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I   have previously mentioned free-fills and demonstrations, tools used to promote products. When you try to place your product with a new account, you will be pressured to provide such promotions and ads and discounts, and if the account doesn’t like what you have to offer on an ongoing basis, they make take a loss and send your product off to the half-price bins.

What is a free-fill? A free-fill is a free case of your product. Most retailers require at least a free-fill to test your product. If you sell, then they will keep buying. For example, Michael’s Perfect Pickles just got accepted into Clark’s Nutrition. The buyer says, “We’ll take your product but only as a free-fill.” There are a couple of ways to handle this. One way is to send it through their distributor, who happens to be Nature’s Best. Michael fills out a turnover and gives Clark’s 100 percent merchant chargeback, or MCB. Or, Michael says he’ll send the product directly and delivers it to each store himself.

New manufacturers will be expected to provide retailers a free-fill to acquire placement(s). Free-fills are a part of a product’s life cycle—like it or lump it. Very few manufacturers can get around this practice. Usually, established brands can avoid free-fills because they have paid their dues. I recall a supplement whose price at retail was $24.99–$29.99 with six bottles per case, so that manufacturer’s free-fill was worth $150–$180 retail per store. Multiply that by 170 stores for a major chain and it comes to over $25,000–$30,000. Ouch!

Then after the initial free-fills comes more cash for ads, discounts, and demos.

But sometimes you will need to stand your ground and say no. So how do you strike this balance? How do you get away from the black hole of retailer demands?

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Avoid the Never-Ending Discount Train

A new retail account typically expects a 10 to 20 percent OI (off invoice) or MCB discount for its first order or for an agreed amount of time. In exchange retailers will be expected to buy a fair amount of product to support the ads, demos, and sales that should announce the arrival of your new product. Retailers should place your new product on a sales display to introduce the brand. Sales displays sell product via discounts that you need to supply. On top of that cost most major retailers charge for displays and end caps. (An end cap is a small display at the end of a grocery aisle.) In other words, retailers have an interest in creating in-store revenue streams.

The following tips on discounts will help you face up to these demands:

For the first 90 days provide 15 percent OI with distributors.

Tie in promotions with the new account.

Secure as many accounts as possible.

Hire an industry-based sales director.

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Know How Many Demos Is Too Many

In a product’s first twelve months, you will want to close more than 500 accounts and double that in the next twelve months. The minute a manufacturer closes an account that is a retail chain, the chain will immediately inquire about demos. The usual request is two rounds of demos in a retailer’s top-performing locations. As a rule, you should keep your offer of demos at approximately two per retail location. Only break that rule for special events when customers come in droves, such as a customer appreciation day, Earth Day, or store anniversary. Demos will boost sales, but your product shouldn’t depend on demos. Demos are best used for brand awareness, and the introduction and launching of new items. From my experience, I have found that one or two nonperforming demos is not good news. If your product cannot sell through two demos, find out why and restrategize fast.

It is imperative to acquire information from your customers. When a product is demonstrated it is essential that your demonstrators (i.e., your brand ambassadors) collect unfiltered feedback. Collect raw data from day one. And, numbers tell a story. Make sure your data are telling a good story for buyers. Create a demo report sheet for brand ambassadors to record traffic flow, product interest, brand recognition, comments, and sales during demos. All of this seemingly unimportant data could greatly benefit your cause in future deals.

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Remember, Not All Ads Are Good Ads

Retail chains can advertise your product in their chain publication and in their in-store promotions. For example, if you are advertising at Sprouts Farmers Market, over 170 locations will advertise your product in their publication and/or promote it in store. The majority of retailers have these publications so that customers can grab them as they shop. Or an in-store ad will provide As Advertised coupons or special instant savings tags for advertised items. Customers often leave with some of the advertised product or instant savings coupons or tags. An instant discount often sways the mind from maybe to yes. Hundreds of manufacturers place in-store ads and spike their sales. On the other hand, hundreds of manufacturers place ads and get nada. So how do you spike your sales with your ads as opposed to dropping a bomb? The key is good data. You need to analyze what ads in what locations are producing sales—or not.

The cost for small-chain retailer ads or instant savings tags will range from about $100 to $600. Larger retailer ads for 100+ locations will be at least $600. For retailer ads for 1,000+ locations, buckle your seat belt. But committing to one or two ads is expected. Committing to ads every second month could prove too aggressive.

Major magazine ads in such publications as Glamour, Us, O Magazine, and People may seem like a good idea. I believe mainstream cosmetic and hair products do quite well in these publications. But when a sales rep from a big magazine comes calling, remember that mainstream publication ads are enormously expensive and cost far more than most retailer ads. A major brand can afford to purchase a one-page ad in Glamour. These expensive ads are also in the magazine, rather than in the store. In-store ads are a call to action for an immediate purchase. If you have a natural product, a promotion in the “Paid Advertisement Section” of a major magazine could be a waste of resources. A new brand is often best served by a talented publicist obtaining free press coverage.

I worked with a manufacturer who was published on the “Oprah Hot List,” which is Oprah Winfrey’s top seasonal picks in O Magazine. For example, Zevia Natural Soda was submitted by a publicist as an “undeniable” product and O Magazine thought so too. Soon Zevia went from being somewhat obscure to a household name. But I know another company that paid big bucks to be in the “Paid Advertisement Section” in Glamour and Shape and it did nothing for sales. In fact, that company is going under.

When Do You Move Away from the Black Hole?

A product completely relying on brand ambassadors, ads, and discounts to sell will fail. A good deal kick-starts a product, and a good product stays after the sales of the first year. This is why wide margins are crucial in the beginning. They will lessen the blow from promotions and various discounts.

It’s when you are off deal that you see the real demand for your product.

In your second year, you can continue to run promotions, but should you end the discounts? And, will customers keep buying? It’s the age-old question.

What determines whether your product is a hero or a zero? The answer is consistent sell-through, that is, consistent actual sales. If retailers don’t see the product consistently moving, it’s problematic. One must have sell-through along with case stacks to support demos. But consistent sell-through will be your product’s ultimate test. There’s no magical date, but I’d say if a product is not selling through within four to five months after placement, it’s probably a zero. If a product sells through within the first six weeks of placement, it could be a hero.

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Build Your Brand Ambassador Team

Employ a team of brand ambassadors who are completely engaged with your product and brand. For customers, there is nothing worse than receiving a sample from someone who is apathetic. A customer’s first experience with a brand should be memorable. Consumers will remember a bad experience, like a soda served warm and flat.

I have sampled products at demos all over the country. I found a vegan mayonnaise this way that’s now a monthly purchase. The samples had been perfectly prepared, and they were delicious. The brand ambassador knew the product well and engaged customers. This manufacturer clearly knew their potential customer and sold the product hard. I spoke with their brand ambassador for some time and really felt her brand attachment. I bought a jar and received a coupon for my next purchase. Now I always use this mayonnaise when I make mashed potatoes, potato salad, deviled eggs, or egg salad, and we buy it whether or not it’s on sale. This is the impression your brand ambassador should create: that your product is undeniable and everyone needs to know it.

Empower your brand ambassadors. One way you can do this is with competitive pay. Implement sales bonuses and incentives to energize them. I suggest an incentive for brand ambassadors to sell case stacks of product demos. Offer $10 or $20 as an incentive, or a spiff, as they are called. Often manufacturers will offer a spiff to brand ambassadors and distributor and broker account executives who hit a specific sales goal. These incremental deals can really amp up a brand and expand awareness. It’s also a way to incentivize distributor and broker account executives to give your brand extra attention and care when they have many brands to oversee.

Cash should not be the sole incentive, though. Be creative. A hungry brand ambassador could be your future salesperson, so excitement and enrollment are key. Enrollment is when your brand ambassadors are completely sold on your product. When brand ambassadors are excited about your product, you get customers who are excited, and sales roll in. Educate brand ambassadors with a one- or two-hour training session. Every brand ambassador should know your product inside out, so provide all pertinent product-related information. Make them a part of your company’s mission so that they will become your evangelists.

Create demo kits with a branded, uniform look. You want all demos to be aesthetically consistent. Within your demo kit include demo reports, marketing reports, and sales reports. Your brand ambassadors are your eyes and ears for your in-store demo—take advantage of the data they provide. Good kits can only help you develop your product and team.

Have your brand ambassador call at least four days ahead of your scheduled demo to ensure that product for the demo has arrived or will be arriving prior to the demo. If there isn’t any product or very little, cancel the demo.

With your product established in the market, ask yourself if you are content to remain a smallish, local brand, leaving yourself time to garden, read, play golf, . . . whatever. Or are you planning to spend another 20 years becoming a major regional, or even national, brand? Do you want to partner with investors to handle Kroger when they come calling? Or do you want to sell the brand when it gets just big enough to attract a competitor to absorb?