“That was then, and this is now.” We’ve all heard the saying. “What was before isn’t necessarily what’s needed now.”
The last few years have seen a number of sales agency consolidations, buyouts, and alliances for regionalization throughout foodservice. Pressures on the full-service agency’s cost-to-serve --- further exacerbated by shrinking commissions --- has created an atmosphere where organization mergers and acquisitions are suddenly even more common than before. These have been further fueled by a few key manufacturers openly stating that they “…want to reduce the number of brokers they work with to no more than six over the next few years…” and you have a “perfect storm.” The number of viable foodservice markets in the US is often quoted at around fifty. Doing the math, that would mean that each sales agency would need to cover an average of eight markets (or more) for this strategy to come to fruition. Let the games begin. And they have.
What drove this “demand” from the manufacturer? I contend that their long-term view is one of a flattened field organization, firmly putting the old-school “regional sales manager” position at risk.
Consider:
· Manufacturers have struggled for years to recruit, train, and properly direct the RSM position within the context of the fragmented foodservice channel.
· Sales agencies likewise have complained bitterly that the RSM is the weakest link in the ever more complex sales chain (in fact, the 2006 FSMA Top2Top Conference devoted an entire session to issues surrounding “regional manager effectiveness”.)
· Technology can now provide dynamic, rich data regarding sales, shipments, and programs to analysts and executives at the manufacturer’s HQ. Properly managed and evaluated, this data can help both parties “fine-tune” agency action plans to more effectively address market or competitive issues as they arise. Local market “nuance” can come directly from the agency to help craft the correct response. Again, without the need for RSM input.
· Technology also easily allows “on-demand” video conferencing opportunities, so that despite the distance separating them, manufacturers and agency team leaders can schedule conferences and meetings as if they were in the same room.
· Customer interaction? That was then…many RSM’s today don’t make many operator or distributor calls. They are too busy working the phone with corporate HQ, and sending CYA emails from their Blackberry.
· Food shows? Manufacturers long ago abdicated much of their involvement in local and regional food shows, pushing the responsibility (and expense!) down to the agency. In fact, today it is an unusual RSM who even works a booth at any but the biggest distributor or regional restaurant shows.
· Trade Promotion? Agencies have taken more and more responsibility for local market business-building. Many have asked (and received) their own budget allocations so they can directly manage the local MDF (market development funds) within pre-approved action plans.
· Issue resolution? Key agency managers know that they need to “jump over” the RSM and go directly to the VP of Sales or Zone Manager (the decision makers) to get anything done. So that’s what they do.
· Agency and DSR training? Sadly, many of today’s RSM’s are often incapable of conducting an effective training session in front of a group of agency reps or DSR’s. Furthermore, fewer and fewer agencies and distributors hold weekly sales meetings that are open to manufacturers and principals, so alternate methods of training must be developed. Manufacturers still provide many “tools” in the form of marketing literature, but “personal training and product demonstrations” at the sales agency are too often, a thing of the past. At best, some manufacturers have created web-enabled training or webinars to try to fill the gap. Again…with little or no interface from the RSM.
· Chain work? Manufacturers have already allocated responsibility for national chains to their HQ National Accounts team, often including cross-functional teams to address product development, logistics, marketing, and customer service. These teams exist in many organizations today, and effectively address chains that transcend regional or divisional lines. Regionalized chains typically fall to the agency “chain operator” team. Where does the RSM fit in either of these puzzles?
In the cold hard light of day, the field manager position in foodservice today has become increasingly redundant. And honestly, that might not be a negative:
· Manufacturers will have more funds available for market support and to allocate to agencies for “supplemental activities”
· Agencies will, by definition, have more direct authority over their own markets
· Direct accountability for tactical execution will now fall where it should. On the front line “customer touch-point”: the agency.
Such a radical structural change would require both the manufacturer and the agency to make other concessions in their organization in order to properly expand effectiveness:
· Manufacturer communications would default to a senior sales group at HQ designated to interface with agency sales partners. With broader accountabilities, and a narrow range of agency sales organizations, this small HQ senior field sales group would be the primary point of contact with the sales agency account manager for each consolidated agency.
· Both team contacts would have full authority to make decisions and commit resources against initiatives.
· Agency team leaders would become formal participants in the manufacturer’s annual strategic and sales planning sessions. Counterparts for both in marketing would also participate.
· Customer Service for both elements must be world class, capable of integrating their systems for maximum efficiency. Leading edge logistical, technological, and communications tools would further assure effectiveness.
· Well-trained, entry-level manufacturer sales people would be equipped to undertake “surge” efforts in any market, conduct new product roll-out support, conduct agency support functions, and/or assist in key market shows. This level could also be a developmental position from which the manufacturer can draw his HQ sales and marketing team. (No need for field managers to be forced to relocate to take a promotion; these team members are already at corporate HQ.)
When the foodservice sales process is fully --- and openly --- examined, organizational changes in the industry’s go-to-market strategy are called for to address the evolutionary shifts seen in the marketplace. There is ample precedent in other channels --- and other industries --- to changes of this magnitude.
Who will be the first manufacturer to re-organize in such a radical fashion? Rumors and recent clues notwithstanding, it’s anybody’s guess.
Anyone interested in a “pool”?