SNEWS® View: Third-party pro-deal system in need of immediate repair

After a four-month investigation into the state of the third-party pro-deal system, which retailers have alleged is spinning out of control and needs immediate reform, SNEWS finds a broken system, albeit one that is fixable. You owe it to your business to read this.
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Ever since we ran a reader poll in September 2010, asking if pro deals help or hurt business, SNEWS® has been getting an earful from retailers about how bad things are becoming.

Keith Baker at The Trailhead in Buena Vista, Colo., posted to a SNEWS chat, “In our area, pro deals are a detriment to our business. In addition to outright, rampant and flagrant abuse, far too many vendors allow anyone and everyone with even the most tenuous connection to ‘the industry’ to have pro deals. The pro-deal system is out of control and needs to be reined in ASAP.”

Another retailer, Todd Frank of The Trailhead in Missoula, Mont., told us in a Nov. 10, 2010, email, “The issue seems to be getting more out of control every day. I have had four customers in the past 10 days come into my store with pro deals from Promotive.com – they apparently got hooked up by a friend at a local ski resort. I seem to be spending more and more of my time every day dealing with the leaky distribution model that more and more vendors seem to prefer.”

Baker and Frank are far from lone voices. At Outdoor Retailer Winter Market 2011, numerous vendors we spoke with for this editorial told us that retailers from across the country were sounding off telling them the current pro-deal system is out of control and hurting their business. And most of the finger-pointing, we were told, was being directed at Promotive.com with retailers apparently asserting anyone can get a pro deal through that business while vendors don’t seem to care.

SNEWS set out to see just how bad things really are, honestly doubting they were as bad as retailers were claiming. We were wrong.

Really?

Enlisting the help of numerous friends, we started with Promotive.com. We set one of our own staff up with a Promotive.com (www.promotive.com) account in November 2010. He used a fictitious name and company, and provided only a friend’s mobile phone and name as a reference. Within 24 hours, his account was approved and he was able to join one of the many groups offering pro deals without difficulty. His “friend” who was the reference was never called to provide any verification.

Our undercover operative then sent multiple invites to friends to become Promotive.com members. Each of them received the following standard Promotive.com email, sent on behalf of our undercover man, with a delicious offer to get connected with discounts up to 70-percent off retail:

XXXX has invited you to ProMotive.com.

You've heard of brands that hook up "pros" with free gear to expose their products to flocks of potential buyers. You may not know those same companies offer discounts to other high-profile customers as well. You're receiving this invitation because I think you're discount-worthy, and I'm pretty sure a bunch of cool brands will feel the same way. There's only one way to find out if you qualify for up to 70 percent off retail - register with ProMotive.com for free!

Few of the individuals receiving the email invitation would qualify for a pro deal if Promotive.com had checked for verification of employment and pro-deal eligibility. Each used fictitious names, fake companies and made-up occupations, and provided proof of employment contacts that SNEWS had set up. Five invites later produced five quick memberships granted and not once was any provided reference contacted to confirm proof of employment. Once inside the Promotive.com walls, all five of our operatives were quickly accepted into various “teams,” i.e. interest classifications, which Promotive.com uses to coordinate pro deals – vendors choose which teams they want to be a part of. While a few teams are invite-only, most just ask those accepted to Promotive.com to to apply for membership. In only one case was an operative denied membership to a team. In that case, the Promotive.com email made it clear the company would work to ensure its members have access to as many discounts as possible; the customer service person at Promotive.com recommended our operative apply for another team. He did and was granted immediate access.

Only one of our operatives was asked for additional information. That person had purposefully provided such a thin application lacking information that Promotive.com came back with an “application denied” email, albeit noting it was pending further verification. That additional information requested was for a supervisor name. The operative gave a fake name and what was a Google voice phone number. Within minutes of her sending that email, she received the following email: “Dear XXXXX, Your application to join the Sporting Goods Insiders Team has been approved.” That operative is now happily buying things at very steep discounts. And not once was our fake supervisor contacted.

160,000 deals and beyond

With that level of background checking, it is little wonder that the Promotive.com “Sporting Goods Insiders” team reported over 19,000 members on March 1, 2011 – up from 15,426 on Nov. 12, 2010. Another number offers an additional window into just how hard Promotive.com appears to be driving the bus offering “brand influencer” membership discounts. On Dec. 20, 2010, Promotive.com claimed 129,238 members and 132 brands offering various levels and access to discounts. In less than three months, as of March 1, 2011, the number of members had swelled to 160,603 with 139 brands offering various levels and access to discounts. It does make one wonder how any organization can possibly expect to properly verify the applications for pro deals of 30,000 people over a 71-day span. That’s 422 pro deals approved per day on average. Perhaps this explains why some of our operative’s approvals to join various teams at Promotive.com arrived at odd hours, such as 4:55 a.m. on a Saturday.

By comparison, the other primary third-party pro-deal vendor, OutdoorProlink.com, claims 20,000 total members – still not an insignificant number but one that does pale by comparison to Promotive.com. For the record, we also tried to fake our way into membership at OutdoorProlink.com, but were thwarted immediately. There, an applicant is required to submit paperwork on official company letterhead along with a paystub as a minimum to show proof of pro deal qualification status, simple requirements any pro-deal program should have. While not impossible to wiggle around, it does make it much harder.

Given how easily we got into Promotive.com we dug a bit deeper, plowing through months of postings on Promotive.com’s Facebook page to see if we could gain a glimpse of what kind of folks were qualifying as pros and influencers. While we can see how a U.S. Forest Service apprentice could qualify, and certainly how a summer camp director gets in the doors, we fail to see how someone earns pro-deal status if they list themselves as a “stay-at-home dad,” a “passenger service agent” for American Airlines, a respiratory therapist (who raves about The North Face deals by the way), or even a high school principal (to name just a few).

Once accepted into a team at Promotive.com, the gates to a discount nirvana stand wide open apparently. We had another operative join up as easily as our other five by using the SIA trade show attendee code Promotive.com was handing out. That person actually ordered product at two companies and tracked the process. It is important to note that the ordering and fulfillment for product is controlled by the vendors, not Promotive.com or other third-party pro-deal companies. Our operative ordered from I/O Bio a men’s large shirt and a women’s small. Should have been a red flag, right? Nope. When I/O Bio did not have the color in the women’s shirt he ordered, they simply called him and offered up another color. He also ordered two shoes from Teva on Jan. 30, 2011, and the order shipped Feb. 8.

Out of control

How have things managed to get this out of control? Many reasons and causes can be found if you look as hard as we did: Internet, YouTube, retailers, pros, athletes, discount-hungry consumers, and even flawed sales and marketing expectations at companies. Promotive.com, Outdoorprolink.com and others exist because it has become very evident that there is money to be made and significant brand exposure to be had in the world of pro deals. As a result, like it or not, a new sales channel has been born – one that is not going to go away but one that is clearly in need of much more tightly managed guidelines and controls. Just as importantly, vendors must find a way to ensure that the ones who brought them to the party in the first place – the retailer – are shown respect and given an opportunity to participate.

While it appears all too easy to point a finger squarely at the likes of a Promotive.com given our experience at egregiously lax approval and ordering processes, this really is not about Promotive.com or even Outdoorprolink.com. The current state of affairs with the third-party pro-deal system is primarily a vendor problem. After months of investigation, talking to both retailers and vendors, we’re now sitting firmly in the camp of specialty retailer Gary Neptune, who recently opined in a SNEWS chat on pro deals (and we paraphrase): It is too bad vendors are so lazy.

Time and again, vendors we spoke with told us they did not have the systems in place -- or the time, or the staffing, or the fill-in-a-reason-here -- to run an effective pro-deal system themselves. More than a handful told us they opened up Promotive.com because, as most said in one way or another, they felt they had to since their competition was there and they didn’t want to lose sales. In every case, even if it was not said in these exact words, it is very apparent that vendors turn to the likes of Promotive.com or OutdoorProlink.com because they feel that managing a pro-deal program themselves is, simply put, a pain.

As a result, vendors have become eager participants in a haphazard and relatively new sales channel that serves to provide far too many folks loosely tagged as “influencers” with piles of discounted equipment and gear. Little wonder they are all telling their friends. Why buy at full retail when you don’t have to?

Damning?

Despite the damning evidence presented above, we believe the likes of Promotive.com and Outdoorprolink.com perform a valuable service that we would argue is infinitely more accountable now than it was in the old days of faxed forms or bro deals out of the back of a van. It makes perfect sense to use Promotive.com or OutdoorProlink.com as a processing system for taking orders and managing the online component of pro deals, especially if you don’t have the systems in place yourself.

But to blindly allow a third party to be in charge of approving who should and should not get pro deals on your brand’s behalf is like putting the fox in charge of protecting the hen house. Promotive.com and OutdoorProlink.com are for-profit businesses that make their money by taking a percentage of a sale for offering the service. While we know they both have a stated goal of ensuring only legitimate pros and advocates gain access to pro deals through their websites, at the end of the day, unless they are making sales and making money, Promotive.com or Outdoorprolink.com have no business.

And while Promotive.com and OutdoorProlink.com both offer tools for vendors to control access and discount levels to a brand, they are useless unless a vendor takes full advantage of them. That means thousands of supposed pros may have access to a brand who have no business receiving that discount…at least as a pro.

It is time to slow down this runaway train. If you are one of the stated 139 vendors now doing business on Promotive.com, or one of the stated 50 vendors doing business on OutdoorProlink.com, we would argue you need to take much more control. At the very minimum, you need to know who is getting approved for access to your products and why. As a first step, at least turn off access to most of the teams Promotive.com has set up until it can demonstrate it has dramatically improved its pro-deal verification and qualification process. At Outdoorprolink.com, check in again to ensure only those pros you want to have access to your brand at pro-deal pricing are getting access.

As a second step, start to work more closely with your existing specialty retailers to manage effective programs to service local clubs, ski areas and suitable organizations. No one knows or is perhaps more vested in a relationship with local pros than a specialty retailer. We wonder if there are ways that Promotive.com and Outdoorprolink.com can implement programs on behalf of retailers to serve clubs and pros in local markets. It is time to start thinking both locally and globally, with some imagination, while engaging all of the stakeholders in the solutions.

For all those vendors who continue to moan that they simply can’t manage a pro-deal program themselves, it can be done, according to Andy Marker, Prana influencer program director. Recently, he told us, “Running your own pro-deal program in-house and ensuring you are working only with qualified pros and advocates you know are good for your brand is really not that complicated or difficult.” If you are serious about pro deals, then you need to put someone in your company in charge of that sales and marketing channel – and it is a sales and marketing channel. At the very least, that person should be the point person who is firmly controlling who and who does not have access to your brand and its products with a system such as Promotive.com and Outdoorprolink.com

As a primer, we’d suggest referring to our Nov. 17, 2010 article, by Marker,“Pro deals – Part 3: Create an effective 'influencer' discount program with these 8 pointers” (click here to read).

Connecting better

While we are on the subject of pro deal effectiveness, we understand the desire to connect with as many “influencers” and pros as possible in the hope that it will benefit a brand. And we know that word-of-mouth is a powerful influence in terms of brand image and sales. But since when did hope become the foundation of a successful business plan?

Few vendors we know would sponsor an athlete and then not hold that athlete accountable for certain performance metrics – appearances, wearing the brand logo, product testing, product evaluation, product design, etc. So how did the category of pro deals – really a distant cousin to sponsorship programs – become so reliant on hope and so devoid of metrics? Shouldn’t we be holding those who are receiving discounts to some sort of performance standard? Perhaps tracking how many sales they drive to local retailers, or tracking how many of their friends actually buy your brand’s products (at retail, by the way) as a result of a pro’s recommendation?

True pros will understand the quid pro quo nature of the discount. Everyone else needs to realize they either prove their worth or they have to get off the pro-deal train at the next station. We would suspect the folks at Promotive.com and Outdoorprolink.com are hard at work on this very concept – and it can’t happen soon enough. But they are merely tools in the pro-deal system.

Vendors, you need to drive the process. Accountability at all levels starts and ends with you. And now we’re all watching.

--Michael Hodgson

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