Reflection and Resolutions

It’s a few days early, I understand, but Happy New Year!

As I have oft been reminded these last few days, this time of the year is perfect for reflection and resolutions.  There are several people who should take credit for my “jumping on the bandwagon” and posting about my reflections on this past year, and my resolutions for 2011.

In no particular order, these three authors and posts were the catalyst for my content this week.  If you’re reading this post, please click on the links and read the ones that inspired me.

Amber Naslund | Brass Tack Thinking | The Brass Tacks of Resolutions | 

Rick Stilwell | Over Coffee | Just Doing It in 2011| 

C.C. Chapman | ccchapman.com | End of a Decade | 

This past year has been a challenging year for me.  In addition to the commitment I made when I created this blog, I also run a beverage manufacturing company.  My partners and I bought a 33 year-old company almost 2 years ago.   The transition period took almost 14 months to complete, and during that time we weren’t able to focus on much marketing or brand building.

During the past 12 months, we launched new products, a new website, and, a new on-line store.  We doubled our marketing spend, developing new sales materials, attending more tradeshows, and developing strategic partnerships.  We also hired new personnel.  In an economy where other companies were cutting budgets and people, we went in the opposite direction…we spent.

As anyone can tell you, when you ramp up your spending like we did, you simultaneously ramp up your stress level.  Thankfully, a lot of the programs we initiated have paid dividends, and should continue to benefit us in 2011.

My new year’s resolutions, at least for this blog, are to write more consistently (but always focused on providing valuable content, right C.C?).

In order to do that, in addition to my normal posts I am resolved to read more social media, marketing, and/or business management books.  I’ll post a review of the books, and offer up practical information I can implement in my own businesses.

I am also going to add an interview category.  I’ve been involved in foodservice beverages for over 15 years.  Over that time, I have networked with several FnB industry leaders.  Their views and opinions of industry trends are not only insightful, but also relevant.  I’ll be asking them about their views for the industry, current trends, future predictions, and best-practice examples.

As we head into the new year, what are some of the things you will do differently to make 2011 better than 2010?

TRANSFORM CLIENTS INTO SALESPEOPLE

Customer service as marketing and sales tool?

I grew up in Central Florida.

When I was in high school, I was lucky enough to land a job at the Magic Kingdom in Disney World. I say “lucky” because one, it was a job at Disney; and two, the experience introduced me to the Disney approach to customer service.

The job itself, like most high school jobs, was menial. However, the education I received from working for “the mouse” has continued to serve me over the last 24+ years.

Disney is often referred to as “The Happiest Place on Earth.” Anyone who has visited the Magic Kingdom, or any of the Disney parks, can attest to the validity of this statement. Not only are you happy to be at Disney, you are also happy giving them all your money.

For Disney, the secret to achieving this level of happiness starts with a commitment to customer service (They call is guest service, which makes you feel like you’re part of their family.)

Disney initiates their guest service program long before you ever reach the park. Call them for help with your reservation and by the end of your call you will feel like you have been having a conversation with a relative…a relative who has up-sold you during the entire conversation.

I have been involved in sales most of my adult life. Phone sales (think stock brokers) are the most difficult type of sales jobs I can think of, yet the folks at Disney make it look easy. Some of my favorite sales conversations with Disney guest relations’ representatives have gone like this, “As long as you are staying on property with us, you should think about the Disney meal plan.” Another favorite is, “I see you are scheduled to stay with us for two nights. If you extend your stay an additional night, I can offer you the following deals…”

When you hang up the phone, you’ve got a smile on your face; you feel like you have just made a very helpful new friend, and you have already blown your vacation budget before ever leaving the house.

As a business owner, we always look at ROI (return on investment). Whether we are contemplating the purchase of a new piece of manufacturing equipment or the hiring of additional employees, we want to know how much that investment will add back to our bottom line (and, how long will it take to recover those investment dollars).

But things like a commitment to customer service, or an “investment” in social media marketing are difficult to analyze quantitatively. If we can’t put an actual number on the effectiveness of these marketing practices, how can we determine if those investments are adding to our bottom line?

Measuring the ROI of customer service, like that of social media marketing, is nearly impossible…at least in traditional terms. Can you quantitatively measure how each dollar spent towards customer service adds to your bottom line? No.

Can you track how much revenue has been added to the company relative to the number of man-hours your staff has spent engaging your clients in social media spaces? If you can, email me the formula…please.

The message has to be clear and consistent among the entire organization. But a long-term commitment to customer service (and social media) programs will pay off. Engage your customers, build a relationship with them, exceed their expectations and they will become your best marketing and sales team. They will talk about you in a positive light. They will refer you to their friends and families. And, they themselves will continue to do business with you.

Disney engages you at every point during your visit with them. Everyone on the front line has a mandate to exceed the customer’s expectations. From the moment you arrive, you are continuously greeted by, “Have a Magical Day.” And every employee (cast member) works hard to make sure your stay is magical.

At the end of your visit with them, no matter how much money was left with Mickey, Minnie and Donald, you have had a magical time…more importantly (from Disney’s perspective), you have already started planning your next visit. (And next time you are going to coordinate with friends and family, because imagine how much fun it would be to go as a big group…)

If your clients don’t have that same level of passion about your organization, ask yourself what can be done to foster that level of loyalty. Do you engage your customers, or do you react to problems and issues as they arise?

Have a great Disney guest relations’ story? Please, share it below.

Is your organization committed to exceeding customer’s expectations? Are you using social media as part of that commitment? Let me know what you’re doing, and if it’s working for you.

Social Media Sniper School - HOORAH!

“One Shot. One Kill.”

That’s the motto for the US Army Sniper School.

What does that have to do with social media marketing and/or foodservice beverages? Read on. I’ll tell you.

“How can you incorporate social media into a foodservice manufacturing company’s marketing plan? We are B2B, not B2C?”

I wish I had a nickel for every time I heard that question (or some variation thereof) from one of my peers.

Wait, I do. But that’s only because my circle of influence is pretty small. The foodservice beverage industry is enormous from a revenue perspective, but pretty small from a company/personnel perspective. I think that’s one of the reasons I love this industry…it has a “small-community” feel about it. But I digress.

I follow quite a few blog authors. My RSS feed looks like a “who’s who” of social media. The content shared on these blogs has been instrumental in my understanding of social media marketing.

If you haven’t done so already, check out the infinite blogs out there and sign up for a few of the good ones. You can start with this one if you’d like. (Any of my foodservice peeps that don’t know what a blog is, or how to subscribe to one, have no fear. Send me an email, or call me on the phone…I’ll walk you thru the process. We non-natives need to look out for one another.)

Generally the blogs offer suggestions on how to increase your twitter following, or talk about the steps you should take to build an effective social media campaign. But this week, whether planned or not, a common thread has been to focus on “content, content, content.” The message is: nobody wants to write just for the sake of writing. And surely as readers you don’t want to read something that isn’t a 10/10 in content.

So, today, I am posting a real-life example of how my company has started to use social media for lead generation.

Yes, this information is going public, which means any of our competitors can use the information to compete against us. But, I’m confident in our employees. I’m confident in our strategic partners. And, I’m confident in the uniqueness of our products. Besides, I have always liked competition.

One of the social media sites I have used for some time is Yelp! When I’m at industry events (foodservice industry, not social media) talking about the benefits of social media, one of the first apps I show is Yelp! To truly “wow” my fellow digital immigrants, I show them the monocle widget within the app.

I can’t quite describe the looks and/or reactions when one of my industry peers holds my phone and walks around in a circle, looking at the interactive “head’s up display” which shows all the restaurants in a 360degree fashion. It never fails to bring a smile to my face.

But Yelp! is more than just an app to find nearby restaurants, bars, nightclubs, etc. For me, it is an awesome lead generation system.

How, you ask?

One of our target markets is the catering industry. We have a line of iced tea concentrates that are perfect for the catering industry. And, we spend a small fortune on traditional marketing to make sure the industry knows about our products. But, traditional marketing is more of a “shot gun” approach. You throw it out there and hope you hit something.

Yelp! allows us to be marketing “snipers”.

What do I mean? Go to the yelp! website. At the top is their search header. Search for “caterer” and plug in a city “Austin, TX”.

What happens when you hit the enter key?

I’ll save you the effort and tell you. You get 196 entries, all complete with addresses and telephone numbers. Do you want to know a secret? These contact numbers are more up-to-date than any list we have purchased.

You can filter your search by type of foodservice operator too. Have a product you want to pitch to sports bars in Columbus, OH? There are 184 listed.

If you are a sales manager for a foodservice distributor or manufacturer, and I told you I’ve got a sales tool that will filter out the specific type of operator you desired, gave you the operator’s contact information, was capable of mapping the locations and providing you directions to the location, and would constantly update itself so your information was never stale, how much would you be willing to pay me?

How much more effective can your sales organization become if it can achieve the same level of concentrated focus as the US Army sniper? One targeted shot. One confirmed hit.

Social media IS changing the way our company does business. We can embrace the change and learn how to make it work for us, or we can ignore the change and hope to stay in business.

I’ve made my decision. How about you?

Social Media for OLD people

Anyone who has followed my blogs knows that Chris Brogan has had a significant impact on my social media education. The amazing thing is, he and I have never met nor have we even talked on the phone to each other.

I was sent a link to one of his blog posts. I read the post, liked it, and then searched his archives. Some of the suggestions and tips he offered were useful in our “everyday” business of selling iced tea concentrate to foodservice operators. Some of his ideas and postings were completely new revelations to me.

You see…I am old. Well, I’m older than Chris. I learned spreadsheets on Lotus 1-2-3. I did not have online access to research sites and news archives. I had to look stuff up in encyclopedias (real books) that required you to correctly spell the thing you wanted to research. For news archives, we would sift through hundreds of microfilms looking for a particular picture or quote. It was tedious and sometimes painful.

I love what the Internet has developed into so far. With news apps, search engines and alerts, we can filter information to specific key words so we don’t have to read the “fluff” until we get to something that is personally useful and/or relevant.

As a marketer and brand owner, I really love that social media is reshaping how business gets done. We have heard the term “social media marketing” so often that we blindly accept the phrase without really understanding what it actually means.

The concept of social media marketing is not an easy one to understand. (At least not for my age group.) We can define it as “marketing strategies utilizing the Internet and social/community websites”, which sounds pretty, but what does it mean?

Initially I looked at it in the context of traditional marketing. I tried to figure out how our print and word of mouth marketing campaigns would fit within the social sphere. To put it simply, I tried to fit a square peg (traditional marketing) in a round hole (social media).

It wasn’t until after reading Chris’ book (co-authored by Julien Smith) Trust Agents and then the book Socialnomics by Eric Qualman that the proverbial light bulb went off.

Social media marketing is not so much about marketing as it is about communication.

Reading those words now, I feel pretty silly. And I am sure a few of you out there (Chris, Julien and Eric most likely) are probably in disbelief that I didn’t just KNOW this simple truth.

Facebook, Twitter and the like are not about forcing a brand or product upon the consumer. For the companies who DO employ that strategy, IT IS SIMILAR TO WRITING AN EMAIL IN CAPS…it’s just not very professional.

Social media sites are about communicating. Sometimes you communicate with your clients and consumers. Sometimes you communicate with your peers. Every once in awhile you may even communicate with your competitors.

The marketing aspect comes from keeping your brand and/or product in front of consumers. By engaging in conversations about your product/company/ brand/ or even personal interests, you develop (or enhance) a relationship with your customer. You get to know more about the people using your product, and they get to know more about the people making the products they use.

I still have a lot to learn about social media marketing.

Thankfully, BECAUSE of social media, I have an almost unlimited supply of reference material and expert advice available to me.

Is social media viable?

Every once in awhile a question comes up on LinkedIn and I feel compelled to add my two cents worth. Most recently it was a question that came up in a food manufacturers forum. There were about 10 other answers before I added my thoughts. If you’d like to read the entire discussion, here’s the LINK.

How do you feel about the potential viability of "social media" communications in the food service channel?

The fact that we can have this discussion on a social media site IS pretty promising. And yes, I agree with the comments about it being more difficult to figure out the B2B strategy as opposed to the B2C one. But, I believe our industry needs to figure out an overall social media strategy (and soon) because consumers (both operators and ultimate end-users) are getting information differently than they did a few years ago.

As manufacturers, what we need to understand is social media is about communication. People are having conversations about our company, our industry, and our brands. They're talking about us 140 characters at a time. Some of the talk may be good. Some of the talk may not be as positive. But the talk is happening.

One of the questions I am asked by my peers is, "how do you monetize social media?" Since you can't measure the ROI on an investment in social media the same way you can measure the investment in a new piece of manufacturing equipment, most manufacturers seem hesitant to commit.

Personally, I think it is because they don't fully understand the dramatic changes in communication that have taken place over the last few years. And of course, there is always the comment about, "why would I care that you are standing in line at the grocery store waiting to check out? Do I really need to know that much about your life?"

10 years ago I would have answered, "absolutely not!" But today, yes, I want to know that you are in a grocery store. Not only that, but I want to know WHICH grocery store you are in, and if you geo-tag your tweets, even better because I will then know in what state and city you're currently located. And, if I have a coupon going with that particular grocery store where you are standing in line to check out, I can send you a quick little note to remind you to purchase my item and take advantage of the coupon.

Communication.

We, as an industry, need to figure out how to communicate more effectively with the actual people who are purchasing and using our products. Then, we will see the monetization of social media and the more traditional return on our investment dollars.

I ended my response there, but I apparently I had more to say on the issue. Here is what I haven't added to my LinkedIn response...yet.

The foodservice manufacturing industry consists mostly (if not entirely) of digital immigrants. We, myself included, grew up without instant access to information. My first computer had to be started with a 5 ¼” floppy disk, and I needed to know how to write DOS to get the computer to do ANYTHING.

The young men and women coming out of college today, our children, are digital natives. They have never known anything other than instant access to information. They embrace transparency in every aspect of their lives, because that is all they have known. The Internet has provided them a way to find out almost anything. Want to find out the annual sales revenue for a privately held company? It’s out there and available if you can ask the right question. Want to read classified communications between government agencies? You can find that too. Want to see how intoxicated “Jamie” was at last weekend’s house party? There are probably pictures and a written account of the actions online.

These “natives” live in total transparency and expect everyone (companies, brands, products and even government) to be just as transparent…just as honest…just as raw. If you want to know an opinion, just ask them. They won’t hesitate to tell you.

Over the years, I have spent small fortunes on market research…polling groups about a label design or a flavor combination. With the advent of social media and sites like Twitter and Flickr, I now have a much bigger audience to poll, and will have instant feedback from that audience. And, I will have access to this information at a minimal investment cost.

Social media is a tool. It’s a way for us to communicate. It can be used effectively by the foodservice manufacturing industry, for both B2C and B2B communications. But we as an industry need to understand the way we do business is changing...140 characters at a time.

Strategic Partners: For better or worse

Strategic alliances are not uncommon within the foodservice community, not even within the foodservice beverage division of the community. Sometimes, despite the best of intentions, strategic differences can occur between the two partners.

Over the next few weeks we will get to witness what is sure to become a very expensive dispute between two international foodservice brand powerhouses…Kraft Foods and Starbucks Corp.

According to an article on thestreet.com, Kraft has begun arbitration to challenge Starbucks’ attempt to end a 12-year agreement.

The dispute, it appears, is over the right to market Starbucks’ bagged coffee products. Starbucks has asserted that Kraft failed to meet certain provisions of their arrangement, including keeping Starbucks involved in major marketing initiatives, and has said those failures caused “the erosion of brand equity.”

In their defense, since executing the agreement in 1998, Kraft has taken the business from $50million to $500million in annual revenue. So there seems to be slightly more than “erosion of brand equity” behind Starbucks decision to terminate the agreement.

As the arbitration process evolves and more information becomes available, maybe we’ll get a more accurate picture of what is really at stake, and how much this dispute will cost.

In the meantime, the process has raised a question I feel is important. What is more important to a company/brand – maximum annual revenue or brand integrity and control?

Sure, my question is a somewhat loaded question. What company doesn’t want to achieve the maximum annual revenue possible? That’s what companies are designed for…annual revenue. If developing a strategic alliance with a partner is going to help you increase revenue (and/or decrease operating costs), then at the surface, it would be a wise decision.

However, decisions like that always come at a cost and usually that cost is brand control and/or brand integrity.

We don’t need to look any further than this past July when tensions arose between Honest Tea and Coca Cola over wording on the labels of the tea company’s product line. Honest Tea, in an attempt to retain brand integrity and brand control refused to change the wording. Coca Cola respectfully agreed with Honest Tea management, and no changes were made. Since Coke has a financial stake in Honest Tea, we can’t really define them as “strategic partners”, but even so, the importance of brand identity/control can be seen from this example.

A more likely dispute between strategic partners would arise when a decision is made to grow a product line thru new product offerings. The brand owner, after establishing brand recognition and value, decides they want to cash in on that exposure. The brand company develops some complimentary products to extend their product offerings only to find the synergies shared with their strategic partner on the original item(s) aren’t there on the new product offerings.

With the recent success of the Via line of instant coffee products, and the inevitable brand extensions to follow, the Starbucks decision to end their alliance with Kraft is a little easier to understand.

We’ll have to wait and see how much the decision costs Starbucks in terms of money and brand dilution.

Distribution 2.0

If the sign of a successful blog posting is an open and passionate discussion about your topic, I must have written the mother of all blog posts. After posting the 3^rd installment of Foodservice Outlook 2020, my phone started ringing.

The irony of having someone call me regarding an online posting was not lost on me at all.

Don’t get me wrong. I received several emails with comments and words of congratulations as well. But the phone call was one of the most interesting.

“Why did you write that stuff about the distributors and brokers?” I was asked. “What were you thinking?”

“What do you mean?” I responded. “All I did was write about a day dream I had describing a distribution model which was efficient from a manufacturers perspective. My model doesn’t exist, and in all reality probably never will exist.”

“That’s not the point. You’re a brand and a manufacturer who needs distributors to get your product to market. Your post could potentially cost you a relationship with a distributor.”

I usually try to think of how my words will be interpreted before I hit send. However, I did not even consider the scenario I was currently being presented. I mean, my post was written a little tongue-in-cheek. I had been presented with a scenario in a conference, which as a manufacturer seemed to be at one end of the spectrum. I offered the unorthodox and contrarian perspective as a means of illustrating the normalcy of our existing distribution model.

Sure, our distribution path has some potholes. We have some issues that need to be resolved. We, as an industry, have to figure out a better communication model so manufacturer, distributor and operator are all working towards the same goal. We need to develop transparency throughout our multiple channels to build trust and foster better partnerships.

BUT…our distribution model works. Foodservice Manufacturers build products. Operators purchase food products. Consumers consume food products. And distributors, well distributors are the important piece that makes the entire system work.

We aren’t interested in reengineering the distribution model. Foodservice Beverage Manufacturers like myself only want to figure out how to sell more foodservice beverage items, communicate with our operators and consumers, and maximize our profit margins by becoming more efficient.

So, from this beverage manufacturer and brand owner to all those distributors who help us get our products to market, thank you for doing what you do. We don't have the patience, the knowledge, or the vehicles to do what you do...so please keep doing it. And if you can add a few extra cases of mine on every delivery, I would surely appreciate it.

Foodservice Outlook, 2020 (3 of 3)

This is a continuation of my earlier posts, describing my thoughts and comments about the 2010 IFMA President's Conference. This post wraps up my discussions regarding FS-2020.

I was immediately brought back to reality when I subconsciously heard Bill say, “Costs and prices always go down.”

What? Huh?

Did I hear that correctly, or was I still working on my new distribution model? Thankfully, as if he heard the panic in my thoughts, he repeated himself…”Costs and prices always go down.”

Bill, I love you, but what the heck are you talking about? My ingredient costs have gone up. My warehousing costs have gone up. My labor costs have gone up. My freight and fuel costs have gone up. My packaging costs have gone up. The only thing that has gone down in the past year is my profit margin.

I looked up to find Bill moderating a panel of industry leaders, discussing the talking points from his presentation. Apparently the panel was back to discussing buying groups, and Bill was trying to make the point that as manufacturers (or distributors) once you lower your pricing, it is hard (if not impossible) to raise it again.

First, I need to offer some constructive criticism of the panel. We were at an IFMA conference - IFMA, as in the International Foodservice Manufacturers Association. Notice the Foodservice Manufacturer's portion of the name. Bill’s panel consisted of 3 operators and a distributor discussing the potential future and shape of the foodservice industry.

Personally, I thought a key component of the foodservice industry was missing from the panel…a foodservice MANUFACTURER. It would have been great to hear the thoughts from a global food manufacturer like Kellog’s or Nestle, but really any manufacturing perspective of the potential future of our industry would have been appreciated.

Despite the lack of a manufacturer on the panel, the panel offered some insightful comments. One sentiment repeated by all the panelists was - the sales process is changing.

Let me repeat that because I think it's important...THE SALES PROCESS IS CHANGING.

Consumers are not interacting with brands in traditional fashion. They are talking about our brands in social spaces like Facebook and Twitter. They are finding foodservice operators on sites (and mobile apps) like OpenTable, Yelp!, and FourSquare.

Conversations ARE happening, and people ARE talking about our brands. The "new" sales process needs to focus on engaging those customers and participating in the conversations.

If our industry of foodservice manufacturing is going to survive (and succeed), we need to figure out how to engage with the customers. If we can figure out how to engage with the customer and operator in the same conversation, even better.

Foodservice Outlook, 2020 (2 of 3)

This is a continuation of my earlier post, describing my thoughts and comments about the IFMA 2010 President's Conference.

I left off the first post describing Bill Hale's discussion of cost controls and efficiency...as relevant to the foodservice distributor. Bill had posed the question on whether it was more or less cost effective to have more trucks on the road distributing from fewer distribution centers.

Although my first instinct when I heard the question was to check my email, Twitter and Facebook accounts…I decided to listen instead. Actually, I couldn't get a strong wi-fi signal inside the conference room, so really the decision was made for me.

It turned out that listening was the better option. Even though I didn’t hear an answer that directly addressed concerns from the manufacturers standpoint, the ensuing discussion did get me thinking about the issue from our perspective.

As a manufacturer, I would much rather ship into 6, 12 or even 20 distribution points rather than say 82 individual distributor houses. I can manage my freight costs with more certainty. I can achieve better economies of scale by shipping (and thereby producing) more products at one time. And, it is easier on my receivables and cash flow.

The problem with my "solution" occurs from the distributor level, as far as I could predict. By having fewer distribution points, distributors will be shipping over longer distances. This means relatively more trucks with higher fuel costs and considerably more logistics planning.

But, could it work?

As Bill continued to speak about FS2020, my mind began building a distribution network that worked from a manufacturer’s perspective.

First, the organization would have a much leaner employee base with an increased focus on logistics instead of management. There would be a core group of personnel at each of the distribution points whose main focus was to facilitate the inbound and outbound shipments. Orders and AR/AP could be handled at a corporate location and delivered electronically to the few distribution centers and supplier partners, again minimizing the work force, preventing duplicate efforts and increasing efficiency.

Every distributor needs a sales force, but why not outsource it?

Instead of foodservice brokers working for manufacturers, why not have them handle the sales for the distributor? I mean, brokers maintain relationships with operators anyway. I would assume the cost for a distributor to reach an operator would decrease dramatically by utilizing a broker with existing relationships. As for chain account business, manufacturers already have people focused on selling the chain accounts. Why duplicate the efforts at the distribution level?

Plus, unlike the current manufacturer/broker relationship, a distributor would not necessarily have to exclusively align themselves with particular broker. A distributor could open up the marketplace to competition, and competition should help sell more items. If you’re a broker authorized to sell for a distributor, you can sell anything in the distributor book, and, you’ll get paid on everything you sell. Sales could be tracked by broker codes, making it easy to track commissions.

From a manufacturing perspective, since our broker fees were eliminated, we would be able to offer more distributor programming monies...which, since those monies would now be spread over a smaller executive base would translate into larger profits for distributor shareholders.

Yes, my mind wandered for a few minutes, and I am positive I missed the entire focus of Bill’s point. And yes, I know my scenario requires manufacturers and distributors to develop real partnerships, working openly to financially benefit these two sides of our industry and become more efficient.

But I couldn’t help wondering…what if??

--To be continued-- (Part 3 will post on Friday, November 19th)

Foodservice Outlook, 2020 (1 of 3)

I recently attended the 2010 IFMA President's Conference in Palm Springs, California. This is the second year I have attended, after officially joining the association last year. It is one of the better networking events of the year for the foodservice industry, bringing together executives from the foodservice manufacturing, distribution and operator industries.

Because of the length of the post, I am splitting the post up into 3 entries. This is part one of three.

First, Bill Hale of the Hale Group moderated the event. For those who don’t know Bill, he is an industry veteran and one of the nicest gentlemen you will ever meet. He has a great sense of humor and has probably forgotten more about supply logistics than most of us will learn during our entire career.

Bill opened the event with a vision for the future of foodservice. He called it FS2020. I am sure the entire deck will be available shortly, but here are the points I keyed on.

First, Bill described a future with “flatter” distributor sales organizations. Thru the course of discussions, I came to assume he meant that distributors are going to learn how to do more with less people, given the state of the economy and job market.

Bill also went on to prognosticate we will see more buying groups and co-ops within the next decade, noting a significant shift to volume purchasing. “Volume counts”, he quipped. Again, I believe he was talking about end user’s and operators getting together to purchase like items in bulk quantities in order to obtain better pricing from their distributors. But will that affect manufacturers? I think so, yes.

As a manufacturer, we do have to think about the surge of bulk buying groups and how they will affect our current pricing models. Manufacturers have faced this for years as we have watched the consolidation within the foodservice distribution community. Once upon a time we could develop individual distributor-location pricing models that covered the outbound freight cost to deliver our products to various distribution points across the country. Clients knew if they were buying a product manufactured on the East Coast of the United States in their home state on the West Coast, the product was going to cost them more money than if they were located on the East Coast.

Today, with the consolidation of the industry and need for single distributor pricing, manufacturers find themselves “averaging” their freight costs. In some instances, such as distributing close to home, you pick up some margin. In other instances, like shipping cross-country, you lose some margin. This shift costs us manufacturers time and money because we have to make the investment to track, analyze and forecast fuel costs. In our small little manufacturing company, this investment can cost us as much as 1.5% of revenue in a given year.

Actually, this discussion on pricing and freight costs becomes a nice segue into another of Bill’s key points…cost controls and efficiency. Once again, Bill’s presentation focused on the distributor as he posed the question on whether it was more or less cost effective to have more trucks on the road distributing from fewer distribution centers.

--To be continued-- (Part 2 will post on Wednesday, November 17th)

FS Beverage Update

I realize it has been some time since my last update, and I apologize. Over at ThirsTea (my day job), we have been working on several new products.

As a result, I have been working on formulations and flavor profiles; working out our supply logistics; helping to create a cohesive marketing plan for next year; and, trying to maintain some type of balance in life.

I am not making excuses. I fully intend to catch up on my blog, offering insight into foodservice beverages and the role of social media in marketing those products.

A lot has happened in our marketplace since I last posted. Which means I now have plenty of material to comment on.

Look for an update within the next few days.

Thanks for your understanding.

-Ray

Communication Breakdown

As manufacturers, how do we utilize the power of social media to help promote our brands? That’s a question I have been asking for over a year.

If I had a retail brand, the answer (I feel) would be simpler. As a foodservice beverage company though, how do you open the lines of communication with customers? Is it even important to a foodservice operator to have some type of communication with the manufacturer?

From the manufacturer’s perspective, I KNOW we want open communication with the operators who use our products. We want to feel like we are part of the operators’ success – a resource they can call upon when they need something outside of ordinary. We love the challenge of creating unique flavor combinations, or developing a product to meet a specific application. We also like hearing from operators when they have problems…it gives us a chance to resolve the issue and, sometimes those resolutions lead to completely new products. In any event, the communication leads to a stronger relationship and better understanding of each other’s business.

I’m pretty sure the operator would say it is important. With open lines of communication, an operator who has a specific need can communicate directly with the manufacturer to have a specific flavor profile developed. Or, if the operator had a problem with a particular product, wouldn’t it be easier to resolve the problem directly with the manufacturer?

If operators think communicating with manufacturers is important (and I know manufacturers think it’s important) where does the breakdown occur? Why are we not having more direct communication with each other?

From my personal experience, the breakdown appears to happen from the distribution side. Now before my distributor friends jump all over me, let me say this - not all distributors are the same. There are some progressive, modern thinking foodservice distributors across the country that have embraced social media as a way of solidifying the relationship between operator and manufacturer. By being a conduit and opening direct lines of communication, those distributors have strengthened their relationships with BOTH the operator and manufacturer.

But there are other distributors who (as I was reminded at a recent conference) feel they need to “own the relationship with the operator.” I can understand the sentiment, and the desire to keep the relationship private, but in doing so transparency is eliminated and trust is broken.

We’re all in this together –operators, distributors and manufacturers. Transparency is happening all around us via social media. If we become overprotective of our relationships, and don’t foster an environment that promotes open communication, we run the risk of alienating ourselves as the rest of the world rushes by at Internet speed.

Relevant Content

A few days ago, while scrolling thru my RSS feeds, I came across the following header:

Ben & Jerry's Drops Email Marketing In Favor of Social Media

I had to read the article.

It appears that in the UK, Ben & Jerry has decided to drop their email marketing strategy. The article stated that customers “disliked the email despite loving the brand.” But, the author didn’t go deeper to try and find out WHY the newsletter was disliked.

Many social media experts have argued that traditional marketing is intrusive: your program is interrupted in order to bring you a commercial; or the magazine article you are reading is continued on a page following some advertisements.

The email newsletter, although not considered “traditional” marketing, could also be seen as intrusive or interruptive marketing. But, it still doesn’t make sense for a company to drop the entire email marketing campaign when all the quantifiable metrics still show it to be one of the most effective forms of communication marketing.

My question to Ben & Jerry’s is: why was the email newsletter disliked? Was it a technical issue? With more and more people checking their email on mobile devices, was the newsletter formatted for the proper delivery vehicle?

Was the issue content? What kind of information was being disseminated in the newsletter? Was it geographically important information, or was everyone in the B&J database getting the same information, regardless of where they lived? Were they offering “relevant content”, or were they just using the newsletter to keep their name/brand in front of customers?

I can’t answer the questions because I have never gotten one of their email newsletters. Right now, I wish I had...just to see why it was so disliked by customers who clearly love the brand. As of this writing, I have signed up to receive future ChunkMail…you can too. Just click here.

Regardless of the reason customers disliked the email, you shouldn’t just drop the campaign. You should work on integrating email and social marketing so they work in conjunction with each other and with traditional print marketing. According to Information Week, “Almost 40% of consumers consult Facebook and Twitter to complement the information, deals, and news they receive from companies via e-mail marketing…”

No matter the delivery vehicle of your message (social, email, or traditional marketing channels), the single most important component should be content.

Is your content relevant? Are you talking about noteworthy issues like new flavors or new sales promotions or new location openings? Or are you talking simply to hear yourself talk?

Gen-Y consumers like their content in 140 characters or less. As marketers, we need to be brief, concise and most important…relevant. Our customers will eventually stop listening to us, or (worse) listen to someone else, if we are providing information and content that is both useless and irrelevant.

Foodservice, beverages and Social Media

The foodservice industry is best described as a "mature" or "seasoned" industry. The leader's, and I count myself among those, are almost (if not completely) digital immigrants. Information flow in the foodservice industry happens at snail pace, and sometimes even slower.

Social Media is a MUCH younger industry, inhabited by much younger people, and information flows at real-time speed. To me, that is one of the benefits of social media...instant feedback.

This week, I attended a trade conference in Chicago. It was a joint program of the Foodservice Manufacturers Association (IFMA) and the Foodservice Distributors Association (IFDA). It was the first time both sides had formally met as a single conference.

I personally thought the conference, as an initial attempt, was a success. There was an educational component, with real life case studies from both sides, and the format fostered an open dialog between us all. In future events, I hope they place more emphasis on the open dialog portion, because many of us felt that was the biggest benefit, and where most of the learning happened.

One of the educational sections of the conference, on the second day, was devoted to "Social Media Marketing for Independent Operators." The 40 min block opened with Erik Qualman's video "Socialnomics" which led into a discussion from two distributors having success with social media. For those not in attendance, the two distributors are BenEKeith Foods and Shamrock Foods Corp.

First, I love Erik's video. I loved it the first time I saw it. If you haven't seen it yet, click on the link above. This video was so personally moving, it got me to buy his book...not once, but several times. I own a hard copy, which I will have him sign for me next time I see him. I own a digital version which permanently resides on my iPad. And, I bought several hard copies to give to peers for them to read.

In simplistic terms, one of the important messages Erik delivers is, "consumers are talking, are you listening?" My industry, or at least a large portion of it, isn't listening. Perhaps it would be more accurate to say we are not communicating efficiently, at least not by today's standards.

How do I know? What's my basis for making a statement like that one? Easy. If you have a twitter account, search for #iismc10. That was the hash-tag assigned to the conference. Scroll thru the conversations, not so much for the content but for the participants IN the conversation. You'll notice only a select few (@ThirsTeaCorp for one) participating in the online conversation.

But it's not all doom and gloom for the industry. One of the manufacturing leaders has embarked on a new (for them) social media marketing campaign. The concept, as I understand it, is for this manufacturer to offer coupons on Facebook. The coupons would be for a local, cooperating eatery and would offer a discount on one of the manufacturer's menu items. Coupons, set up as a click-thru ad, would be geographically filtered to a specified area around the restaurant.

To me, this seems like a "safe" way for foodservice to stick their toes in the waters of social media marketing. The manufacturer is running a campaign that has been done before, in other market segments, to varying degrees of success. It will help build strategic partnerships between manufacturer and operator. It will have quantifiable results. And, it will eventually evolve into much more creative ways to communicate with and engage consumers.

The "buzzwords" bandied about at our conference were "transparency", "efficiency", "open communication", "trust"...we used these words to describe what we felt would make our channel (manufacturer - broker - distributor - operator - consumer) more effective. It's fitting that those are the same words used to describe the benefits of social media.

Social media is not a fad. It's here to stay. It is changing the way people communicate and listen. It is not conducive to secrecy, so we are forced to become more transparent and open. These things will lead to trust. And trust, from supplier to broker to distributor to operator to consumer, will lead to better products...better offerings...better efficiency...and better relationships.

Since our industry is built on relationships, we should start participating in the conversations and work on building better, stronger ones.