1. 10
2nd Quarter 2015
Question: At the upcoming IFDA Smart Conference, you
guys are doing a back and forth conversation titled “What’s
Your Price? NowWhat?”That’s an interesting title.What are
you getting at?
John Paré: The art of foodservice selling has completely
evolved over the last 50 years. Customers have changed
the way they buy and caused an evolution that the
distribution industry has got to deal with.We have created
this highly commoditized, price-driven marketplace. Many
of our customer interactions have become more about
transactions.
It seems as though the general foodservice distribution
selling model is based on price, promotion, program —
and things that are based more on pricing manipulation
rather than bringing useful information and inspiration to
the operator.
This, to me, creates a fear factor because the buyer may
feel they are missing out if they don’t object with pricing. It
has almost become instinct for people to say — “what’s
your price” — just to see how low they can get a DSR to
go.
Amazon is a great example of the era of customer control.
Amazon has, in a sense, provided a vehicle and process
that has transformed the customer retail experience.
That is something the distribution business has to
consider. For sales growth and retention, both our leaders
and frontline sales professionals have to reevaluate the
sales process.The sales experience with the customer has
got to be relevant and tailored to that customer’s needs
rather than the needs of the distributor. In the end, I think
this practice will serve both the customer and the seller
better.
So essentially, that is what we are going to tackle on stage
both in a micro and a macro sense.
Question: So you are talking about the DSR and customer
experience together. Does transparency play a role here
from the distributor side?
John Paré: Oh my gosh, yes! Just ask a customer what
they think or step back and observe their behavior.Why do
they have multiple vendors?Why is there constant pricing
pressure?
There is little trust. In many sales instances, every line item
becomes negotiable. After years of little transparency, in
general, the customer feels a bit jaded. If you want to
predict the future of the industry, just look around and see
what’s happening. Cash and Carry is gaining market share
and there are several tech start-ups that are working
diligently to disrupt the established foodservice buying
paradigm by cracking the transparency code and erecting a
model similar to, say, purchasing an airline ticket.
If we continue to operate with these short term strategies
focusing on price, we are going to continue to erode sales
and margin because we seem to have difficulty in
overcoming the price objection at the point of sale.
Defending our share of the business is extremely
inefficient.
Discounting is transactional, so it’s a short term decision
after short term decision and the price posturing does not
breed any kind of loyalty at all. Part of the solution will be
to correct the erosion of trust and transparency that we
have seen.
A Discussion Around Price, Transparency, and Making
the Customer the Hero of the Story
At the upcoming IFDA SMart Conference, a discussion
titled “What’sYour Price? NowWhat?” will tackle the
current selling paradigm around price. The two featured
speakers — John Paré, business solutions director at Pate
Dawson – Southern Foods, and Rob Keeney, director of
training at F.A.B., Inc. — sat down for a discussion about
price, transparency, DSR/customer interaction, and the
need to make the customer the hero of the story. Whether
you make the conference or not, this subject made for an
interesting discussion.The interview was conducted by
IFDA’s Chris Caldwell.
John Paré
Pate Dawson Company -
Southern Foods
Rob Keeney
F.A.B., Inc.

2. 11
IFDA EXECUTIVE UPDATE
Question: Rob, a lot of this is about the sales force — the
interaction with the customer. As the director of training at
F.A.B., how do you view this challenge within the sales force
and what do they need to do to succeed?
Rob Keeney: DSRs are kind of caught in the middle.They
are caught in the middle from a number of different
directions.They are caught in between their customer who
they are trying to take care of and yet at the same time
trying to sell to.The other pressure is their management
team may be telling them that “we need you to grow your
sales,” but also at the same time, “we need you to grow
your margin.” That seems counterintuitive. How do I grow
my sales and my margin at the same time?
They are also being taught they need to sell on value, not
on price.That is very confusing to the DSR because they
don’t really know what that means.
Question: If you are working on training and looking at the
sales force versus their management, how do you get them
on the same page?
Rob Keeney: The way I approach it is that I try to teach the
sales people — and whenever I have the opportunity to get
in front of the management team, I do the same thing — I
try to teach them the components that really drive value to
the operator.This is pretty simple, but for some reason it’s
not always well understood.When a manager says to the
DSR — “You’ve got to stop selling on price. You’ve got to
sell on value.”Well what the DSR hears is not to give the
customer the price.
And so they play what I call the price avoidance dance.The
customer says, “What’s your price on these French fries?”
And the DSR says, “Let me tell you about the features and
benefits of this French fry.”
In this scenario, the customer gets annoyed because the
DSR won’t just tell them it’s $24.95 a case, which is all the
customer really wants to know.
So the DSR is told by their manager to sell on value, not
price, but what they don’t understand is that price is part of
the value equation.You can’t take price out.You can’t
extract it and say we can have a discussion about value
when we can’t discuss price.
So what I teach is understanding the simple value equation
— the relationship between how much something costs
and what are the benefits — what do I get when I pay that
$24.95.
Question: So what you’re saying is to put yourself in the
place of the customer first?
Rob Keeney: Yes, exactly. If you think like your customer
— then you approach it as customer centric pricing.
We teach a module called “customer centric pricing.” So if
you give information to your customer in a way that
makes sense to the customer, including the price, then
that is the definition of transparency.
Now, you brought up the term transparency, and we have
a disagreement in the community about what
transparency means.
Some people are of the opinion that in order for us to be
transparent, our customers need to know everything
about my company — my distribution company — and
how much does it cost me to move a case. I don’t agree
with that.
To me, transparency is what the customer cares about —
which in most cases is whether the cost has come up or
gone down. If that happens, I just want to know about it.
Don’t surprise me when a delivery happens and the price
is $2 more than the last time I bought this, regardless of
when I last bought this.The customer just wants to know if
something on price has changed.To me, that is the
essence of transparency.
The idea that transparency means revealing all my
internals harkens back to what John mentioned about
Amazon. If I go to their website and want to buy a piece of
computer equipment, I don’t care what their operational
costs are to run their warehouse. I just want to know how
much it is and what’s the shipping going to be and what’s
the tax going to be.
Lack of transparency is hidden costs that I have to pay that
I did not know about.Transparency is not about the
customer knowing what the operational costs are for the
warehouse.
Question: Let me throw a final question to both of you —
and John, you can take this first. From what you are both
saying, it sounds like there is some discipline that might be
put around the discussion of price and value.
John Paré: I would agree that it is a disciplined approach.
You have strategy and tactics, or put another way you
have micro versus macro. From a strategy sense, you
can’t build sustainable long-term results on this idea of
pricing manipulation.
continued “What’s Your Price?” on last page