Article

Improve your pitch by including incremental sales opportunity

I recently had lunch with an account manager I worked with when I was a buyer.  I shared that I was going to write some content on “The Thing all Retailers Have in Common.”  Before I could share my angle, he instantly said, “Meetings!  All buyers have TONS of meetings!”  While so, so true, I promise, I am not going to talk about the countless hours I spent in meetings while leading my buying team.

The other thing all retailers have in common is the desire and need to grow their business.  As I think through the thousands of products I evaluated, the one thing the failed pitches have in common is the lack of incrementality communicated as part of the pitch process.  All product pitches include product features and branding, better pitches also include consumer insights and competitive assessment, but the best pitches included details on sales incrementality potential.

There is a difference between total sales opportunity and sale incrementality.

Sales opportunity refers to how much in annual sales the retailer can expect to be driven by a product, while sales incrementality is the sales impact to the total business considering the balance of product on shelf.  Here are the four ways a product can drive incremental sales opportunity.

Reach new consumers.  While most products will cause some level of cannibalization to current products, reaching a consumer that is not currently shopping the store or a consumer that is not currently shopping the category can be a great way to generate sales incrementality.  This increase will actualize for the retailer as more sales units for the category and as increased customer count.

Increase purchases for existing consumers. Products introduced to the category that entice customers to buy more units from a retailer also generate incrementality.  This increase can come from frequency, units per purchase, or share of wallet.  Increased frequency means that a consumer must purchase the new product more often than the existing product. Increased units per purchase means a consumer needs to purchase more units at one time than with the existing product, and increased share of wallet occurs when a consumer spends more of their money with one retailer vs. another.  These drive incrementality by increasing sales units either through units per transaction or purchase frequency.

Trading up. New products come with new attributes for the consumer.  If those attributes motivate the consumer to spend more on the new product vs. the existing product, incrementality is generated.  In this incrementality, the consumer pays a higher price as the value the consumer receives from the product increases.  This incrementality actualizes with no impact to sales units, but an increase in revenue for the retailer.

Grow Margin.  When thinking about incrementality, most think about growing topline first, but don’t forget about the bottom line.  There is incrementality for the retailer with improved margin.  If all else is equal, sales units and sale price, the incrementality comes through as lowered cost.  If your pitch includes this type of incrementality, make sure you have assessed the impact to the consumer.  Are you giving the consumer a lesser product?  The incrementality of the improved cost could be offset if the new product has lower value to the consumer.

Wait a minute.  Is that all?

There could be a few of you reading this thinking that you pitched me incremental opportunity when I was a buyer, and I still said no.  Why is that?

Prove It. It’s somewhat simple to include an incremental sales opportunity projection, but it is critical to include the assumptions and data sources that were used to develop the forecast.  What are your assumptions?  Why do you think the product being pitched will grow the buyer’s business?  As the buyer is listening to the pitch, you need them to find you credible and believe the sales projections.

Where do I start?  How do I approach this?  How do I even get this data?  “Prove It” might seem like a huge undertaking.  Let me break it down.  There are two parts to this type of analysis:

  • Consumer insights. Define how your product will drive incrementality.
  • Size of opportunity. What’s the number?

Start with consumer insights.  This is the most important part.  There are multiple ways to get consumer insights like online reviews, primary studies, or secondary research, etc.  While the sales projection number is important, the insights and assumptions around consumer behavior are the critical parts to communicating HOW the product being pitched will deliver incrementality.  Having strong consumer insights that support your incrementality assessment will ensure that the buyer audience finds you credible and understands exactly the importance of the product being discussed.  Consumer insights are a must-have.

Once you know if your product will drive incrementality, apply that logic to sales or market information. Having an actual sales number to share is great, but if you don’t already have established sales history, this could feel like a shot in the dark.  Keep in mind that part of “Prove It” is establishing credibility.  If you can’t provide an actual incremental sales number, stick to the consumer insights and be the expert.

It’s not enough.  You have done the work to outline consumer behavior to “prove it” to your buyer audience that the product is incremental… but you still get rejected.  What else is going on?  If you are pitching a brick and mortar retailer, you must remember that shelf space is not unlimited. There are lots of products that could be added to a store, not cannibalize existing purchases, and create incrementality.  So, is your product a large enough opportunity to warrant the space on shelf?

Let’s take for example that you own a garden center, and a brand pitches you the idea of adding pet products to your store.  The purchase would be incremental as the pet products would likely not disrupt the live plant, soil enhancers, or tool purchases; however, would the incrementality of the purchase warrant removing your current product to make room for the pet products?  Now, also consider that other brands are also pitching ideas to you for the same floor space.  Would you add the pet products, or would you add something else more closely related the garden center shopper mindsight?

The thing to take from this example is to think about the size of the opportunity and the product relevance to current shoppers.  Will this be impactful and how likely is the consumer to consider this product while at the store? Ultimately, will this product addition move the business for the buyer?  If the answer is no, you should know from the start that the pitch will be challenging.

Yah, but…

As you are reading this you could be thinking, “Why go to all this work to outline incrementality?  The buyer knows their business better than me.”  This is mostly true but remember what all buyers have in common.  They are looking to grow… and they have a lot of meetings.  Once they leave the room, there are no guarantees how much time they will later spend thinking through your product.  Put the whole story together for them.  Tell them why your product would help them grow and not just shift air around in the balloon.  Make sure to save time to focus on the common goal of all retailers – growth.

If you need support analyzing your incrementality, let’s have a conversation.