[MUSIC PLAYING] AMY WELSMAN: When determining what resources you need to allocate to your growing wholesale channel it will really depend on what your strategy is. If your plan is to go after a select few of strategic accounts that will act also as your marketing partners, you may be able to use an existing person on your team. This person may already handle brand partnerships, public relations, or community management. This approach requires the least amount of resources and most likely you would avoid trade shows and only travel to those areas where these key accounts operate.
Your goal may also be to partner with five accounts in which case an existing employee may be equipped to manage this in addition to their current responsibilities. If you're looking to partner with more retailers in various territories, you may want to consider building an in-house sales team. This approach involves both customer acquisition and account management handled in-house. So that means cold calling, sampling, trade shows, staff training, et cetera would all be handled and executed by house staff.
And would need at least one person in charge with ideally a second or even third team member depending on your rate of growth and sales goals. Coordinators would start the sales funnel by working on target lists, cold calling, shipping out samples and sales materials while the account manager would be the closer and relationship manager. The sales team would plan and attend trade shows, go on sales trips, and manage all the accounts from in-house. This is a more resource heavy approach but it gives you the most control of your brand and the partners that you work with.
It also allows you to establish a structured sales funnel with timelines, measurable goals, and projections. For example, your research indicates that there are about 600 specialty retailers in your target market across North America, to establish a timeline you determine how many of these your in-house team can call per day and allow at least a month for sampling and/or follow-ups. For example, you call 10 retailers a day for 60 days, which is a total of 600, add another 20 days for follow-ups.
So you're looking at four months to execute this plan. You can then assume that of the 10 calls per day this converts to about six leads who are interested in receiving more information and/or samples, which is a 60% prospect ratio. Of those six you send information to, assume you were able to reconnect with about four of them. About 67% prospect to proposal ratio. From there you send your team leader in for the proposal in closing phase.
Where assume you can confirm orders from about two to four prospects. Based on this scenario, and it may vary depending on your business, your total conversion rate for this program is about 20%. Once you know your approximate conversion, you can then determine the potential revenue for your strategy. For example, your plan is to approach 600 retailers of which you calculate opening 200. Say your opening order is $2,000-- something you would determine-- and the assumption is the retailer will do about three replenishment orders per year making each account worth around $6,000.
Based on these assumptions your total projected revenue for this wholesale program is 1.2 million per year. Also keep in mind as your brand grows, you may garner interest from larger chain stores, which will grow that revenue number significantly. In some cases, one chain store could surpass the revenue total of all of your specialty stores combined. Of course these are only assumptions. And there will be variables which impact these numbers and projections but you need a starting point especially when thinking about resource allocation.
From here you will then need to look back at your margins and salaries and determine if this approach is worth it. If the prospect of creating an in-house wholesale team seems too resource intensive an alternative can be the sales rep approach. This would require one person in-house to manage a team of independent reps in various territories. There are pros and cons to this approach. The benefits are as follows. If you select the right rep, they will have an established relationship with the top retailers in their territory.
They will also have extensive knowledge of the retail landscape in their area and will advise on who the best accounts are, who specializes in what, and who has what sort of reputation. They bring with them and established knowledge of their market and this is a valuable asset. They will also be able to open new doors faster as they already have relationships with buyers and they will limit the amount of travel required for your team in head office to open accounts and manage relationships.
Also they are typically paid on commission only, usually around 10%. So they get paid based on their performance, which is a plus. With this strategy there are some shortcomings that you need to consider. Sales reps typically have more than one product line that they represent in their market. They can easily take on too much and may not give your brand the attention and focus it requires to launch it.
When you add a new rep to your team there is an upfront investment from sales materials, samples, training. You will want them to be successful and hungry to grow your brand. Because they are on a commission basis only and not working at head office, managing them properly requires skill and attention. Your sales manager in-house will need to provide clear goals and objectives that they can be held accountable for.
A good rep is very valuable but can be difficult to find the right one for your brand and managing them is key. When recruiting new sales reps it's important to do your research and interview them as you would any other employee. Here are some of the questions I would ask when interviewing. So what other brands have you repped or currently rep? Who are your biggest accounts and key relationships? Do you work with any chain or key accounts in your territory?
Do you have references I can speak with? What does success look like to you? How big a business do you currently manage with your other key brands? In conclusion, determining what resources are required to start your wholesale channel will be based on what your strategy, goals, and timelines look like. There are lots of ways to go about it depending on how many resources you want to allocate to building this channel. Thank you for taking the time to learn about wholesale.
I hope this gives you a good starting point where you can begin building your company's wholesale strategy and growing your brand in the retail world. [MUSIC PLAYING]
