<#022> A dead-simple system to cluster your On-trade customers in 4 types (2 ✅ +2 ❌)

<#022> A dead-simple system to cluster your On-trade customers in 4 types (2 ✅ +2 ❌)
Photo by Alexander Grey / Unsplash

Today's issue will follow up on Issue #019 where I spoke about the importance of using outlet segmentation in hunting new customers. Today I'll dive deep into the importance of using such segmentation for farming existing clients.

Unfortunately, many brands I see daily, lack a straightforward system to prioritize where to focus their effort on existing customers. They go in all directions, being pulled left and right by sales and marketing teams without a clear action plan.

Image-based segmentations are useful for hunting new customers (driving distribution).

Volume-based segmentations are better for farming (developing rate of sale of velocity).

They have a segmentation on a PowerPoint deck but they don't put it into action.

Strategy decks are in all companies. What brands miss are execution decks: action plans to give directions to the team and live by them.

I've always been against prioritizing outlets on volume, I used to be a purist of premium brand building and image has always played a big role for me, until I became a Country Manager and started to manage a P&L. That was the moment of truth 6 years ago.

All my old talks about brand buildings still felt great but I started looking at things in a different way. I needed to fund the journey as I was working with very small budgets.

I started thinking: what's the point of being on the back bar of a fancy venue if there are "no & low" sales there? People may see it but if there is no link to the occasion, nobody will order it. There is no point in trying to harvest those outlets. I'd rather spend time on a more average bar that sells a lot than on a cool bar that doesn't.

If they don't put in any effort to "get your bottle out there", they are not interested.
For this reason, I decided to add another dimension to segmentation.  

It's not about cool or mainstream outlets. It's about who's putting an effort to sell it out.

This thinking led me to prioritize outlets in a way that was friendly to my resources and P&L. A simple way to understand which ones to focus on is to create a simple matrix like the one below.

Cluster the outlets in 4 quadrants based on premium-ness and on sell-out. NB if you lack data, ask your clients and then work with estimates confronting data from wholesalers with data your clients give you.  

#1. ❌ Top-left quadrant: The useless beauties (The cool ones that don't want you)

They are the ones that might be some of the coolest places in town. When thinking about them, you are not objective because it is your dream to tell friends and investors that your brand is there. But they don't do anything to your brand. It is usually for 2 main reasons:

  • your brand's core occasion doesn't fit with their bar's one
  • it does fit but they care about a competitor's brand more

Stop trying to make an impact there. If your bottle is there, be happy until it lasts but don't have high expectations. I don't want to be negative but these are often the types of bars that in their nature always want to show something new. For this reason, they are trying your product (maybe you know them) but at some point, they will need to put another one in as the space on the back bar is limited.

#2.  ❌ Bottom-left quadrant: The waste of time (Mainstream ones that don't want you)

These are very straightforward. They have probably bought a bottle once. It didn't move for any reason. It could be too expensive to sell in a cocktail or it may not resonate with their clientele. Not much to do there. Of course, you could try to increase the rotation but your resources and people are limited. Skip them.