What types of Retail Pitches are there and when do I use them?

This week, I've been training my new consultant, who is FANTASTIC by the way. And her insightful questions have unveiled topics that I haven't covered in my blogs and should! 

So without further ado, here are the different types of retail pitches any product entrepreneur will find themselves using at any point in time. I'll explain why you need to know these at the end.

Tier 1: “Elevator Pitch” Retail Story.  Objective: To gain the initial interest of retail buyers. Length: 30 seconds

Usually this short-form Retail Story (AKA Retail Pitch) covers just the basics. It is a short description of your 1) product, 2) current retail distribution,  3) sales numbers and 4) past marketing success.

For example, "(Target Market) will use (Product X) to (solve this problem). (Product X) is currently sold in (Retailer 1), (Retailer 2) and we are in discussions with (Retailer 3). We average (X) Units Per Store Per Week in sales. Our last marketing feature in (Media Vehicle) drove sales lifts of 150% for our retailers. Do you have a few more minutes to discuss whether our line is a fit with your stores?" 

This might be what you use at a trade show when you greet a buyer, sales rep or distributor that visits your booth. Or what you say when you get a buyer on the phone or come across the store manager in a boutique. 

Tier 2: “Coffee Pitch” Retail Story. Objective: You have now piqued the buyer’s interest after the Elevator Pitch and have bought a few more minutes with the buyer to discuss further. Imagine you are having a quick informal discussion over coffee or you've bought a few more minutes of the buyer's time during that initial phone call or trade show booth visit. Length: 5 minutes.

The goal here is to offer more context or color commentary on the Elevator Pitch PLUS add a quick reassurance that your vendor execution is up to snuff. 

For example, "(Product X) delivers the benefits of (benefit 1) and (benefit 2) and is different from current products in the market because of (Point of Difference). We can deliver these benefits better than our competition because of (Reason To Believe). (Product X) retails for (SRP) and we offer retailer margins of (x%). As for sales, our sales turn of (X) Units Per Store Per Week at (Retailer 1) is higher than the category average and higher than (Competitor 1). Sales have grown (X%) versus last year and we project it to grow another (X%) this year. We have the ability to support sales at shelf with our marketing plan. Past features include (list 3 to 5 key media vehicles) and our next feature will be (media vehicle) on (date). We are reliable vendors and execute well; our vendor scorecard ratings are all in the (% range). I'd love to sit down and walk you through what we propose for your store. Can I set up an appointment?"

Tier 3: “Presentation Pitch” Retail Story. Objective: You have earned a formal appointment with the retail buyer and will now go through a longer, more detailed Retail Story. In this format, you are making a formal business case for how you'll benefit retailers. Length: 30 minutes

The goal here is to go into detail on your sales history and forecasts, the recommended assortment for that retailer, plus your detailed marketing plan for how to support sales at shelf. You'll also align your proposals to their merchandising objectives and growth goals with analysis such as 'how you will add incremental sales to their assortment and not cannibalize current items on shelf', or 'how you build basket size through either multiple purchases or cross-purchasing with complementary items'. You will discuss at length vendor execution, inventory management, ship dates, and product testing. You will discuss pricing - SRP, wholesale cost and margin. You may also spend time talking about how to differentiate your product assortment from other retail channels. 

I don't have an example for a "Presentation" Retail Story because it is unique to the retailer you are presenting to and to each business' strengths and weaknesses. But you can see what a template looks like here. My clients typically send the Retailer Pitch Deck to retailers they are cold-calling or are lukewarm. It's amazing how often we convert retailers interest with the Retailer Pitch Deck. 

Finally, why is it important to differentiate these different pitch types in your proverbial 'sales tool kit'? You have to select the right level of information for the situation you are in. Obviously. But you'll be surprised how often buyers get turned off because the right information is not succinctly presented to them. Us buyers are impatient folks who get pitched to constantly. Cutting to the chase actually engages us. The categorizations above ensures you tailor your message to the buyer's frame of mind in the various occasions you might encounter them for maximum engagement.

I cannot tell you how often great brands get told "NO" because they don't tailor their message and just rattle on with information that is not relevant for that particular moment. Buyer's evaluate brands in stages. It's a filtering process. So help them filter by organizing your information in a way that aligns with their thought process. If there is one way you can make a buyer's life better ( and I'm pleading after years of frustration with bad pitches), it is to organize your pitch and tailor your message to the buyer. 

This post also appears on Both Sides of the Retail Table (www.retailtable.com).

From the Buyer’s Perspective: Do Retailers Want To See The Market Research I Have Conducted?

By Vanessa Ting

Buyers don't necessarily want to see the results of your market research, but rather, they want to know you have validated your decisions and the product itself. Decisions like product name and concept, packaging design, packaging copy, product claims, marketing messages, formulas and flavors/colors. For example, conducting in-use testing (a consumer takes your product home and uses it for a week, then answers questions about their experience) assures that your product delivers to the promises and claims your product makes. This helps reassure retailers that if they put your product on their shelf, customers will enjoy the experience thereby making their experience at that store favorable. No retailer wants to be known as a store that carries products that don’t work.

Market research is not a check box and it does not have to be formal or cost anything. Plus, it is actually helpful to your business! Just getting out there and talking to potential consumers to get feedback is the best kind of market research. Do it early, do it often.

When you can show a retailer you’ve done this kind of homework, whether it is communicated in a slide or bullet point in your presentation deck, it will give a buyer one less reason to say "No."

Other helpful ways of incorporating market research data into your retail pitch is using it to prove the market opportunity of your product. This is called market sizing. It’s looking at the potential population of consumers out there and determining what percentage of that population will buy your product. This reassures buyers that you chose your target consumer carefully and that enough people out there want your product. Another way to use market research is in building your volume forecasts. By buying market research data, you can learn the market size, how many people typically buy this type of product, and the market share each competitive brand owns, you’ll be able to figure out a good estimate for the potential volume of your brand in total and your brand in each of your retail accounts.

Have you conducted informal or formal market research for your product?  Did it pay off? Let us know!

For Market Research Tips on the Cheap, check out an older post http://www.retailtable.com/tips-market-research-on-the-cheap/

FROM THE BUYER’S PERSPECTIVE: HOW DO I KNOW IF I’M READY TO PITCH TO A BUYER OR MOVE MY BIZ TO THE NEXT LEVEL?

By Vanessa Ting You are ready to pitch to your first retailer when you can say “I've done it!” to the following:

• You have conducted market research with potential users and retailers to qualify the concept, price, product and packaging.  Potential users should consist of more than just your friends and family.  You want objectivity!
• Your product meets an unmet consumer need and delivers product benefits in a unique way.
• You have ensured your retail price is within range of your competitors, but also occupies a distinct price point to create differentiation.
• Your retailer markup is in line with retailer’s expectations.
• You have a product margin (your company’s margin) that is healthy and sustainable.  Get those cost of goods down (COGS) – even if it means producing overseas.
• You have tested your product with a "guinea pig" (also known as "Test and Learn") retailer to make sure EVERYTHING has been road tested – including your sales pitch, retail promotions, and shipping/fulfillment logistics.
• You have created a brand that is ownable and memorable.  And have built a multi-prong marketing plan to help build awareness and drive purchases at shelf.
• You understand the basics of inventory management.
• You have a retailer pitch deck. This includes sales history or a sales volume projection, and an explanation for how you will drive sales for your intended retailer.

Generally you know whether you are ready to advance to your next tier of retailers when you’ve been selling in your current tier for 6 to 12 months and have collected sales data that demonstrate steady sales growth over time.  If your sales are not growing in 80% of your stores, then it’s time to pause and diagnose the problem.  Until you figure out why sales are not growing, you are not ready to advance to the next tier.

A note about tiers: A good retail distribution strategy paces your retail growth into stages or tiers.  These tiers are specific to your business and designed to help you reach your ultimate dream retailer.

FROM THE BUYER’S PERSPECTIVE: DO RETAILERS CARE ABOUT MY PRODUCT’S PR EXPOSURE?

By Vanessa Ting It’s not just PR exposure that retailers care about, but your overall ability to build brand awareness and create demand for your product.  And PR is just one lever to use to create demand for your brand.

Romy offers great tips on how entrepreneurs can generate PR for themselves.  I will add to that by suggesting what you can propose to retailers to supplement your PR efforts, especially if you're on a limited budget.

If you're unable to drive customers to those retailers through PR, pull other levers at your disposal such as:

• Use that customer list you have built over time.  Offer to drop a direct-mail postcard or email announcing the launch of your product to your customers in your retailer’s geographic area.
• Leverage social media. Tell retailers you will create programs that direct people following you on Twitter or Facebook to their stores. Combine it with a promotional offer (as mentioned above) to sweeten the deal and get people running to those stores.
• Strike strategic partnership deals with complementary manufacturers who have the PR muscle for co-branding or cross-purchasing (e.g., coupons) initiatives.
• Focus on driving impulse purchases among shoppers already in the store. You can do this by making sure your packaging gives you a noticeable presence and clearly communicates what you're selling. Work with the retailer on giving you prominent merchandising space (may be hard if you can’t sweeten the deal with additional funds). Or use your limited budget to create distinct POP displays or shelf signage. Or create a promotional offer (that you fund, not the retailer) such as “Buy 3 and Save” or “Buy One Get One Free”.
• Show your sales history. If you can show these potential retailers that you have been achieving strong sales in your current stores, this may encourage them to give your product a try. Nothing speaks louder than a proven sales record.
• Get creative with solutions. If these retailers are reluctant to take a gamble on you, offer solutions that mitigate some of their risk and shows your confidence in your product. For example, you can offer consignment deals or a limited time store test.

FROM THE BUYER’S PERSPECTIVE: WHAT CASH FLOW CONSIDERATIONS SHOULD I BE THINKING ABOUT NOW VERSUS LATER?

By Vanessa Ting Selling to major retailers is a strain on cash flow.  There are many fees and charges you will be exposed to within the first 6 months of getting a “Yes” from stores like Target, Walmart, Costco and other national retailers.  These costs will be covered in more detail in a future post, but for now, here are the cash flow considerations you should investigate further.  Since Romy covered the risks to positive cash flow, I've taken the approach of suggesting cash investments you should make now versus later to increase your appeal to retail buyers (and improve your cash flow down the road).

NOW:

Invest in funding the “right” Suggested Retail Price

Avoid artificially high retail prices.  Many first time product entrepreneurs are unable to get favorable costing because of their small production orders.  As a result, they price their products (both retail and wholesale) artificially higher to offset the high production cost per unit.  Make sure you price your product strategically (e.g., good, better, best) and based on what the market will bear.  Obviously it is important to price for your own profitability too, but at the beginning, you may need to “invest” in your business by taking a smaller per unit profit.  This obviously reduces incoming cash flow, but if you are realistic about your breakeven point and manage your financials methodically, it will pay off.  You want to avoid having fluctuating retail prices in the market or artificially high retails that can hurt your sales volume, thereby making you less attractive to retailers.  And unless you have built a strong brand, often times your product cannot justify the artificially high retail price.

Invest in formal or informal product usability testing

Shop your prototypes around for feedback to as many consumers and retailers as possible before you commit to production.  Nothing is worse than bringing to market a product that has not received “buy in” by these two important stakeholders.  Getting as much input now will save you from the buyer rejection, the cost of consumer returns or complaints and the expense of unsold inventory.  Avoid relying on friends and family feedback – it will always be biased.  Leverage entrepreneur networking groups, stop shoppers as they walk out of your targeted stores, invest in focus groups, contact retail buyers for a “preview” (which will NOT hurt your future chances or ruin the “wow” factor – big misnomers!).  Get creative; there are many cost-effective ways of getting this input.  Major consumer goods companies spend a disproportionate amount of their budgets on product research and usability testing prior to launch.  Obviously you don’t have their big budgets, but you should take their cue and spend a little money up front to save you money later – and prevent blowing your first and only chance in market with retailers and consumers.

NOW (AND LATER):  

Invest in branding early and often 

To be attractive to buyers, you need to have built a brand that distinctly targets a consumer segment.  This is more than designing the colors and logo (visual brand identity), but having a brand strategy.  Building a brand effectively occurs over the span of time and cannot be rushed, so start now.

Building a brand requires a financial investment, both in defining your brand now  (research, strategy development, identifying key messages) and in executing the marketing tactics later (advertising, sampling, event marketing, packaging, social media, retail promotions).  Without an attractive brand that can drive store traffic and sales, buyers will find your product less valuable to them (and at worst to you, buyers will turn to a current vendor with similar manufacturing capabilities to knock off your idea at a cheaper cost.  Strong branding can prevent this!).  Branding is a large up-front expense, as well as an ongoing cash flow requirement throughout the life of your product(s).

LATER:

Hire Vendor or Manufacturing Reps

They are usually required by many major retailers.  And it is usually to your advantage to use them to help you make contact with buyers, sell in your products, navigate the new vendor set-up process, provide customer service, and buyer relationship management.  Often times, these reps take anywhere from 5% to 10% of net proceeds after you receive payment, which reduces your incoming cash flow.

Final thoughts: In general, all cash flow considerations “now” should strategic, forward-thinking, and prioritized by the potential payoff (the investment horizon will be longer).  Invest up front to avoid last minute changes or redesigns that can be costly.  Cash flow considerations “later” are more operational in nature with more immediate ROI.

From the Buyer’s Perspective: Will Selling at a Major .Com Help me Get Into Major Retailers’ Shelves?

By Vanessa Ting The short answer is no, except in one unlikely situation.

The long answer is....

Major retailers are more concerned with the sales traction you have built in other brick and mortar stores.  And the more established those stores are, the more impressive your sales results.  It is important to note that how a product sells online does not directly transfer to how it will do in-store.  This is why selling in the .com channel doesn’t do much to win over the store buyer.  Even if it is Amazon.com.

However, selling in a .com environment may be helpful in the following case:

Many large stores have .com sides to their business.  For example, Target has Target.com and Walmart has Walmart.com.   In these situations, it can sometimes help to first get into the .com side of the business.  By doing so, you can prove – using Target as an example – that Target shoppers (at least the online Target shoppers) have an appetite for your product.  It’s a little easier to translate sales performance from Target.com to Target stores than it would be from Amazon.com to Target stores.

Once in a while, those Target or Walmart store buyers will scan the list of  their company's .com products to find hot-selling items that are not being carried in stores.  In exceptional cases, they will bring those items into their store assortment.   Stores buyers are typically different than .com buyers, but they do communicate.  So in this scenario, it is conceivable that you can win a place at shelf by selling to .com first.  But this is more so the exception than the norm, so I would not recommend this as part of your sell-in strategy.  Your best sell-in strategy will always be to prove your sales in other stores first before approaching the top-tier stores.   

Ultimately, selling at .com will not hurt you - as it helps drive your company sales and profitability.  Romy makes excellent points on the upsides of selling on .com.   So why not do it?!   Just make sure your .com retail prices do not undercut your brick and mortar retailers.

From the Buyer's Perspective: Five essential tips for getting the attention of a retail buyer!

By Vanessa Ting

The common tips you might hear include:  Hire a sales representative, go to trade shows, have your friends and family make requests at the store.  These are all effective tips, but there are a few more ways to be resourceful.

Tip 1:  Be at the place of influence of your targeted retailer.  Whether they buy for the big guys (Walmart, Walgreens, Kohls) or small independent retailers, buyers are out in the market place and shopping competitors to stay on top of trends and get new product inspiration.  Try and find out where they shop.  Often times they are shopping small boutiques and stores – since many new trends start there.   Then, using this intelligence, get your product into that store.

Tip 2:  Research that retailer and determine what is important to them.  If they are publicly traded, read their annual reports and listen to quarterly earnings calls to learn their strategic focus. Knowing this, you can spin your retail pitch to align with their strategies.

Tip 3:  Shop their stores.  Notice how they merchandise your product category.  Observe price points, how they organize brands, piece counts.  Form opinions and recommendations on how they can do things better to grow their business; and those recommendations should also include adding your brand.  Adding value and being a credible source of unbiased industry intelligence will earn you ten more minutes with that buyer than if you were calling just to pitch your product alone.

Tip 4: Another way of grabbing attention is showing your product has selling power.  What is its selling history in other retailers?  Have sales been growing steadily over time? Sales is THE most important metric to grab their attention.

Tip 5: Lastly, take a step back and make sure you have a tight elevator pitch.  30 seconds.  Be succinct, clear, and persuasive.  Give them the information they want to hear.  No more.  No less.

What tips do you have to share with our community?  We would love to hear what has worked for you, so please share in the comments section below!

Next, Romy and I will tackle the common question, "What things do I need for my retail pitch?"  Check back with us soon!