By Matt Lloyd, CEO & MD Strikforce
As published in InsideFMCG.
Clearly, I’m biased. But it’s a resounding “yes.” For over 30 years, I’ve been both in outsourced agency side for 20 years but also a client of such providers and then have managed teams which I decided to keep in house, all in Australia and in Europe. There are pros and cons, there is timing and context to consider, but outsourcing your field sales and in store activation tasks works, and I might be bold to add, usually works better than having your own team.
Tapping into a third-party sales/merchandising team provider offers scale. Most of the major service providers in this space will cover > 90% of Australia in an efficient and cost effective way. This sometimes means sharing the store visits with other non-competing brands, but in essence, each brand gets it’s “call within the call” so as to ensure share of voice in the store visit, measured, timed and optimized. Alternatively, dedicated store visits for just single brands/clients can be provided.
It’s no accident that around 70% of the top 100 FMCG manufacturers (by revenue) outsource all or part of their in-store brand activation effort covering selling, merchandising, display building, compliance work, availability, winning over and above displays, sampling. Furthermore, the major grocery retailers themselves outsource much of their in-store work. This market penetration means that third-party retail marketing providers are expert and executing brand activity in store via running large field teams is their core business. Such providers have strong relationships at store level given their visit frequency and visit duration, as well as experience and insight across different retailer settings and across a breadth of product categories. This all amounts to adding value to the agency client partner through expertise and experience.
The labour market in Australia is not getting any easier to do business. Relatively low unemployment around the 3-4% mark in recent years, means that the fight for talent is a constant challenge notwithstanding just availability of labour per se. Add to this the increasing regulatory and legislative creep into especially casual labour employment practices, and being compliant, up to date and organized against this context can be too hard for some. Conversely, this is “day-job” for the agencies whom running field teams is their core business.
Related to the impost of the labour market, the overhead costs of in-house teams is an increasing burden. Fine, (albeit challenging,) if you are able to pass on to the customer (usually the retailer) in trading terms, and great if you can see a clear return on investment of your field team. Not fine, if you are just seeing exponential costs with no obvious growth or return. The worry then is the opportunity cost lost if I don’t carry on executing. When evaluating on whether to outsource or not, procurement and budget holding decision makers often omit to include not only the unit cost savings in outsourcing tasks or the increased return, but the knock on opportunity to remove overhead costs from the support services at Head Office. If the budget holder for Field doesn’t see the on cost of HR, Finance (payroll), OH&S and Systems that supports their Field team, then often the potential savings in those faculties is often overlooked. Yet savings there are to be had.
Outsourcing to experts governed by contractual relationships that surpass even the most robust of internal SLAs of in-house teams means costs can be performance related. Look for the opportunity for “risk and reward” style fee related schemes so as to ensure a “pay for what you get” type approach with the agency open to putting some of their margin at risk. You don’t get a rebate if your in house team doesn’t deliver.
Finally, many of the top agency out-sourced providers in Australia know that collectively there is benefit in tackling key non-competing but industry challenges together. The ACTIVATE group is a not for profit, member-based organization enabling members to join together with collective scale to improve awareness through marketing, lobby Government, and increase the talent pipeline into the industry. ACTIVATE also runs the highly prestigious “Joe Berry Award” which for over 30 years has been recognizing younger talent involved in Australian retail and manufacturing.
Outsourcing field teams and in-instore execution works, and it works very well across many fronts and mitigates against many headwinds facing Australian retailers and manufacturers.