The Customer is King

The Customer is King

by Wendell Simmons

“The Customer is King” is a pearl of wisdom we’ve heard many times that doesn’t tell the whole story. As any student of history will observe the king-peasant relationship model is not sustainable. Yet in more recent history the retailer-brand relationship has sometimes taken on these dynamics. At least from the brands point of view. 

Today, CPG brands across the board are working to establish a healthier trade relationship, not through storming the king’s castles but through better collaboration. The 2013 IDC-CGT Shared Strategy Survey1 identified five key sales and marketing objectives to improve key business relationships and ultimately their own bottom-line.

29% of the respondents identified “partner of choice,” or category captains, as their top objective.  18% want to increase “customer loyalty.” Typically category captains work closely with the retailer to optimize category performance. In exchange for this effort, category captains gain access to retailer data and their SKUs are favored when tough calls need to be made in the category.

So partner of choice (or increased loyalty) is a huge win for the brand, but is earned as a result of excelling in many other interactions such as improving customer service. Every day, brands juggle thousands of interactions managing shipments, product quality, merchandising, consumer issues, contractors and brokers. Insuring that these activities are executed correctly and quickly responding to any exceptions or issues that crop up are all customer service issues.

Advanced brands recognize that all of these (customer service) activities impact each other and the retailer, so having a consolidated view and control system is critical for understanding and improving the retailer’s experience.  Just like you and me, retail staff prefer to do business with suppliers that know what’s going on and can address issues proactively.

Ranked equally with improved customer service is increasing revenue through better collaboration. The account teams responsible for revenue work with their buyers to craft trade promotions that meet the retail requirements, drive incremental revenue, and contain cost elements such as slotting fees and merchandizing support. The buyers, being human, make decisions based on the numbers and the relative risk of ugly surprises. Better collaboration (and communications) provide insights into what numbers will work for the buyer and gives the buyer a higher level of confidence in the supplier.

Account teams with integrated access to customer service, shipment, and trade promotion data are also more empowered to take advantage of unplanned opportunities that pop up. With fingertip access to this information, account teams can pivot their plans and commitments with full confidence in their ability to execute.

And with better access to accurate information (including retailer information collected through a collaborative relationship) the brand can spot opportunities to reduce costs in fulfillment, promotions, and penalties.

These are all great objectives for CPG, or any business for that matter, but the glaring fact this survey uncovers is that about 80% of respondents are not ready to embrace these goals or don’t rate them as important. And that is the state of the industry. Competition for shelf space and share of consumer’s wallets is fierce yet many brands view the relationship as more combative rather than collaborative. So the good news is that for those organizations that believe that collaboration is more effective in the long run can still distinguish themselves from the pack and drive more revenue to their bottom-line.

So, yes, customers are kings. But savvy brands are engaging their kings with a mutually beneficial dialog that can ultimately transform the king into a true partner.

1. IDC-CGT Shared Strategy Survey, 2013

Consumer Packaged Goods, CGT Trends, consumer goods companies, CPG manufacturers