Saving Your Product from Being De-Listed – Ep. 54

Episode Transcript

 Mark Young  00:18

Welcome, everybody to this edition of CPG insiders. I'm your host, Mark Young Justin is off sick today, but he'll be back for future episodes. So don't worry, he hasn't gone away. We recently put out a white paper that was really popular. And we thought we'd kind of cover it here on the podcast. And what we're the reason we're covering it is because we we realize one this is this is a topic that we get a lot of phone calls about that we get a lot of emails about. And we see how many people really locked onto that white paper. So we thought we would discuss it further. And the topic is, can you save a product from being delisted? So I want to start off by first telling you that products get delisted all the time. In fact, most products get delisted all the time. And mathematically only less than 5% of products that hit retail shelves ultimately survive. So you know the numbers are against you to start with. But let's let's talk about it. Here's the first thing. There are several problems associated with being delisted. And that is the first one is get one shot to make a good first impression. So when your product gets on the shelf, typically it gets on maybe one retail account, whether it's a local account, you know, a regional or national account, but usually only one or two people say yes to it at first. Once that happens, all your sales figures are now published in Nielsen and IRI reports. And once that happens, every other retailer can see how you're doing. And this is the reason why typically one or two retailers say yes. And the rest say no. Because the reason the rest say no is now they don't have to take a risk on your new item. So CVS can sit back and see if Walgreens is successful. And if they like what's happening, they could do a cut in in six months, or bring it in in 12 months when they reset their planogram. Not a big deal for them. It's remember that it's more of a big deal for a buyer to avoid a failed product than it is to be the first to find a winning product. Because you get measured, you know they get they get measured based on their performance. So whether your product is in risk of delisting, or you're putting your product on for the first time, most of what I'm about to say applies to you.  You get one shot to make first impression. Once you're in there, those numbers are in Nielsen and IRI. And here's what we have to keep in mind. When we're launching a new product, or we're saving a product from being delisted. We're no longer working on being profitable. We're working on saving our shelf space or proving our viability, which means you're going to overspend to pull it off. Here's the other downside. If you get delisted, it makes all the other retailers say I don't want to bring it in you were already at fill in the blank Walgreens, you failed there. Why would I bring it in? Also, it will be a long time before you ever get that retailer to bring you back. In fact, probably the only way that retailer is going to bring you back is if a few years have passed and the buyer has actually changed because buyers do rotate a lot. Or something dramatic has happened in your business. So you got delisted at CVS. You changed your ad campaign two years later, Walgreens brings you in now you're ahead of Walgreen, yes, you could go back to CVS and make an argument that we're doing things differently now, we've changed things. You should give us another shot but it's it's really tough to get back in. Another problem that happens from being delisted is you end up being stuck with a bunch of unsold product. And you have to do something with it. So you don't want to be in this position. Now, the first thing I want to get people to do is I want to talk about something that is a cognitive bias. It's something I covered in my recent book hypno-ti$ing and the concept is called sunk cost fallacy. And sunk cost fallacy really, really affects business people. It affects all of us. And it's simply this. It is, we've invested a lot of money into a new product or a new service. And it's not going well. And as business owners, we have a tendency to double down and pour more money in because we don't want to lose the money we've already sank into it. That's where the name sunk cost fallacy comes from. And the fallacy is, if I just keep spending more, I can fix it. You need to be brutally honest with yourself, you need to look at this product and say, okay, does this product have potential? Or did I just miss the market on this one? And if I've just missed the market, then stop putting money into it. And put your focus on how can I mitigate my losses? On the way out? Can I work with the retailer to do a mark down to try to liquidate the product? Can I swap the product out with the retailer, can I present a different SKU to the retailer and be willing to trade out another, you know, put another product in in the same space? It's it's no different. The sunk cost fallacy is the same thing that affects gamblers. So as an example, you've already lost $3,000 at the blackjack table. So the gambler says well, I have to keep playing. Because I've got at least get back to even it's the same thing that keeps even keeps a bad marriage going. Because, well, I've got eight years invested in this marriage. I can't just walk away from eight years, when in reality, what's worse than walking away from eight years is walking away from nine years. Now, let's talk about what products can survive, and which ones can't. What we have to look at is the chain, are you in the right retailer? Maybe you've maybe you've presented to the wrong retailer. And this retailer is not the right place for your product. So let me give you an example. Let's say that you are marketing a premium cologne or perfume, and it's $100 cologne. Probably not the best matchup for Dollar General, or even for Rite Aid probably belongs where probably belongs in Alta probably belongs at Nordstroms, Macy's. So you have to make sure that you've put your product in the right place. And you have to again, be honest with yourself. Now when we're trying to save a product from delisting, you need to think differently, you need to change your mindset. The first thing you need to change your mindset is we're not talking about brand building. In any advertising we're doing. Now keep in mind all advertising will build a brand. But not all advertising is brand building. Here's what I mean by that. Brand building is building top of mind awareness for future consideration and intent to buy. You can't save your product with intent to buy, you cannot deposit intent to buy into your bank account. You can only deposit money into your bank account. So what we have to focus on is moving product. So all of your marketing, all of your advertising needs to focus on trial. This is about getting people to trial the product for the first time. Think of this as match.com match.com does what? It lets you see the maximum amount of people that might be viable for you to date. And for the two of you to trial each other by going to coffee, going to lunch, having a dinner. Brand building is getting a second date brand building is getting engaged brand building is getting married. We don't have time for that right now because you're on the bubble of being thrown off a shelf. So we need all of your advertising to focus very heavily on what's in it for me and why I need to go trial this product today. Our advertising needs to be focused there. We need to have heavy calls to action. We need to use all of the best psychological tools we can use to create scarcity to create to create urgency to get people to run out and try it right now. Now with all products, all retailers have something which is called the Mendoza line. And the Mendoza line actually is a reference to baseball. And it's actually, Mendoza was a baseball player. And it was the way that they came up with batting averages. And ultimately, the Mendoza line in baseball became how much what is the batting average that a baseball player has to have to be able to stay playing baseball? Well, in our world, the Mendoza line is how many pieces per week per store does this retail account expect me to sell in order for me to survive and not be thrown off? It could be again, it's going to be very dependent on the category and the price of your product. So it's not the same across the board. How many pieces of Windex a Kroger store expects to sell is very different than how many tubes of Blue-Emu they expect to sell as a topical analgesic. It's a hugely different number. But there is a number, you need to know it. If your number happens to be, let's say it's a half a piece per week per store, is what your buyer tells you. And you're in a you're in a chain with 8000 stores, you need to move 4000 pieces per week. Now let's say you look at your POS numbers and you're selling 1500 pieces per week. We need to find 2,500 first time consumers first time trialers every week to get you above that line. Now, here's why you need to change your thinking not only do you need to change his thinking and realize we're not building a brand right now. Second thing we need to realize is we're not trying to be profitable right now. You can't be profitable in this position. One, you're probably only in one retailer or two retailers, which is not enough to make an advertising campaign fully produced everything it can produce. The reason is, let me give you a quick comment on this. Let's say you you're in drugstores, drugstore consumers are heavily loyal. Walgreen consumers are 86% loyal, CVS consumers are 83% loyal. What that means is, if you're a Walgreens family, you always go to Walgreens, your prescriptions are there. It's it's where your driving pattern is created. It's close to your home, it's on your way home from work, whatever the case is, you have developed a habit, your records are there, this is where you go. When they're 86% loyal, that means I only have a 14% shot on getting you to leave Walgreens and go to CVS to buy my product. So I need to be in Walgreens to be to sell to the Walgreen consumer I need to be in CVS to reach their consumer I need to be in Rite Aid to reach theirs I need to be in Kroger to reach theirs the crossing over is not that great. The only place where you have really great crossover is drug and food because a lot of people have a drugstore and also go to Walmart or go to Kroger or go to Albertsons. But you need to be everywhere. So because you're not, you're going to overspend on your advertising. Now the reality is, I'm going to give you this as an example. Let's say you have a $15 product. At retail, let's say you wholesale it for 850. I'm going to give you the bad news and tell you that on that 850 wholesale to save this product you're going to spend at minimum 25%. And could go as well as spending 50% of wholesale, to bail this out, bail this product out. Because you don't have time to build name recognition and future consideration. You need trial today. So typically what happens, most consumers need to see an ad about four times. Now remember that the frequency of four doesn't mean that you ran an ad in front of them four times it means they recognize the ad four times. So as an example, I could run 20 banner ads on you on a website. But because of banner blindness and the way people ignore banners of those 20 Banners ads, you may have only actually noticed them twice. So that's why advertising takes time. That's why you have 13 and 26 week campaigns, because we have to build that frequency. When you're told that you have 30 days or 60 days to clean up your sales or get out, you don't have time for that. So you need to spend more, because you need that frequency to happen now. So that's what we've got.  The other thing that we see a lot of is, we get a lot of phone calls from people that say, yep, we're in trouble. And my broker told me to call you, my buyer told me to call you. And they wait till the last minute. They wait until the buyer has already told them. They're within 60 days, or within 30 days, they're on the chopping block. And sometimes we get the call, the buyers already told me that we're already on the list to be delisted. And they'll make a final decision in two weeks, whatever the case is. Don't wait till the last second. Because sometimes it's too late, by the time you got to us. Remember, we still have to build an ad campaign, we still have to create assets. Is it going to be a TV commercial? Is it a print ad? Is it a web ad? Is it an influencer campaign? All of these assets take time to create and write and do correctly and produce. And then we have to have time to get them into market and get the product moving. So if you look at your sales, and you know that you need to sell 4000 pieces a week, and you're moving 1500, and you're not seeing your week over week, numbers going up at the rate of 10-12-15% a week, let me help you, you're in trouble. You don't need the buyer to call you you need to act on this thing. Right now. There is there is no turning back. Now, what I will tell people in closing is at our agency, which is called Jekyll+Hyde labs, we have probably, I don't know we've probably bailed out over 100 products that have come through the door here over the years that were being delisted. I will give you an example. I will won't use a name but I had a guy call me years ago, he had a product in Walgreens that was selling for $30. And he needed to he actually was told by the buyer we're going to cut you he was selling 500 pieces a week in a chain with 8,600 stores. In this particular case, I was able to call the buyer, I knew the buyer in this case and called the buyer and said, Hey, if we take this client on as a client, can you can you give them another 30 days before you make a decision. And he says yeah, if you can get them up to 1,250 pieces a week, in the next 30 days, I'll give them another six months. But they need to grow past that. Client came into his didn't have a lot of money. In about a three week time, we jumped them from the 500 pieces and we got into the 1100 range, we were around the 11-1150, talk to the buyer, the buyer goes, yeah, you got it figured out, I can see that you've got it figured out, I just need the client to make a commitment that they're going to keep spending with you. And I'll let him stay. Now ultimately, that client, that product went on to be number one in drug, it actually became the number one product in its category and was selling 10s of 1000s of pieces a week. So it can be done. It can happen. If you find yourself in this position, I want you to feel free to give me a call or send me an email, you can go to CPG insiders.com. Or you go to Jekyll Hyde labs.com. Contact myself. And I'd be listed as Dr. Mark Young, you can find Justin Girouard, reach out to either one of us will be happy to set up a zoom call with you look at your numbers, give you an assessment and let you know if it's for real. Because I will tell you that if you come to us and your products in trouble. And if you're if you've already crossed the line, and we know you can't call it back, we're just going to tell you you're not going to get this back. Let's let's pivot. Let's figure out how to mitigate your damages. Maybe we can find another retailer. Let's not let's not waste the money. One. We don't need your money. Two. We don't need the track record of losing products. We have a great reputation of having a lot of wins, and we like to keep it that way. So if we can help you we'll let you know that. And that's it for today. So I Hope this was helpful. If you want the white paper on this, you can go to the website. And Matt, is that at Jekyll Hyde?

Matt  20:09

Yes it is and there'll be a link to the white paper in the Episode Notes.

Mark Young  20:12

In the show notes. Okay, there we go. We'll see you on the next episode of CPG insiders.  If you're looking to greatly increase sales on your CPG product, don't hesitate to contact us at Jekyll and Hyde advertising and marketing. By the way, the only advertising agency with a guaranteed result. Just go to Jekyll Hyde agency.com Or feel free to give us a call at 800-500-4210