Because it's important for your program to not be stagnant. Once you get on the shelves in a major retailer, you've always got to be pressing the envelope to do it better, to be comping the next year to help your merchant capture more share from the competition.
(07:03):
So looking at your POS data to continually push your program forward is really important. It's not enough to just get it in there and sit it on the shelf and check off the major boxes and making sure you're shipping on time and in full. That's all well and good, but if you're not growing your program and constantly getting better, there'd be somebody that's coming in looking at your program as an opportunity to take you out. So it's important that you're analyzing your POS data to always be improving. Those are some of the things that we think about when we're thinking about how do we get really good consumer feedback that you may be able to apply to your particular retail program. So hopefully that's helpful. Leave us some comments and let us know what thoughts you guys have got and what tools you've used to help you get really good consumer feedback.
(07:54):
Alright, next question. Dear Mike, do you have any advice for handling inflation and the increased costs of raw materials? How do you help shoppers be more accepting of necessary price increases at retail? That's a tough question that everybody's facing right now, right? So merchants consistently over the past year to 18 months have said, Hey, we participated with you in the price increase. Now we're going to need you to participate with us as raw materials are going back down. So as deflation happens in just raw materials, they're expecting you to participate in that with them. So how do we handle all of that? There's not a single right silver bullet answer for every manufacturer out there. So you need to look at your specific manufacturing process and think about how can I continue to add value? How can I be transparent? And then what does my brand stand for?
(08:49):
Those are kind of the three things that our team came back with. So let me break those out a little bit more for you. When I talk about transparency, the French fry story kind of always comes to my mind when I'm thinking about transparency. So since the pandemic, we've probably all had this experience. If you haven't, then maybe you don't like fries and you like something else, but try to stay with me on this. We've had the experience of going to our favorite restaurant ordering the meal that we've ordered for the past 10 years, and all of a sudden the portion sizes are a little bit smaller. I was with a friend having dinner the other night and he got an order of fries with probably about five french fries in it. He said, I used to come to this restaurant and you would get a mound of french fries with your hamburger.
(09:38):
Now I'm getting five french fries. So they're trying to kind of sneakily adjust the amount and the quantity of product size to account for some of the cost increases of their raw materials at this restaurant. So kind of think about that in terms of how are you handling your price increases? Are you cutting corners? Are you staying true to the way that you've always manufactured things? And if you are, that's really something to be proud of and something to talk about. There's an opportunity there to reassure your consumers through branding and say, Hey, this is the same great product that you've always bought. It's the same quantities. We're not cutting any corners. We're still manufacturing even though it may be a little bit more painful to us today, we're still manufacturing this the way that it's always been done. And you can rely on that because you can rely on our brand.
(10:30):
It's now a time to go out and start talking about that. If you are trying to adjust some sizes or you have to make some adjustments to how you manufacture or how you merchandise your products, you need to be really transparent about it. Let your consumers know that there's something new happening and don't try to slide it past them. So it's important to be transparent and authentic. You'll hear me talking about that more. And that goes with your merchants as well. So transparency in your manufacturing process and your increased costs is kind of how we're tackling that with a lot of our clients right now. So when we're having discussions with merchants, they're very frank, open and transparent because we need them to understand where our pain points are so that they don't just think things are easy. On the manufacturer's side, they're not. We know that they know that intuitively, but you got to be open and honest with them about, Hey, we're having some labor challenges here.
(11:29):
We need your help in that Mr. or Mrs. Merchant. And that can look like a lot of different ways in terms of how you negotiate your program, but it all starts with honesty. So being open and honest and transparent about your process, I'm not asking you to share your costs and your margin with them. Nobody's saying to do that, but it is important that they understand where you're coming from so you guys can have a good and productive discussion about your program. We're looking at also adding value in different ways. So there are a lot of different ways that you can start to add value. Think about collaborations with other brands. How can you guys come together in marketing efforts? Maybe there's a multi-packs that you can offer. Kind of start to think outside of the box of ways that you can add value into your products and into your assortment that consumers are looking for.
(12:19):
And the only way to know that is to do the answer in step one and go out and get some quality consumer research, talk to consumers that are in your category and understand what their wants and needs are. Because if you understand what their wants and their desires and their needs are, then you can come back to them and give them some value adds that will help to offset some of the price increases. So if you're adding value, a price increase doesn't feel as painful. And that's kind of just traditional how consumers approach every single category in the world. So it's important to think about how you're adding value and think about it in different ways. Try to get yourself outside of the box. It's easy to get into kind of the monotony of, we've always done it this way, we're just going to keep hammering it out in the same cookie cutter fashion that we've always done.
(13:11):
But one of the worst sentences in the English language is we've always done it this way. So don't let that happen with your team and your manufacturing processes. Start to think outside of the box. If something's not working, don't be afraid to kind of break it down and try something new. Next question. Here we go. Hi Mike, loved your episode on ai. If you haven't watched that episode, go back and tune in. It's with Juan Hernandez, our kind of in-house resident AI expert. He is learning every day and figuring out how do we apply that to our clients and to our work. There's a lot of good information in that episode, so if you haven't watched it, go back and watch it. Do you feel or do you think marketing professionals should feel threatened at all by chat GPT and other AI platforms? Lemme start off by just saying that was the first thing that jumped to my mind as well.
(13:59):
And what I've learned and what I think I want to stress is that AI is a tool. So think about it like a tool and just like with all tools, probably just like the tools that you manufacture, human oversight is crucial to getting the best out of the tool. Having a human that is an expert is going to give you the best outputs and outcomes from using AI. And it's important to think about this in terms of how can it augment your team and how can it add to your team and less about how could it replace your team because it truly can't replace your team at this point. It is important to kind of think about this in terms of being a tool and how can it make what we are doing better. The next thing that I kind of want think about or talk about when discussing AI is the role that it's going to play.
(14:50):
And so I think the natural inclination is to think that it is going to play this huge human job in creating collateral in writing and creative and all these things. But I think the more productive use of it, at least today, is going to be how do we synthesize big huge sets of data? How do we dig through consumer research? How do we use that to speed our team up and become more efficient in getting answers about data sets that we currently have? Because it can do some creative things and it can do some of those roles acceptably, but where it's really going to gain you huge efficiencies in time and how you use it is going about using the tool as a huge number Crutcher. So how do I get through huge sets of data and synthesize this information into an understandable, digestible data set quicker and more efficiently?
(15:53):
How do I ask questions and get answers quicker and get that to market or get that to my POS analysis or get that to my consumer research feedback loop? How do I get that in faster? And so using that to kind of synthesize information is where it's best used today, and we don't really see that changing in the short term. Think about how are we using it to augment our team and how are we using it to make our teams more efficient, to expand their capacity and to crunch huge amounts of data in a really quick turn. So that's kind of how we're thinking about it today. Let us know how you guys are using it. If you've found something that is like, Hey, this is where AI shines, we would love to hear about it because we're always trying to learn and trying to improve.
(16:42):
Next question here. Dear Mike, you've inspired my small business to dig deeper into our POS data -- that is high praise -- We appreciate that. Are there any tools or technologies you think are particularly helpful for inventory management? So I'll talk about inventory management as well as your POS data analysis. I'll first start by saying good old fashioned. Microsoft Excel is a great place to start for analyzing your POS data as well as your inventory. Understanding how to use Excel and pivot tables is a great way to get probably 90% of what you need from your data. And so we are constantly in Excel daily, mostly all day in Excel and kind of analyzing data for our clients and you can get a ton there. So if you really understand how to use Excel well using pivot tables to analyze and cross tab, that is a great place to start.
(17:40):
There's a ton of other tools that are out there. One of the tools that we use pretty consistently is Tableau. We really like Tableau. It kind of helps bring data to life. One of the things at Sales Factory that we think and we believe pretty strongly in is that visualizing data help people understand it. So we constantly are using Tableau to help visualize the data. It's a really great tool for that. There are similar tools out there for that. The other thing I would say is that if you are working with a retailer, paying for their analytics tools, using their analytics tools and paying for those analytics tools is really table stakes. You've got to have those analytics tools. They've got some really good ones built into their backend. Now some of these things are like Excel files on steroids with all the macros built in.
(18:33):
So one of the things that we really like about the retailer's tools is that's their language. So when you are using their tools, you're now speaking to them in their language. Those are oftentimes the exact same tools that they're using to look at your program. I think it's great to use Excel and Tableau and all these other things to try to pull out nuances and to try to analyze your program to get better and be proactive about it. I think it's really, really important. In fact, I preach that daily, but just talking to your merchant about your program in the same vernacular and using the same tools that they use is a huge rapport builder with you and your merchant. They value that you are talking the talk and also walking the walk. I think they see that as an investment in the partnership. And so we are all trying to build really good partnerships with our retailers using their tools as a great way to do that.
(19:30):
Next question. What consumer loyalty programs are you liking these days? That's a tough one. Loyalty programs became so widespread in commonplace years ago that they kind of lost their punch. So I'm thinking about loyalty programs in more terms of how do you retain your consumers, how do you keep them loyal to your brand? And some of the ways that we are seeing that done the most effectively are not in traditional loyalty programs, buy two products and get a free hat or a T-shirt or a sticker. We're not seeing kind of swag loyalty programs being the most effective way to retain your consumers these days. We're seeing different ways to approach that, be more effective. We've got clients that are building out their own professional insight panels, so they're consciously seeking out professionals in their category. They're providing them with new products with r and d products.
(20:31):
They're asking them specific questions on insights and how to improve their program, improve their manufacturing process, improve their products because they want to understand from the people that are using their products every day, what do you not like? It's a portion of consumer feedback, but it's really focused on a specific panel of individuals. So if you have pros that use your product in your particular category, and not all categories are professional driven categories, we understand that. But if you do have pros, go out and seek out to build some relationships with those professionals, build your own panel, have constant communications with them, really take care of them past hats and t-shirts and value their insight and put it into your development and into your processes. And I think you'll see some loyalty and some retention within that specific group, obviously, but also that tends to go out.
(21:27):
That tends to have a butterfly and ripple effect of going out when you're really listening to the people that use your products and putting that into play in your processes. We're seeing that be a really effective way to retain consumers. Other things are really investing in trade schools skills. USA is something we've always really thought highly of people that are coming up and learning how to do a particular trade. Oftentimes we'll continue on with the products that they learn with. So I'm going to take it away from home improvement space for a second and talk about something different. Just to give an example. So a lot of times in culinary school, aspiring chefs will come through and learn how to use particular tools like a specific chef knife that they will stick with through their entire career because it's what they learned on. If you can get to people while they're learning their trade and come alongside them and support them, oftentimes they will stick with what they know, especially in the professional trade.
(22:28):
So investing in trade schools, investing in programs like Skills, USA, that is a great way to build in some loyalty with your customers. Last question. Hi Mike. My category is feeling crowded lately. What advice do you have for creating meaningful differentiation without reinventing the wheel? I want to start off by saying it's not always an r and d and product development innovation does not have to always come in the form of a new product. You've probably heard us talk about that or talk around it before. I think it's really important to keep that in mind. So again, I'm going to tell you and encourage you to kind of think outside the box in terms of how are you differentiating yourself, your products. And when I say yourself, I mean your brand from your competition. It doesn't always have to be a brand new product with a ton of bells and whistles.
(23:14):
Sometimes it is very assortment specific. You may need to add in new sizes or new depths or a different color. There's a lot of assortment specific things that you can do to help differentiate yourself from your competition. It all starts with understanding your consumers and your category. So start there and look for what they want and then figure out ways to give it to 'em in an effective way. Next, it can be service related, right? So it doesn't always have to be product related. It can be service related. How is your customer service team supporting the consumers that are shopping for your products? Are you helping them educate on how to do new products or projects? Excuse me. Are you helping them understand how to use your particular products in the most effective ways? There are a lot of things from a service standpoint and a product knowledge standpoint where you can come along consumers and gain a lot of goodwill and loyalty by just helping them understand the best ways to use your products in the marketplace and to support them when they are using your products in the marketplace.
(24:17):
So it can be service related. Another way that we're seeing be pretty effective is kind of mission related. And I will be the first to tell you to not get behind cause marketing just for the sake of getting behind. Cause marketing, I personally, strongly don't believe in that as a effective way to go to market. It's got to be authentic. If you are going to have a mission and a cause, it's got to come from who you are at the core of your brand and your company. We've seen that done really well in the past and we've seen it done not so well in the past. One of the ways that we've seen it done really well is I kind of go back to the Patagonia example. A lot of times Patagonia does a really good job of caring about making the best products in the most ethical way possible.
(25:06):
They don't alienate people by doing that because it's who they are and it's been who they are since day one. You'll see everybody wearing Patagonia apparel. So I think that's a good way to do it, but you got to be authentic when you're doing mission marketing. A couple other references that we've had recently. I had a really good experience with a Lexus dealership recently. Now I want to be very clear that I drive a very, very old Lexus is nothing nice or new, but even though it was old and a little crusty, they took really good care of me. They really focused on what would the consumer want out of this experience. And it made me pretty loyal to Lexus and also to that particular dealership because they handled it well. So you're hearing a lot of times in the marketplace and probably around your friend groups, customer service is going away.
(25:58):
That is an opportunity for people that are willing to invest in customer service. So taking care of your customers and going back to old school customer service is a way to build some really good loyalty and loyalty that people are willing to talk about. Here I am talking on a podcast about my Lexus dealer locally in Charlotte, North Carolina. There you go. And the last thing that I'll say is look for ways to surprise and delight. If a loyalty program is expected, it kind of loses its punch. Our producer, Jenna, who's off camera right over here, had a really good experience with John Deere recently where she had her riding mower serviced for winter, kind of getting it ready for the winter season. And when it was returned, they gave her a free T-shirt. She didn't expect a free T-shirt. She just got a free T-shirt and she was like, wow, that's really nice and cool.
(26:49):
And so that was a way to kind of get her attention in a way that she wasn't expecting. So the other thing to think about with your loyalty programs is how are you surprising and delighting your consumers? Because if a loyalty program is expected, like your free coffee card at your local coffee place, it kind of loses its punch, it becomes expected, and it's just part of how you're going to market. It's not a bad thing because it does build some loyalty, but it is not surprising and delighting your consumers. And so think about ways that you can kind of give them something unexpected that might really make their day and you'll get some really good benefits out of that because people will talk about it, they'll be loyal to your brand and that's what we're all looking for. Those are some ways that we think you might be able to kind of differentiate yourself in a really crowded market.
(27:40):
There's a ton of ways to differentiate yourself when things get crowded and cluttered. So hopefully that's sparking some thoughts for you and getting some discussions going within your teams. So there you have it guys. Thanks for the opportunity to talk through some of your questions. We combine some questions, so if there's anything that we missed out there, please let us know. Reach out to us, drop a comment, send me an email at mike.fowler@salesfactory.com. And as always, hit the like button, hit the subscribe button, click that little bell icon so that you always know when there's new information and new insights that are coming out that may help you with how you're analyzing your retail program. We appreciate you guys. We thank you for joining us on the Journey. We'll probably do another q and a session at some point, so send us your questions. We want to hear what are the hot topics and what are the things that are keeping you guys up at night because we want to discuss 'em here or have a guest on that's relevant to what you're thinking about. As always, in retail, we are always thinking about selling in and selling through.
