Top Marketers from Ben E. Keith Foods and Kohl Wholesale Talk about Issues Facing Customers, DSR Compensation, and More
by Caroline Perkins, 06/11/2014
In this in-depth interview, Caroline Perkins talks with David Werner, vice president of marketing at Ben E. Keith Foods in Fort Worth, TX, and Greg Whitney, director of marketing at Kohl Wholesale in Quincy, IL, about marketing strategy and much more. Werner and Whitney are the chair and co-chair respectively of the 2014 IFDA SMart Conference, taking place July 20-22 in Manhattan.To visit specific subjects in this interview, use the links below.
Marketing Strategy
Biggest Issues for Customers
Local Marketing Program Session
Use of SMart Conference
DSR Compensation
Millenials in the Workplace
Perkins: Let’s start by talking about your companies’ customer mix and an overview of your sales and marketing strategies. David, can you lead off.
Werner: One of our primary focuses at Ben E. Keith is the independent street customers. That would cover primarily restaurants – casual dining, white tablecloth, and fast casual. We don’t do a lot in QSR. We’re about 60 to 65 percent street business versus national accounts. Certainly our national accounts are important to us. They have continued to grow, but street business is a primary focus.
Perkins: And Ben E. Keith’s sales and marketing strategy?
Werner: We place a lot of value in the DSR. Two years ago at the IFDA Partners Executive Forum, one of the things we talked about during meetings with all our vendors was how they, as manufacturers, see the role of the DSR. Do they still see value in it? Do they feel like we need to be putting resources behind it? Every single one of them felt exactly like we do — that there is huge value in the DSR. He or she is our direct link to the customer.
So many of our high performance DSRs now have a lot of program business. We’ve gone from a DSR that produces, say, $4 million a year with 55 accounts to DSRs that are doing $10 million a year with 43 individual accounts. Our strategy, for sales and marketing, is to make them stronger so they can bring value to that transaction with good product information, good business information.
We spend a lot of time training them on things that don’t have anything to do with food so they can be more of a help to their customers. We’ve upgraded our talent pool. They’re smart, they’re energetic, and they’re technologically savvy, but they are not necessarily all millennials. These are not 25-year-olds coming out of college. These are folks that have industry experience and now they’re trying their hand at foodservice distribution.
Perkins: Greg, could you give us the same from Kohl’s point of view?
Whitney: Our company is a bit different from Ben E. Keith in that we’re smaller, but we have 140 years of experience. We’re a family-owned business with the sixth generation involved at this time. Our trade area is Illinois, Iowa, and Missouri. We’re likely to expand soon from the three-state area into touching-states with some contract business. Our business mix is 50-50 commercial and noncommercial. K though 12 and healthcare represent about 50 percent of our total mix and the other 50 percent is traditional street – independents, moms and pops, and bars and grills. We have a lot of seasonal business, summer accounts – golf courses, things of that nature. We like to tell people, if you think of Kohl Wholesale, think of that small town in Iowa that has two restaurants with 20 tables each. That’s our bread and butter. That’s our customer.
Kohl’s biggest market area for trade is St. Louis and we’re spending more time in that area, but our business mix is very rural. Our drop size is lower than our competitors by design. We’re known in the three-state area as being the bid or contract house. It’s our history for the last 20 years, our strength. Take K though 12 as an example. In the state of Missouri, we service 46 of the top 50 districts. Still, we’re 50 percent street. That’s a profitable side of the business.
Perkins: So is your strategy similar to what David was describing in terms of a focus on DSRs?
Whitney: Yes. From a training standpoint, we work with our top vendors. We ask specifically for them to help us with street and healthcare to make us the point of difference versus the competition.
I know the term “consulting” is used frequently. We have to quit order taking and figure out a way to help the customer stay in business. We’ve expanded to the point where we’ve got staff now that work in the field doing value added services such as waitstaff training, menu development, social media platforms such as Facebook, and even customer web sites. These are things that have nothing to do with the cost of the product.
Perkins: David, what’s the biggest issue with your customers right now?
Werner: The economy in our market area was never hit as hard as it was in other parts of the country, but it still has become tougher. A limited labor pool, taxation and rules, and healthcare are issues, but we see one of the biggest challenges for operators being the need to stay relevant and grab that spendable extra buck. There are some restaurants that have really taken off and exploded. They’re not reinventing anything, just working hard to provide bigger taste and bigger flavor so customers feel they are getting their money’s worth.
The biggest challenge we see our operators dealing with is having consistent business so you don’t have this huge swing on Thursday, Friday, and Saturday. Where they can make money is to appeal to a consumer’s current desires – local, sustainable, gluten free, where the buzz is. I would say staying relevant and gaining more consistency in their business are the issues.
Whitney: On the relevancy piece specifically, I think that is a significant issue for operators. How do you stay relevant in the economy today? What is your point of difference? What do you do today that you didn’t do five years ago? I think the successful operators today are the ones that have adapted. Some of our customers have been in business for 50 to 60 years and they are successful because they continue to evolve. But then you’ve got customers that are the same age and you can see that they’re struggling. They haven’t adapted. They haven’t found that next thing they need to do.
I want to add a second concern for some of our customers, especially K through 12, are the regulatory issues that are being passed down to them right now. Everyone in distribution is trying to figure out how to help districts. Regulation changes are happening at a tremendous rate and it’s having a big impact. Distributors have to help customers react and we’re working with our key manufacturers to make sure we have all the up to date information. It’s a difficult thing for everyone in the industry on the regulatory side.
Perkins: Greg, you’re leading a panel discussion at the upcoming IFDA SMart Conference talking about local marketing. Could you tell us about that discussion?
Whitney: We’ve got a couple of distributors and manufacturers who are trying to flush out best practices. We want to talk about what’s unique and different that’s done today that we can learn from and share. Food shows and flyers are still there, but they’re also the past. So what else are we doing to strengthen our ties together? We want to share that in a very candid format. From the manufacturer’s perspective, it’s about return on investment. From the distributor’s perspective, what activities can we continue to do with a justified request? How do we work together to do that? That’s the crux of the session — to have the panel share some ideas that they’ve had success with.
Perkins: David, how has the SMart Conference helped you in strategizing about the sales and marketing function?
Werner: I was moved to the corporate office from one of our divisions in the early 2000s and started our online DSR training tool. One of my peers was on the conference planning committee and mentioned this particular system in a planning session and they asked me to come speak. I went to the 2009 conference in Philly and I was blown away.
We think we know a lot – but maybe we’re not as smart as we think we are. I say that tongue in cheek, but a lot of times we think we’re ahead of the curve. We think we’re doing well. That conference kind of flattened me back into reality. Within a month I was moved into the marketing role. We really went to work and over the next 20 months changed the way we went to the street. It wasn’t all because of that conference, but it gave us an openness to look at new ideas and change things and listen to the customer. Every conference since then I’ve gotten something valuable.
It’s also the networking and meeting with vendors and suppliers and seeing our peers in the industry and sharing good ideas. I get as much at a reception talking to Greg or somebody else about ideas. It’s invaluable.
In addition, our division general managers go every year. That’s how important we think it is. It doesn’t matter if you’re a $3 billion dollar company or $300 million company, if you go with an open mind you’re going to get something out of it.
Whitney: We became participants in 2009, which is when I came with the company. We really utilize it for the networking and peer-to-peer conversation. The content we also clearly take back and use to help frame our business strategies. Attending also reminds you that you do some things pretty well. That doesn’t hurt your business model, either, when you say: “We’re on that, we’re ahead of the curve on that – or, oh boy, we really need to work on that one.” I think that’s what the conference does specifically for me, but also it reminds you about best practices and where you need to raise the bar. That’s what I love about it.
Perkins: During a panel discussion at last year’s IFDA SMart Conference, there was some discussion about DSR compensation — salaried vs. commission. What’s your take on that?
Werner: This is where I go away from being scientific to being opinionated. For us in our market, a commission-based pay plan has been most successful. When you get a sales rep that’s running big numbers, we have a reduced commission on their program business. You might have a 12-unit chain and we’re controlling all the pricing internally. They don’t get as much commission on that as they would on a regular street account. I think the commission-based system is more productive. It allows us to hit our targeted sales numbers as far as percentage of the total and it makes the rep independent. We do have some sales reps on salary, but the majority of our street sales people are on commission.
Perkins: Do you feel that you get a different personality for a sales rep that is on commission?
Whitney: Some of our recent hires have come from outside the industry and have been commission-based by design. They’re inherently hungry. We’ve had a lot of success with people that don’t have that industry background that are on a commission structure and they’re wowing some folks that have been here a long time.
Our company’s set up almost identical to Ben E. Keith. All outside sales are commission based. Anyone that’s on a salary structure doesn’t necessarily have a key account tied to them. Any account number the DSR is assigned has reduced commission on contract business versus street business. But all of our specialists, business developers and jobs of that nature, they’re all salary – center of the plate, chefs, and so forth. They are there to support the business with all customers.
What we’re trying to figure out is how to deal with complacency. A good portion of our team has been doing sales for a long time. They’ve got a lot of years of experience and make a very good living. As the company grows, they’re not necessarily growing so they’re probably at a plateau. That hunger is not there anymore. So we’re trying to figure, with a commission structure, how do you re-motivate these people? We don’t have it figured out yet. Our system is set up as commission-based, but we’re looking at some things that might move in another direction. Complacency can be an issue. We can see it.
Werner: I’m glad you said that because it’s a very valid point. We get these guys who’ve been in a territory 10 or 12 years, the kids are out of the house, the house is paid for. They are making good money and they just become flat. You’ve got loyal customers who are happy with the service levels and the support they are getting from their rep. The challenge with that rep is that they are opening only a few new accounts every year and that is enough for them personally.
Whitney: We’re the same. We don’t do the corporate model where we start reducing territory and give it to some newbies. We don’t take it away from them, but we also know that maybe that needs to be thought through.
Werner: It depends on the market, too. If we’ve got a decent-sized market and we’re not getting our fair share, we leave the existing rep alone, but we’ll also put a newbie in there. We hold them to the same regard in terms of gross profits. We don’t let them go in and sell on price. We tell them, here’s the accounts you cannot go into and here are your prospects — and then we turn them loose. Invariably the veteran will step it up. Instead of a mindset of: “I’ll get to that one next week or next year,” now the rookie is in there going after it. Invariably the veteran gives themselves a raise through effort and they don’t even realize they’re doing it.
Whitney: We’ve implemented that in the last several years as well and it just strengthens everyone’s effort.
Perkins: On new hires, I’m guessing some of them are Millenials. One of the subjects being addressed at the IFDA SMart Conference has to do with millenials in the workforce. There’s been a lot written about how they differ from Baby Boomers. Are you seeing any issues with this younger generation and how are you dealing with them?
Whitney: I think it has been well discussed and unfortunately we still don’t have answers yet in the industry. This generation that’s coming in is extremely talented, but there is an attitude of “what am I going to do tomorrow and when do I have your job and how soon can I get there?” It’s not an attitude where you take time to prove yourself. It’s now: “OK, let’s be done with this one task and what’s next.” So as managers we’re trying to figure out how we continue to motivate people and also how do you let them know that everything doesn’t happen overnight?
What we’re experiencing at Kohl’s is that, if we don’t have a blueprint map written down that’s going to get them in four different positions in two years, they’re not interested in staying with us. They are not hired to do a job for the next two years and do it well. They want to know how many jobs can they do and if they continue to succeed how soon can they make big money. It’s just a different mentality that we’re trying to appease. We recruit really well, but retaining these people is a challenge.
Werner: I would echo those sentiments. I think it is a little bit of impatience more than anything. It’s a “What can I do next” mentality. It is task based – now I’m done with that, what’s next. It’s not an attitude of making sure you do the task really well. I think for distributors, we want our people to take the time to learn to serve customers really well. That sense of impatience is something we’re going to have to figure out, including on the issue of retention.
Greg mentioned that Kohl’s is 140 years old. I imagine their overall company stability is the same as ours in that we don’t have turnover once you get to management. I was in a meeting the other day and there were seven of us in there, from a senior VP all the way to a category director. The seven of us had almost 200 years experience with Ben E. Keith.. The reality is good people will stay in a good job. That’s hard to tell a Millennial that if you just put your nose to the grindstone, you’re going to be successful. They expect that a senior job is just waiting to be filled, but you have to have patience and eventually the opportunity will come.
Whitney: I think the Millenials bring in a different mind set. They don’t hesitate about job-hopping or how many business cards they have. It’s almost an expectation for their experience, their whole experience in life. How many jobs can they do and how many unique things have they done? As a distributor, our concern is around where do we get the good people for the future? The bottom line is there is an expense to this because we all invest in training. We want professionalism in supporting our customers and we want a stable environment for the customer because their success is ultimately our goal.
Perkins: As chairs for the planning council for the IFDA SMart Conference, do you have any advice for people who haven’t attended?
Whitney: Get active, get engaged, keep an open mind. Meet some people, throw some business cards around. Don’t just sit at the same table every day. Get active. When people do that, that’s when the mind share really starts.
Werner: I agree. If you’re going to spend the time and effort to go, get in there and get busy, because you’ll get more out of it. I would say too, I would like to see most of our primary, preferred vendors there. I would like to see a few more suppliers involved, just from the standpoint of what’s being told to the distributors. If someone is responsible for distributor sales or direct marketing to the sales force, they should hear what’s being discussed. How much better would it make it for them as a supplier if they could be part of that process?
No comments:
Post a Comment