House of Revenue™ Radio

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Episode 8: Scaling CPG Companies 

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Meet Guest, Brad Hendrickson

Brad Hendrickson is a consumer packaged goods, retail marketing, sales and go-to-market expert. His extensive sales and marketing expertise helps House of RevenueTM clients bridge the communication gaps between sales and marketing, maximizing efficiencies and revenue opportunities at all stages of the sales journey. 

Former creative agency and sales firm executive, Brad has worked with dozens of celebrity and national brands on product sell-in, licensing & brand management, and omni-channel marketing programs across most major retailers and CPG categories.

   

Don't Have Time to Listen, Read The Full Transcription.

Mary Grothe (Host) (00:00):

Welcome to the House of Revenue™. I'm Mary Grothe, Founder and CEO. I love scaling companies to their first 5 million, then 10, 15, and 20. If you've reached a revenue plateau and aren't sure how to get past it, you're in the right place. Listen in as we interview CEOs and solve their most pressing revenue challenges. If you want to be on our show or want to learn more, connect with us at houseofrevenue.com. For years, we, as a firm focused on serving businesses that were mostly professional services or in the B2B space. But very early on (believe it or not), we had a CPG client. So CPG stands for consumer packaged goods and I didn't know what CPG was back then. Never heard the acronym. In fact, I treated that engagement as traditional B2B. They had multiple channels that they could sell in so, they were manufacturing wine racks and they could sell directly to the consumer. The consumer could find the product online, call the manufacturer, place that order, get that shipment. The consumer could also order online through e-commerce. The consumer could also order through Amazon house and the consumer could also order from one of their super 11 dealers, is what they called them. So dealers who could add into their product line up this line of wine racks, and they could buy it through a dealer. We were brought in to help with their direct sales channel, who predominantly was selling through B2B being selling they're the manufacturer. And they're selling to architects, selling to builders and designers, anybody that needed a wine rack built into their space. Their relationships with those types of buyers were helpful because they were plentiful. They did a lot of transactions and they were great relationships to have in the market. While we started working in direct sales, all of a sudden our work was requested to expand into dealers. And also in those introductory conversations with consumers, I didn't realize that I was getting my basic first step of learning in the world of CPG. We did not have another client that looked like that company until middle of 2020. And we had an opportunity to work with a company that manufactures calc and they sell in Lowe's and a hundreds, I don't know, thousands of other retailers across the country. They don't have a direct to consumer channel internally, but they do through Amazon. Those interesting engaging with this company, our firm has evolved greatly. It wasn't just sales trading anymore. Now we're on marketing, sales, customer service, and the tech stack within. I started to notice there's unique, new ones here, not just an acronyms and terminology, but there's a way that this business is structured and how this business serves their four distinct types of buyers from the retail level into super pros, into regular pros and then the DIY consumer. And I acknowledged if we're going to be brilliant in this space, we have to strategically hire to grow what we're doing here. Cue Brad Hendrickson. We met Brad and realized, all right, this is what we need. He's the real deal he's bringing in a decade's worth of experience in consumer brands and CPG. And we were smart to extend an offer. And to this guy, we are so thankful to have him on our team. In our episode today, the purpose is to deep dive into the world of consumer brands and CPG. Brad is our division vice president over consumer brands. So all of our clients that are working in that industry, whether it's CPG more of a B2C focus and then also into logistics and supporting companies like three peels that that help in the supply chain for consumer brands. So Brad, welcome to our show.

Brad Hendrickson (Guest) (04:31):

Thank you. Thank you for having me.

Mary Grothe (Host) (04:31):

I really want people to hear about this decade of incredible experience that you acquired. Let's hear the journey.

Brad Hendrickson (Guest) (04:31):

Yeah, so I was fortunate to at a young age, get immersed in the world of CPG and growing up. It's not like I thought I want to be in consumer packaged goods. Th is wasn't my ifelong goal, but I was fortunate enough to get brought on by a sales company when I was about 22 and just got thrown into the lion's den. Uthe folks that worked for us were Walton award winners from Walmart. They were executives at Kroger. And so I could really get a hands on experience from a young age. I had started as just kind of a marketing manager. I worked a lot supporting what our sales reps were going in and meeting with retailers. UI was able to go in and sit in some of those retail presentations. And before I knew it, I was sitting in the room with some of the top executives at these major retailers. And it was an unbelievable experience to hear what was really evolving from the top down. And CPG is one of these unbelievable industries where every person that shops buys consumer packaged goods. And it became an amazing experience for me to see some clients that we were working with actually on retail shelves. And for me, as we really dove deeper, you know, we started with manufacturers and at the manufacturer level, you know, making products and getting those to market has its own idiosyncrasies and its own challenges. And my job was from a consulting perspective was to get these products to market into a retailer as quickly as possible. And so we did that pretty successfully for a long time. And working with these direct manufacturers as the industry evolved, we started noticing that they were licensing bigger brands and in order to get a little more push at retail, they started licensing brands like Jack Daniels or skinny girl, and working with a lot of these brands that we're able to give them a little more oomph. So, you know, without really knowing my career took me into the licensing space of CPG and I began working with big licensees, like Brown-Forman who had, you know, 50 licensing partners. There was a lot of macro strategy involved, but it made that effort of us getting products into retail, you know, much more interesting, I would say, having to work with a major license. Once we got those products on the shelves, it became a little bit of a internal company joke where, you know, we'd have these meetings, we would build these amazing presentations. We would meet with the correct buyers and we'd be at the right time in their mod changes where we knew for sure we're getting the product on the shelves. And we all viewed that as success and our clients viewed that as success. But then, you know, six weeks into the lay-down, which is when the product is actually put on the shelves, a lot of our clients came back to us and they're like, Hey, our buyers are already a little frustrated with our performance here. And we're like, well, what do you mean? And they're like, well, they're expecting, you know, 98.7% in stocks at all times on the shelves. And we're like, okay, yeah, that's your supply chain and your marketing. They're like, well, we didn't prepare for any of that. So, we then over the course of the next, you know, 18 to 24 months evolved into where we decided to start providing marketing support for these clients. So, then of course, as my career continues to go down these tributaries and CPG, I move into the advertising side. And so I spent, you know, 18 months learning what advertising agencies and creative agencies were doing for our clients and seeing all of the shortfalls and pitfalls where they did great at brand awareness and brand awareness has its place in marketing. Don't get me wrong. Sure. But it doesn't necessarily equate to selling product on a shelf. It's not what your buyer wants. So I really spent that time learning what do buyers view as value to their category? What makes a good supplier to a retailer from a sales and marketing perspective? So, two years later, we launched a creative agency that supported all of our, our, all of our manufacturing partners. And this creative agency was just focused on what we did to make our clients from a manufacturing and brand side, the best partner they could be at retail. And a lot of people don't know this, but buyers at retail are responsible for an entire category, but they're predominantly compensated on profit loss and the performance of that category. And so you may have the best product and the best brand, and it may be something where consumers all over really want it. But if you are not incrementally supporting revenue and, and foot traffic to that, to that aisle and consumers, aren't picking up that product and you're not driving growth in that area. You're not as a great partner to a retailer. And so we had a lot of these clients that really, it was a paradigm shift. So, you know, my decade was an unbelievable immersion into CPG. I want to say I've seen it all, but it seems like every day I learned something new. And you know, particularly over the last, you know, if we've all kind of been a part of the last 12 months, you know, CPG has been no stranger to the effect of, of the coronavirus pandemic.

Mary Grothe (Host) (09:21):

That hit hard. It hit across the spectrum, every type of business, even the ones that ended up flourishing as a result of the pandemic and a shift in the way people buy or consume, they had to iterate and figure it out. And there was a very difficult part. One of our clients was able to shift and pivot. We were working with them in January, 2020. And then by April 1st we had a new strategy. We had just written their playbook and had their full years strategic plan for marketing sales customer success. We're implementing a new tech stack, March 15th. We get hit with the shutdown. And then by April 1st, we had all new plan, all new playbook, all new approach. And they were in their industry where they had, many of their competitors were ceasing spend and preserving cash doing layoffs. They just doubled down and they said, let's make this happen. And it was tremendous to see what came out of it with their growth. But that is an example of a services company, a B2B services company. And then you look at what's happened in the world of CPG. You'll have to walk us through some of the biggest things you saw. Let me tell you from a consumer perspective, I have ordered items off of Instagram ads that I still haven't received months later. And we're a year into this pandemic. I know supply chain has been hit extremely hard. Logistics companies have been hit extremely hard. It's been rocked. Whereas you'd say that CPG has been favored because consumers are purchasing more than ever needs and stocking up on supplies. And they're saving money from not working in an office, I read so they're like not spending money on coffee on the way to the office or eating out. And so they're transitioning these funds into buying other things. Okay. So the supply chain, the whole thing just shifted. So tell me in your terms, because you were in the thick of it, what did you see over the course of the past year?

Brad Hendrickson (Guest) (11:25):

Yeah, it was, well, thankfully we weren't working with any toilet paper or paper towel suppliers, so we didn't have to deal with that supply chain interruption. But the thing that we noticed, and it took a little bit of time for it to really settle in, but a lot of our clients from a marketing perspective were confused and they were scared. And we looked at, you know, we had big annualized budgets and we had in-store demos and, and live activations and a lot of things to do, you know, to drive physical foot traffic to the retailers and our clients were coming to us for the answers that we didn't necessarily have. So we had to really dig up stream at the retail perspective and see what we needed to do. So, you know, kind of hitting it twofold from a supply chain perspective, it became very challenging. And a lot of our clients who wanted to take all their marketing budget that they were going to do in store and double down on digital weren't necessarily able to, because maybe they didn't have the e-commerce websites set up, how they needed to, to have the amount of traffic that they were going to be influxed with. Or they didn't quite have the supply chain where the co-packing relationships in order to fulfill the demand that they were getting from this, this inbound marketing that we were doing from a digital perspective at the retail level, it became this, this unbelievable treasure hunt of how do we navigate this new buyer landscape? You know, you used to be able to send a presentation to a buyer. He had time to digest it. You would go into a meeting, a meeting room, you'd present the presentation, you bring your tangible products and you'd have a discussion about how it fit. And now these are done over Zoom.

Mary Grothe (Host) (12:51):

How do you even create the same experience.

Brad Hendrickson (Guest) (12:54):

You don't and buyers are now getting thousands of emails a day. Even the best brands are shoved to the back of the line. So it's really becoming this pivot into e-com where you're using that as a proving ground. And a lot of these companies are going, and even we're experiencing with a couple of our own clients right now is how do we put some oomph behind our e-commerce strategy? Because buyers are now looking at what are your e-commerce numbers, because a lot of people aren't coming into our stores and even in the likes of, of a DIY client, you know, they're going, why don't we build an e-commerce website because we're trying to get into retailers who want to use even their own retail e-commerce platforms as a proving ground to potentially be in store. Because right now, even in unbelievably obscure segments, people are learning that it's okay to buy online. And it's really this consumer pivot that we're all really learning as it's evolving, but it's something that nobody was prepared for. But I think everybody's excited for it because it was in need of a change. And it was in need of an overhaul. A lot of big retailers have been focused on supply chain for quite some time, but they were focused on it, you know, efficiencies. And how do we make more money internally? And now they're looking at how do we optimize our supply chain to be the best value to acquire more customers. And you look at a Walmart for example, and Walmarts, they're the King of supply chain and you know them in Amazon. And it's a battle every day of who's got the best supply chain. And really now retailers like Walmart are focusing on same day delivery. And people now are expecting that throughout this pandemic. And so even the clients that we're working with, even though they're not that big consumers are still expecting the same thing. And we're noticing an emergence of third-party logistics companies popping up all over the place or ones that were pretty well established going through unbelievable growth phases and wanting to expand and offer their services to gaming and perishables and all these avenues that maybe they didn't have before, because they're seeing this as an opportunity because every brand now wants to sell online. And so the supply chain really from a efficiencies perspective for every brand is picking up steam tremendously.

Mary Grothe (Host) (15:05):

I think the shift when retail got shut down the way that it did, and it was so heavily impacted. And even I was at the outlets not long ago, and they can still, you have to limit how many people are in the store at one time. And it was just a line around to getting a store. Like I have zero interest in that, how many people have an interest in that? You go home, you just get on your computer, you order it online. But those are big brands that are going to be at the outlets. You think about all the other small business mom paw that had the brick and mortar or they're selling boutique style. So you've got a product that you're putting on the shelves and another small retailer. And all of that was just turned upside down for small business owners. It was extremely disruptive. Now several of our clients are asking us about the e-commerce and they know that there's a lot of opportunity in this space, but to your point, the consumer expectation is that they will get the same experience when they're on walmart.com as abccompany.com. And that if there's a variance and experience, they really won't have the patience for it. And it's going to cause bounces. It's going to cause them not wanting to be a part of that retail online retail experience and making those purchases. So there's a huge shift that employers need to be looking at and how they're able to create that for, or I shouldn't say employers risk for the companies and how they're creating that for their customers. So that's a big push. So as we look forward from here, House of Revenue™ is a firm where we are deeply committed to one serving our clients. First that's first and foremost, we care about them. We have to connect emotionally with our CEOs and be aligned on the mission and the same page, ensure they're truly ready to scale in that growth mindset, ready to make tough decisions. Number two, we're there to scale. And as we are becoming a bigger force in the consumer brands and CPG space, what's on the horizon for us at House of Revenue™ and what we're bringing forward with our client. I'd love to hear from you on what your vision is for this year. So CPG or consumer brand company comes on board with us. What does that experience going to look like for them?

Brad Hendrickson (Guest) (17:27):

Yeah, it's actually really exciting. And it's a great question and it really doesn't matter if you're a huge brand or a small brand. And I just read something interesting on IRI that right now, more small brands are consuming market share than they have ever before. And that's because now customers are sitting at home and they're looking and they have time to browse online. And there's so much information, product assortment available to them that before, you know, even the largest or a Walmart only has 130,000 skews. And I know that sounds like a lot, but when you're looking at specific categories, sometimes there's only a hundred items available. Well, now a customer can go anywhere and see hundreds of thousands, but in CPG, a lot of these companies have, and again, it's not a bad thing, but older methodologies and older ways of doing things. And now in this emergent marketplace, a lot of budgets and a lot of activity is pivoting to digital them moving. Some of those methodologies over into looking at forms of automation, looking at using, you know, a CRM and looking at different digital ways for them to capture that market share right now is something that I'm predominantly focused on with our clients. And it doesn't matter if you're selling food. If you're selling something in the DIY category apparel, you know, you're in the health and wellness space, anybody can benefit from this type of optimization.

Mary Grothe (Host) (18:44):

And it starts with the right foundations, the term house at revenue, we're all about building the unshakeable foundations and like any good house. The foundation has to be built first. Something that is really interesting to me as a consumer, I, during the last holiday shopping season, I really enjoyed my Instagram ads. And I never once looked up who the company was or did research or found out where they were based and how big they were in other products. I didn't do that. They knew me. They knew what I'd be interested in. They got me with the ad. I clicked shop. Now. I looked at it and like price is reasonable. And I hit the order button and I am, the pathway was so smooth. There were no barriers to me making that purchase. And as I w one of the things I ordered were goalie nutrition, gummies for Apple cider. I'd never heard of this brand. And I order it well, the key there is supply chain problems. It took weeks for this thing to be fulfilled and for me to get my shipment, but that next weekend I'm in target and they're on the shelf. And like, I've never seen I shop at target every week. I'm like, I've never seen these gummies. This must be a brand new launch in store. So I'm putting myself in goalie shoes. I'm like, Oh, they got placement on shelves, right around the same time that they launched these Instagram ads and they were making that happen. And it was a brilliant, what I thought was brilliant strategy because they got a customer out of me and just one click. And so it was really neat to see that as consumers, that is a very powerful point that it we've seen a shift that we're going more to this e-comm, we're going more to digitizing. And that brands before small breads had very little market share. They're gaining market share now at a pace faster than we've ever seen. And I think it's how the consumer is choosing to buy. And it isn't just about brand awareness before it was, you had to have the expensive TV, commercial, or be on a billboard in that super expensive advertising brand awareness while people fast forward through commercials. Now people are digesting content in live streaming on their own time. And they're not like hooked up to cable, like things are changing and how they're getting ads delivered is changing. So these smaller brands, if they can figure out that digital conversion pathway to get to the consumer, it doesn't matter who they are and how big they are. They best be able to fulfill the order because then it goes into client experience. So marketing is one, the Virgin pathway to get the sale is two. And then the client experience has to be pristine. So I'm going to give you this report here, because I think the infrastructure of the house is so important. And that's why people work with us because it's not just about marketing. It's not just about getting placement on inner retailer. This was the part of your story. It has to be full cycle because it's not about the consumer buying the product once it's about them buying it for a lifetime or for a perceived amount of time. And if that shelf life for your buyer, let's say it's three years that they're going to be typically in repeat buys. It's not just the first piece you can't deliver. It. Didn't cost you $4. It's a lifetime of that $4 purchase or three years of that $4 purchase. And so it's bad when you don't have the house in order and you don't have that full three 60 model built.

Mary Grothe (Host) (22:12):

So of the Instagram impulse purchases that I made, I bought goalie gummies. I bought some boots with the fur. Very cute. Oh yeah, very cute. I buy a fitness you know, those things that roll out like the stress in your muscles or whatever, like a foam roller is. I couldn't think of what it's called, got a phone, ordered a foam roller. And I also ordered some new jeans, buttons too. I had another button on my jeans. So as I like lose weight, cause that's what everyone does at January. Right? Like we all get it together, lose weight. So jeans are loose. So it adds an extra button. So I ordered the jeans button. I also ordered these GM pack nutrition things where it's supposed to be like, I don't know a week's worth of nutrition in one bite. Those were discussing by the way. Oh yeah. Big health and well, they know how to get me. So I ordered those. We'll just call them nutrition bites as well. And I'm going to give you the experience from the consumer side, and this is why we exist. This is why we're performing in this category because it's not just about the purchase. It's not just about the marketing, but it's about the full cycle. These were all ordered within the last two to three months. I have not received my boots and I have had no communication from the company, from where they were ordered. Anytime that you reach out, it's all automated COVID blah, blah, blah, delays, shipments the roller, by the way, all the fitness roller. I also saw in target. So both the gummies and the fitness roller, but it took three to four weeks to receive those two items and no communication from the company on the way to getting them at all, no delays, no nothing. I had zero idea when those were going to come, I just got the jeans buttons this past week. And so that was a very long, we're like two months in delivery on that the nutrition bites, this is where it's important to have a good product. I gagged and almost threw up when I ate one. So that actually came within a decent amount of time, about two weeks, but I don't know what they did in their product testing. And like, how would they, how did this get approved? How did this get approved? It was so awful. And they sent me three flavors. And so somehow I was brave enough to try all like the eye, but not only did it make me one of all me, but it tasted like I was eating vomit to start. So it was just started off, not good. And I canceled that immediately. So Brad, I think to your point, it's not just the strategy about let's make great brand awareness or great marketing. How's it revenue we're about the whole house. It starts with infrastructure it's full client experience. Any last sentiments on your part?

Brad Hendrickson (Guest) (24:44):

I just encourage anybody. That's struggling with this to look at what they're currently doing from a sales and marketing perspective. Don't function in a silo. And if you're feeling like you're hitting your bandwidth, merging into this digital side, reach out for help. Yeah.

Mary Grothe (Host) (24:58):

That's exactly right where we've made a huge pivot in an investment as a company. And we highly encourage you to go to houseofrevenue.com, to see what we're about and really embrace the new pathway for everything in consumer brands, everything in CPG. There's so much still lingering from the pandemic, but this is the time where entrepreneurs will innovate. They will pivot. They will shift. They will adjust. You have a partner in it. As you do this, your revenue plateau may be a thing of the present, but it can very quickly become a thing of the past. We're looking forward to hearing from you. Thanks for listening to today's episode. If you're interested in being on our show or want to learn more about how we can help you scale your company, connect with us at houseofrevenue.com or with me, Mary Grothe, spelled G R O T H E on LinkedIn, Twitter or Instagram. 

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