GEOCONCEPT Account Manager, Marianne Jouval, works closely with major players in the Consumer Goods Sector (CGS). We caught up with her recently on the subject of the problems the industry is currently facing, with a focus on challenges managers and their sales teams experience in markets where consumers and distributors are redefining the rules of play….
What are the main trends you are seeing at work in the consumer goods arena?
I can see three, and they are all closely linked to just one root cause: changing customer expectations – that’s not just in the food industry, but also in the hygiene, beauty and household market segments. Over the last ten years this change has manifested as an ongoing rise in demand for products that are healthier, environmentally friendlier, and ethically sourced. This is where the potential for growth lies. For example, according to a study carried out by Agence Bio, in 2019, 7 out of 10 consumers in France purchased organic foodstuffs at least once a month, as against only 40% in 2011. Whether the aim is to simply maintain market share, or more proactively, to increase it, long established consumer goods players will be well advised to take a hard look at their product ranges and invest in innovating accordingly, along with all that this entails upstream in terms of “responsible” sourcing and, of course, cost control at every level of the value chain. This is the first trend.
The retail industry is increasingly feeling the pressure to transform product ranges, and all the more so since – after decades of responding to customer demands to extend product ranges and offer ever larger numbers of individual brands – the consumer goods sector is now pursuing a strategy to tighten the reins on numbers and scope when it comes to product brands. In a move to fight back as disenchantment with hypermarkets and supermarkets on the part of the public grows, some store chains are, indeed, seeking to reduce their classical product lines in scope and number in favour of more upbeat kinds of concept, albeit ones that ultimately take up a lot more shelf space. The result? They are also reducing the number of brands. This means, for example, that French supermarket chain Carrefour is planning a 10% reduction in product brands on the shelves of its retail stores by 2022, mainly in the non-alimentary product ranges. Even though hyper and supermarkets will certainly remain the main artery for sales overall, consumer goods sector players are seeking to compensate for any reduction in the numbers of product lines by diversifying their networks and multiplying their points of sale, notably to operate at proximity and so serve local needs, in a context where the yardstick for success will be pegged to targeted or more selective product ranges. This is the second trend.
The third trend is a focus on building a direct relationship with the end customer with the aim of better understanding and anticipating consumer desires and needs. This will happen through developing proprietary e-commerce websites and maintaining a strong presence on social networks, as we can see right now in the cosmetics sector. This approach is still multi-channel rather than truly omni-channel, and provides a platform for established consumer goods brands to counter the Digitally Native Virtual Brands (DNVB) offensive, those young, innovative brands that are born online, sold using tactics akin to direct selling, and which are rapidly increasing their market share. Forrester estimates that these smaller brands have already captured 10% of the American cosmetics market, and are expanding 4 times faster than the traditional, established brands.
What are the concerns of sales managers you meet in this sector?
Sales managers have to translate strategy into action on the ground and give their teams the wherewithal in terms of solid resources to develop sales. They must help them reconcile the challenge of how to both conquer new markets and protect existing market share. In the current context of distribution network diversification, this goes hand in hand with differentiating between strategies for establishing a presence and those focussed on animating and promoting points of sale: clearly, we are not going to work in the same way with local bakeries or independent pharmacies as we do with major store chains.
The real challenge here is to set up a structure with capability to cover the whole of the territory and every customer typology. This requires that sales staff are assigned not only individual targets aligned with a global strategy, but also balanced client portfolios in terms of potential and workload. This is typically an issue of sales sectoring, and is one for which Territory Manager provides the solution.
The second problem is how to manage the sales force at an operational level, with mobile sales staff needing to optimize their time and travel as a function of shifting priorities that might go against established habits or preferences. Our Opti-Time solution opens the way to new perspectives on optimization and productivity gains, and these are proving to be of interest to a growing number of sales managers.
Can you tell us a little bit more about how consumer goods players engage with sales territory sectoring?
There are two case scenarios. Sales sectoring is either performed internally, or outsourced to an external consultancy. In the first instance, the companies equipped with a dedicated solution are far and few between. Surprising as it may seem, the main tool used is Excel. Sales sectors and customer portfolios are defined on the basis of business indicators, market data supplied by panellists and sales figures. Sectoring may take the form of lists which bear no visible relation to the territory, in the absence of any mapped representation. Often, the only geographic criterion taken into account is the post code or town, neither of which takes into account any kind of ground truth.
This method may also lead to some other counter-productive, or even negative, effects as time goes on: sales staff may leave, others arrive, accounts have to be reattributed to balance portfolios… Gradually, the original sectoring loses coherence, and the pertinence of former assignments is diluted until it finally disappears altogether… Sales performance will ultimately suffer, an individual’s work satisfaction will wane along with commitment … Territory Manager is an application that can prevent this kind of downwards spiral before it even starts by providing an optimum breakdown of your territory into balanced sectors, taking not only geographic realities on the ground into account, but HR and business criteria as well.…. A mapped representation means you can see at a glance the whole of the territory is covered and that sectors are balanced. You can also instantly view the impact of account reassignments or any other changes you make to the original sectoring.
The opportunities these applications offer are increasingly of interest to companies that outsource their sales sectoring to specialised consultants – whether regularly, or as a one-off event: special circumstances might dictate, in the case of a merger-acquisition for example, redefinition of the whole sales force structure. A consultancy commissioned for this kind of work generally delivers its recommendations in the form of a territory breakdown along with lists of customers and prospects for each sales representative or sector. The problem with these snapshot documents is that companies or organisations are provided with a fait-accompli over which they have no control: they can’t test out new hypotheses, or integrate new parameters, and nor can they see the consequences of any adjustments requested on the part of sales staff. The need for autonomy and a capacity to reflect an evolving situation is leading more and more companies to consider the option of buying into a dedicated sectorization solution – something that, incidentally, does not preclude reference to external resources as well to benefit from their methodologies and expertise.
What is the level of market penetration generally for routing and scheduling tools in consumer goods sales organisations?
It’s still relatively weak, but business managers are thinking about it and are showing their interest, the more so because of concrete examples of productivity gains we can cite that are very convincing. For example, Danone Produits Frais France has increased the number of visits their sales force achieve by 25%, by equipping its sales personnel with tablets and our Opti-Time for Salesforce solution linked in with the Salesforce CRM. In total this move has resulted in 40,000 more visits per annum! To achieve this kind of result, sales personnel have to be the first to be convinced of the utility of these tools. Presenting such a scheme to this group of people who can be highly protective of their autonomy and independence can be problematic: route plans drawn up and optimized as a function of business priorities may be perceived initially as a move to exert control. But sales staff who play the game are quick to realise that on the one hand, it is a real time saver, and that on the other it can help them to achieve their targets. For example, our client Berner reported that longstanding sales staff rejected Opti-Time to begin with: they felt they had their own portfolios under control and understood their sector well enough to know which customers they had to see and when. The management team decided not to force them to use the tool, but set it up for newly employed staff to use. The result was that new sales staff were operational in just two months instead of the usual four. Seeing this happen, the «old» staff were soon asking to have access to the new tools.
What works for Berner, in the professional tooling sector, is valid too for the consumer goods sector! A solution such as Opti-Time brings business parameters and rationality back into decision-making. Acting spontaneously, human beings do what seems logical, they are ruled by feelings, and tend to reiterate established patterns and habits. They don’t always see that perhaps these are working against their own objectives. For example, it might seem rational to take advantage of a visit to one point of sale by visiting other POS in stores located nearby. But if the marketing priority is to strengthen the branding position of the first store, this may not be such a good choice. If the tool is configured to take this priority into account, it will draw up a route plan that gives priority to stores in the first chain, and factor in less visits for the day while cutting out the extra kilometers and work involved. This might be completely counter-intuitive for many sales reps, but is a much more rational choice with regard to brand strategy, and is therefore more closely aligned with company objectives.
For organisations still operating according to traditional methods, multi-criterion route planning and optimization for a sales force is nothing less than a cultural revolution! Such a revolution will be fruitful a lot more rapidly when a dependable change management device is put in place to support each salesperson as they adopt the new working methods and tools.