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When Taking Care of Suppliers Sabotages Your Own Success
NBWA Associate Member Verno Consulting, LLC shares insight on aligning PFP incentives with portfolio priorities to drive sustainable growth.
By Wes Verno, Verno Consulting, LLC
When lower-priority suppliers are allowed to offer higher PFP payouts than priority brands, sales reps often chase the money instead of executing the portfolio strategy. This results in a revolving door of low-priority placements that erodes long-term market share for the wholesaler’s core brands.
Formal or informal brand priorities are essential for an overall portfolio strategy. Problems occur when you allow secondary brands to come in and offer incentives (distribution, display, or volume) that exceed those of your priority brands.
We get why brand managers often allow secondary suppliers to offer disproportionately higher PFP payouts. They want to take care of their suppliers. They also want to make sure sales reps have an opportunity to earn as much additional money as possible.
When secondary or lower-priority brands are given leeway to sidetrack your sales plan, your core portfolio strategy never gains the traction it needs. This isn’t a rep motivation problem or a supplier relationship problem; it’s a structural flaw that turns your own incentive program against your strategic priorities.
The Solution to This Common Problem is to Standardize PFP Payouts and Ensure Protection Of Your Priority Brands
1. STANDARDIZE PFP PAYOUTS
Develop standard payout amounts for new placements, displays, and volume incentives. Standard payouts are easy to develop and ensure they are consistently implemented. This should result in higher volume and, over the long term, higher market share. All secondary suppliers are required to use your standard payout amounts when they are in the monthly incentives (ex. $10 per placement).
2. PROTECT YOUR PRIORITY BRANDS
The secondary supplier’s brand payout should never exceed the priority brand payout. If the wholesaler wants to offer equal payouts, secondary suppliers should be allowed to pay up to the same amount as a priority brand for a new placement.
Whether they know it or not, many wholesalers are allowing their sales strategy to be hijacked one PFP payout at a time. By implementing standard payout amounts and ensuring secondary brands never exceed priority brand incentives, wholesalers can realign rep behavior with portfolio strategy, drive sustainable growth in their core brands, and build market share that compounds over time.
Author Info
Wes Verno
Verno Consulting, LLC.
303.718.7849
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