Curious about the in’s and out’s of the pro deal system? SNEWS turned to industry expert Andy Marker, a veteran in developing pro programs, to share his insider perspective. In the first of a three-part series on SNEWS, Marker covers the basics of the various discount systems, and the differences between third-party outfits and managing a pro program in-house.
Traditionally, a pro deal has been a discounted pricing program that most outdoor, snowsports and sporting goods manufacturers offer to individuals who work in the industry. The programs are offered to people, such as store staff, guides, instructors and athletes, who influence general consumers and raise awareness of manufacturers by using their products. In other words, a ski company offers a pro deal to a ski instructor in hopes of influencing all the students the instructor faces.
Keep in mind that pro deal and employee deal programs are two different things. They have similarities, but differ in purpose and benefit. Typically, an employee deal offers a much deeper discount than a pro deal and is given to a shop employee because manufacturers assume:
Store employees are traditionally not paid extremely well.
Floor staff greatly influence consumers’ buying decisions when purchasing equipment used in the sports and fitness arenas, whether it be skis, snowboards, bikes, kayaks, treadmills…just about anything.
There is little doubt among most manufacturers that a well-trained and experienced store employee can be, and should be, the most authoritative voice at the point of sale.
For a manufacturer, getting sales staff into a brand, so they can use it, understand it and its nuances, and then -- hopefully -- recommend it, is undeniably important. Manufacturers, though, can’t afford to simply give away their products to a great volume of influential salespeople, so they offer as deep a discount as possible to entice employees to purchase the products.
There are pitfalls. Too many pro deal and retail employee discount programs are extremely limiting and poorly run. It demonstrates myopic planning and lack of an understanding and appreciation of the markets, audience, responsibilities, revenue, reach and the possibilities at hand.
Various companies have dramatically different programs, but most are either developed by a third-party company or managed in-house.
The advantage of using a third-party outfit is that companies get a partner to handle most of their database and recruitment, targeting markets that are attractive to the manufacturer. Sometimes these customers are brand new; sometimes they are drawn from existing pools of influencers -- which can be advantageous or detrimental, depending on your point of view or marketing goals.
An obvious benefit of being included in a larger pool of pros and influencers is that your program is exposed to a potentially huge group of possible pro-level customers with little effort on your part. The downside of this approach is that the manufacturer loses the day-to-day control and messaging over the whole process of recruiting people for the program, and determining who is approved to participate and who is not. A company should communicate quickly and personally with the pros and influencers who, in reality, should be considered your very best customers. Keep in mind there are always exceptions and issues that come up that can be dealt with quickly and efficiently when handled internally by skilled employees.
While these third-party vendors may do a great job in placing a brand in front of a lot of potentially qualified people, the actual marketing and messaging of a participating company’s products might still be left to the brand itself. Also a third-party program will not always offer the manufacturer the continual reassurance that people in a company database are still qualified for the program. A third-party outfit that manages a pro-deal program will rarely have the capability to continually check on the up-to-date qualifications in the database. Unfortunately, that can lead to serious abuses and misuses of pro-deal purchases.
A key aspect of some of these third-party solutions is linking them to training and education. Training programs tie directly into recognizing that a well-informed shop employee or pro can play a key role in influencing consumers.
Working with third-party providers can be expensive, costing as much as 5 percent to 10 percent of the revenue generated by the pro program -- an area where margins are already stressed. Some companies are very willing to pay this to have the majority of their pro and employee issues handled by others, while others balk at the price and like to have more say in their programs.
Self-managed discount programs
Other companies choose to manage either pro deals or employee discount programs or both on their own. This includes all recruitment and database management of a program, whether it includes shop employees or key industry professionals.
This path definitely requires the manufacturer to dedicate more work to the day-to-day management, but it leads to more control and more profit. Plus, when a manufacturer works directly with members of the pro-deal program, there is less chance that a targeted employee or pro will be swayed by another brand.
Consider that if a company opts for a third-party pro program, it risks sending pro or shop employees to a third-party site where they not only see your pro deal or employee discount offer, but are also faced with dozens, if not more, opportunities to spend their money on other brands. It’s like a stand-alone storefront opportunity versus the opportunities of being in a mall with dozens of other similar stores.
A key element of running a program properly is the responsibility of keeping up with who is in the program, regardless of whom you target or what the discount is. Recruiting is easy. The real challenge is the continual need to check and recheck to make sure the people getting discounts from your company are qualified.
The ways in which these do-it-yourself programs are managed vary greatly. Some companies still receive orders by fax and make no follow-up phone calls, and do not handle backorders, returns or exchanges -- definitely Stone Age thinking in terms of good customer service. Considering that pro-deal members are some of the most influential people your company will ever deal with, doesn’t it make sense to allow them to exchange something to make sure it fits or is the right color? Other companies go all out in terms of service, pricing and marketing, as they understand how important extending themselves properly to all customers can be.
Andy Marker is the pro sales director at Prana, and has worked for the last 20 years developing pro programs at companies such as The North Face, Nike and Patagonia. He is also the author of the white paper, “Creating, Building and Managing Successful Pro/Influencer Programs.” Questions can be directed to firstname.lastname@example.org.