Last month, I wrote about one of my favorite subjects—retail co-op programs. In these marketing ventures a manufacturer gives a retailer money to support sales-building activities—usually advertisements in fliers or magazines, or on the radio or TV. For retailers, co-op programs are tools to grow sales. For manufacturers, co-ops not only help increase sales but also allow tracking of an investment and its results.
Launching a co-op program entails several steps. One of the most basic is figuring out exactly whom you should talk to about funding. After all, in dealing with any given brand, you interact with brokers, reps and distributors. All of these folks can help point you in the right direction and, at times, might be the ones who can approve the co-op funds you are seeking. Your goal is to deal with someone as low in the chain of command as possible so that he or she knows you, but as high as possible so the advertising can be approved and executed.
This is one reason I think retailers need to attend trade shows. They are a valid way to meet with the people who can help increase the support you receive for products in your stores. Have your made plans for Natural Products Expo East yet? Do you know when the next National Nutritional Foods Association show is? Does your distributor have a tabletop in your part of the country in the near future? These are all great occasions to discuss your plans to grow your sales and the opportunities that manufacturers have to participate in them.
After you've identified your funding sources, the next step is putting together a co-op program. Begin by making sure you have your entire agreement in writing and that both parties receive a copy of the agreement. At a bare minimum, the paperwork should contain the exact information about what items are being promoted (brand, item, size, UPC code), the type and form of the discounts, what buy-in requirements are in effect, the type of advertising, how much advertising cost is being paid by the vendor, and what form the co-op reimbursement will take.
Things can and do go wrong in the simplest of advertising agreements. Paperwork gives both parties something to go back to so that differences can be resolved and relationships maintained.
Whatever kind of program you want to fund with co-op money—a flier, a magazine insert, a radio spot, etc.—make sure you do it right. If you don't know how to handle these things in top-notch fashion, hire someone who does. Graphic artists can help you not only in your co-op program, but also in the total printed message for your store. Professionals can help you design, produce and print whatever kind of campaign you are pursuing.
A word of caution: Avoid the trap of seeing co-op funds as a source of revenue. You are not an ad agency, publisher or broadcaster; you are a seller of top-quality natural and organic products. You need to focus on retail and on making money by the sale of products, not through the receipt of funds that are designed to be a sales tool. I have seen many retailers lose focus on the purpose of their co-op programs by doing this very thing. They then "expect" this co-op money for budgetary purposes. Meanwhile, their ad programs have gone flat and they have run-of-the-mill items at ho-hum prices rather than cutting-edge items at aggressive prices These retailers aren't using their co-op dollars to drive any sales, and manufacturers are, wisely, staying away from them.
Keep your focus on satisfying your customers and selling them the best products in the marketplace. Co-op money can be a great aid, but it needs to stay in its place—as a tool to help you reach your goals.
Bill Crawford, director of retail publishing programs at New Hope Natural Media, spent 12 years on the management team of a major natural products chain. Contact him at [email protected]
Natural Foods Merchandiser volume XXVII/number 5/p. 20