Pooling sales forces, a lucrative strategy for food and fast moving consumer goods groups?
Some manufacturers are switching from several specialized sales forces to a pooled salesforce. What are the reasons behind such an approach and what conditions need to be put in place for it to succeed?
Regarding the mass retail sector, the long-standing fundamental tendency of food and fast moving consumer goods (FMCG) companies has been to specialize sales forces by product category or brand. For the past few years, large groups – such as Danone, Pernod-Ricard or Mondelēz International – have been adopting a different strategy: reorganizing their sales forces so that each sales outlet no longer has a point of contact for each range/product category, but a single point of contact. The question is why?
A tendency boosted by the economic situation
If a priori this pooling runs counter to the area managers’ (AMs) “shelf expertise” that previously held sway, it addresses challenges and problems that the economic situation is only making worse:
>> Cost reduction challenges – In a context in which manufacturers are struggling to pass on the cost increases they are experiencing (raw materials, packaging, energy, transport) in their sales prices, creating a pooled salesforce enables them to rationalize headcount and, consequently, their wage bill, while enhancing sales efficiency.
Moreover, assigning each geographical sector to a single area manager automatically translates into a reduction in the sales force’s dedicated vehicle fleet and the costs that go with it (fuel, insurance, maintenance).
>> HR challenges – In a tight employment market, FMCG companies are finding it hard not only to recruit salespeople, but also, and above all, to retain them. If the time spent each day on the road and the number of overnight stays are making this profession less attractive, this applies all the more to the increased number of tasks that most area managers perform in-store, and which are not really in line with their aspirations…
A well thought-through pooling strategy makes for a reduction in sector and portfolio size, and therefore the mileage driven by salespeople. The fact of working on several product categories and a larger number of stock keeping units gives the AMs more power within each store and increases their potential turnover. Finally, a pooling project may provide the opportunity to make AM-sales promoter pairs more widespread – which, by reducing the tasks to be done by the AMs and enabling them to spend more time on negotiation and developing their turnover, makes the profession more attractive and helps retain them.
>> CSR challenges – A pooled salesforce makes an objective contribution to the company’s CSR commitments: a reduction in sales teams’ mileage and a better organization of field activities translates into lower greenhouse gas emissions, an improved carbon footprint and better working conditions for mobile workers.
Does this strategy lend itself to all companies?
After this long list of potential benefits, you might think that pooling sales forces is the universal answer to the challenges currently facing FMCG actors. Evidently, this is not the case. Embarking on this course of action only makes sense if this type of organization is consistent with the company’s overall strategy. The creation of a single salesforce seems particularly appropriate in the following two cases: