Control state broker compensation

[seventh son]

I signed a simple contract with a broker not long ago - they represent and promote our products, and we pay them a fixed % of the selling price (as a broker they don't take possession of the liquor).

I guess that I may be a little naive, but I thought that for this payment, they would promote our product at bars, restaurants, and in stores. Now they are proposing a two month program where we would pay additional money for performance: $ for each menu, $ for each new bar restaurant, $ for each display, etc....

My opinion is that this is what I have been paying them for already. I know that programming is normal in the industry, but is it typical for a broker to be paid these incentives on top of the agreed upon rate?

[ODistCO]

Brokers in these states generally have somewhat large staff's of sales people in the market every day. They generally represent a large number of brands and a number of suppliers. Therefore, they are predisposed to concentrate on whatever is giving them incremental cash in their pocket. Many large suppliers have significant leverage over these brokers and tend to demand their time & attention. If your wholesaler or broker is asking you for a program, do it with these points in mind:

• Ask them to match you $1 for $1- it shows their commitment to your brand. If they won't do it, ask for $2 of yours for $1 of theirs. Same for POS & anything valuable.
• Don't pay for simple distribution or POS placement. That is their job. Pay for the number of cases on display ( 100 cs, display = $1 per cs.). Volume is your job.
• Ask for pictures of everything. If it's a special On Premise, ask for a price reduction and a sign. Take pictures of every display and have a prize for the biggest, smallest, & most creative.
• Make it a contest. These people are highly competitive in a highly competitive industry. Make the prize a unique wearable, the others will be begging you for them.
• Pick a holiday you can own. Not St. Pats or Christmas, pick Derby Day or Repeal day or something unique to your market.
• Target the top 5 winnable accounts and focus your attention there, Show up yourself, build the display or spend $100 on the rep & a few regulars at happy hour.

My final piece of advice is start with the end in mind. Build any program based on what your business is lacking. If you need sales on premise, incent sampling. If you need off premise volume, focus on displays. Know what you need when you walk into the broker. Have the plan laid out and the tracking and measuring, too. Present it to the manager, then ask to present it to the staff at their sales meeting. Bring donuts. Most of all have fun!