Win-Win Sales Stimulation: Use Promotions To Reduce Leftover Seasonal Inventory

by Len Rashkin
Posted On: 8/29/2016

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TAGS: Vending Times columnist, OCS salespeople, office coffee service, office coffee sales, OCS education, OCS customer service, coffee business, office refreshments, OCS sales training, Len Rashkin, OCS product SKUs, inventory turnover, broadline non-food items

In the mid-1960s, the office coffee service industry provided only a dozen or fewer products. They mainly were roast ground coffee, Sanka packets, stirrers, filters, sugar, creamer, tea and hot chocolate. Fifty years later, today's OCS businesses might provide more than 1,000 SKUs.

Our industry kept expanding, as more of our customers demanded that we provide them with multiple product categories. Also, operators like you created demand by expanding the product mix to include broadline non-food items that offices need to operate efficiently. You brought in janitorial, first-aid and paper products, along with health, beauty and personal hygiene items. You then needed larger warehouses to store all these items, and more and larger vehicles to deliver them.

As an operator, you have to become a marketer to sell all these products and get your inventory to turn over, or you will become less profitable. So let's take a look at some of the avenues to market your product lines, as well as to increase revenues and profits.

On weekends, you can see in your local newspaper an array of advertisements from area supermarkets. They offer specials to get you into the store and, hopefully, to persuade you to purchase other higher-priced products. My message is to look at these promotional offers and think about whether you can use the same approach to sell more products. For additional motivation, keep in mind that we all have had or have seasonal inventory left over, and if we don't sell it by its expiration date, we have to dump it, resulting in lost revenue. Other retailers have this problem too. Here are some examples of their remedies:

» Buy 1, get 1 free (BOGO);
» Buy 1, get half off a second;
» Buy 2, get 1 free;
» Purchase $50 and get $10 in free gas;
» Special: purchase by Sept. 10 and receive $3 off.

These are simple examples, and to the point! Now let's expand those basic promotions to include:

» Buy 2 cases, get other free products;
» Buy 1 box, get a complimentary box of XYZ;
» Purchase any 3 and get a free XYZ.

Now we will apply these examples to real products that you probably have in stock:

» Buy 1 hot chocolate, get 1 free (end of season promo);
» Buy 1 box Cup-a-Soup, get half off on a second;
» Buy 2 bottles of Windex, get 1 roll of Bounty paper towels;
» Purchase $50 in soda and receive free $10 worth of snacks;
» Preseason special: Purchase 5 cases or more of any juice or iced tea by June 15 and receive $3 off per case;
» Buy 2 cases of any cold beverage product and receive 10 free packs of Oreo cookies;
» Buy 3 boxes of Cup-a-Soup and receive 30 packs of Saltines free.

How do you promote these specials to your account base?

» Have your sales representatives call their accounts, or stop by to say hello -- and then promote;
» Put flyers into your coffee cases;
» Have your telephone sales reps inform each customer when called, as well as the accounts that call in to place their orders;
» Have your route sales drivers tell each customer about the offers when delivering product;
» Communicate your specials in your telephone-on-hold recording;
» Have your equipment service personnel mention your specials when servicing equipment in the field;
» Post flyers in customers' breakrooms;
» Include a flyer in your monthly billing statement.

After looking at the above promotion list, you might see that one area that can be the most effective is training your telephone account representatives and route sales drivers on how to sell additional allied products. They are your direct contacts with each client, and by incorporating a "dollar incentive" into each sale, they will be motivated to push many more products.

Here are some suggestions on how to compensate your team. The tricky part is not to give out incentives for selling particular products to a client with a history of ordering them normally throughout the year. You need a computer readout or printout of each account's ordering history while they're placing their orders. If you're introducing a brand-new product, then there is no tracking issue.

Here are some ballpark examples of appropriate incentive payments at present. They may vary from market to market, and will change over time.

» 75¢ on first box of hot chocolate, and 25¢ for each additional box;
» 50¢ on first Cup-a-Soup, then 25¢ for each additional box;
» $1 for a case of 24-count juice or soda and 50¢ each additional box;
» $2 for a case of cold cups;
» $2 for a case of paper towels;
» 55¢ for a box of straws;
» $1.50 for a case of plastic garbage bags;
» $1 for a case of potato chips.

Each month or two, pick several products that you want to promote and train your people to sell them. In the summer months, when you might be promoting soft drinks, have them mention to the contact that it is really hot today and you can provide a variety of iced beverages to quench their thirst. By painting a picture in the customer's mind, you have a better chance of making the sale.

Here's a good tip: During each promotion, take the actual products you are promoting and place them on the desk in front of your telephone account representatives. This will be a reminder to them about the items that are being promoted, and a quick reference for exactly what they are.

In the field, have your route sales drivers bring the monthly promotional products into their accounts. If it is cold outside, have them bring in a few boxes of hot chocolate, regular and diet. They should also offer to make a few cups of this hot chocolate so it can be tasted. The more your route people sell, the more money they will make -- and at the same time increase your profits. And remember the old saying: "The more you tell, the more you sell!"

LEN RASHKIN is a pioneer in office coffee service. He founded Coffee Sip in 1968 and later merged it with Dell Coffee, of which he became president in 1991. Sales at Dell topped $7 million. He also founded the Eastern Coffee Service Association and National Beverage & Products Association. He is a speaker at national and local trade conferences, consults on OCS sales and marketing, and is the author of two OCS training programs.