Editor's Note: These executives had so much to share on the topic that we couldn't fit it all in the print magazine. Below are these additional insights, available only on LPportal.com.
It is a reality that LP executives lose their jobs for whatever reasons and some believe they can become a consultant or vendor without skipping a beat? How would you counsel a friend faced with this situation?
BLAKE: As with retail, the provider role is not for everyone, and you have to evaluate the things that will make you happy and successful. You will be responsible for helping to make your company profitable, and, in most cases, that means selling. Most people come to this role and think, "These are my friends. They will buy something from me if I ask." The reality is that the relationship may get you in the door, but your friends are professionals, and decisions are made for business reasons. The other advice I would pass along is to stay involved in the industry. When you go to the conferences, make sure that you attend the sessions, not just work the exhibit hall. Read everything you can about the retail environment, not just the LP articles. The LP executive of today is very well rounded, and they have the expectation that their business partners are the same.
HOLM: "One size does not fit all" is a good analogy to help explain to someone who thinks they will be able to jump right in and hit a home run. You need to believe in the company you go to work for, the products that they offer, and be willing to invest the time and effort to learn the business and what role they play in their new position.
MAY: Do not confuse professional and personal friendships with the ability to sell a product or service. Selling is very hard work and to get someone to "voluntarily" part with their employer's cash is very challenging...as it should be. You need to be an expert on your products' value proposition and be truly passionate about how it will help your customer achieve their goals. Be prepared for rejection, never take it personal, and remember that it is okay to have a beer with a retail friend without talking about business.
McMENIMEN: I think it depends on the individual, the personality and the products or services to be offered. Becoming an LP consultant based solely on LP experience and the dream that with such experience you can go out and help all of these retailers improve their shrink performance and get paid for it—that is more dream than reality. I think most people who are good consultants are well networked with the vendor community and is well educated on, if not partnered with, a variety of solutions and solution providers because at the end of the day, it takes tools to help manage a business and your effectiveness will depend on the products and services provided by others, just as it did when you were a retailer.
I would also recommend that knowing about a particular service or even liking a particular vendor does not always make for a good fit if you are thinking about transitioning. It is all well and good to be positive about a particular product or company, but if you cannot truly articulate its offerings or if you are uncomfortable in the sales environment in actually selling a product and asking for money, then it is not a good fit. Alternatives might also be in what role you look to fill with a vendor. Because you are proficient with a particular product may not make you the right person to sell that product, but it might make you one hell of a product trainer for that company.
Finally, I would ask...or caution...how they deal with rejection. As the director of LP for a retailer, you may have had no problem getting people to return your call. But as a vendor, you might not find it so easy, which can be very discouraging. If that's the case, here's one piece of advice—don't take it personal.
PALMER: It was several years from the time I realized I would like to work in this role until the time I tendered my resignation. There were at least three years of preparation in terms of preparing financially, developing the skill sets I thought would be needed, and working on business plans. I don't know how successful I would have been at this if I had been thrown into it in different circumstances. I would counsel anyone considering the vendor side to really think about the prep work necessary to make the transition.
ROSENTHAL: It is not that easy. There is a huge transition process from managing a group of people to working on your own. You have to learn that you are there to support your customer. You have to be cautious not to use "this is how I did it in LP" or come across like you know more than they do. This is the quickest way to lose credibility. Be a support, not a burden to your customer.
Based on your experiences, if you were back on the practitioner side, would you treat vendors any differently than before?
BLAKE: As a practitioner, the attributes of a vendor that mattered most to me were honesty, credibility, and knowledge. As a service provider, that's what I aspire to and what I expect from everyone else. If I were a practitioner again, I would have greater understanding about the pressure that is put on a sales staff to make their numbers during certain times. I often thought quarterly and sales goals were artificial pressures on me to purchase. Now I realize that they truly are a significant part of a vendor's job performance.
HOLM: I always tried to be as respectful to my vendor partners as possible, giving them the opportunity to meet with me and my LP operations director, visit stores with them, as well as respond to their emails and phone calls. Things can get hectic, but those relationships are important.
MAY: On rare occasions I have experienced the "them versus us" attitude, but it is the exception and by no means the rule. Interestingly, when it has happened, it has not been with the senior LP executive, but from the middle tier LP managers. My guess is that comes mainly from a lack of experience or over confidence. I think until you sit in the hot seat as a director, more junior managers may have a misinformed perception of the challenges a director faces. However, the vast majority have embraced me as a partner and part of their solution and not as a vendor trying to sell them something.
McMENIMEN: I think one thing I would do is take the time to respond to any vendor who reaches out, to be honest in either setting up a meeting or in being clear that I appreciate their reaching out, but note that I simply have no interest at the time. This approach versus ignoring the call or email only takes a minute, and it is far more professional. In return I would expect the vendor to respect my position and my honesty.
Are there things that you miss from being an LP executive? Things you have not missed?
BLAKE: Believe it or not, I miss the excitement of the holiday season. I enjoyed all the aspects of it—planning, execution, and responding to the various curveballs that the retail environment throws you. It was a time when you really felt that you were contributing to the success of the company. I also loved working with the operation teams to create new programs for the stores, and the rapid changes in retail, such as mobile POS and new payment methods, would be a great challenge. The one thing I will never miss is receiving a call that one of your stores was robbed. My biggest fear was that someone would be seriously hurt.
HOLM: I really enjoyed being out in the stores with my field team, helping solve problems, and watching them advance and grow in their career. In my position at USS, I still get out in the field quite a bit, and am able to leverage my experience to help our sales team understand the daily challenges that the LP executive faces. One thing I don't miss is the call that an LP agent had made a bad stop on a potential shoplifter.
McMENIMEN: There isn't anything in particular that I miss about being an LP executive. In my position and in being so close to the industry, I still feel like an LP executive. I will admit that I do not miss the holiday and seasonal schedule. While I do tend to work far more hours than I did when working for a retailer, I like the control around the schedule, and it is no longer mandatory for me to work six days a week around the holidays or to be in a store. That's kind of nice.
PALMER: Probably the only thing I miss is the opportunity to see one of my people emerge and advance in the profession. I was very fortunate to work with several great individuals who have gone on to success in our industry. In my current role, I'm glad that I'm able to stay active in this area by providing coaching to those I can assist, whether that be through formal mentoring or simply ad-hoc career advice.
ROSENTHAL: I miss the camaraderie of team. I have been very fortunate in my career to work with and network with some truly great people; most are still very good friends today. Sure, I don't think anyone misses the budgeting process, but I have traded that for forecasting and sales quotas—not sure which is worse! I truly enjoyed my time in the LP world. It is a great experience and a great career choice.
In your role as a practitioner, you managed a budget inside a large corporation. Is there a different attitude or challenge managing the budget of a small company that may directly affect your personal finances?
MAY: In my capacity as CEO of LPI, I am responsible for making sure we deliver a budget that affects every aspect of my cash flow. I find this to be a much more intense exercise. Even though the budget I manage today is somewhat larger than when I was a director, the process in terms of line items is relative on a comparative basis, but the stakes are much higher.
McMENIMEN: There are several differences with the biggest being the ownership you have over the process. It's one thing to be allocated certain dollars and to put them into certain buckets to allocate for payroll, projects, services, and so on. As a business owner you also have to cut the actual checks. When I worked in retail, if there was an issue with budgets or a situation regarding the need for additional dollars, there was a process and, in most cases, a larger account to pull from if needed. As a business owner, that money is coming from your own pocket, and the headaches and pressures are much greater when you have to move money from your personal bank account to cover payroll or a capital expense. There is also more control around a budget plan in a large company than with that of a small company. With the larger company, you are allocated dollars that, while you may have to trim back or even give back some over the course of a year, for the most part the dollars are the dollars. In a smaller company, the sales performance greatly impacts budgets that have to be adjusted on a quarterly, monthly, and sometimes even daily basis.
PALMER: Being outside the large corporation, I have more freedom to do what's right for the business in the long-term. I'm gambling with my own money, so I have the chance to invest in activities that might be hard to justify in a corporate situation. I'm afraid many organizations have a very narrow view on investments and budgets due to pressures from analysts on Wall Street and, as a result, have erratic performance patterns.
ROSENTHAL: I look at it as all the same. On the LP side, it is a business and not all about catching bad people (even though that is a big part). It is identifying your losses, utilizing your resources effectively, reducing shortage, and bringing dollars to the bottom line without impeding sales. On the sales side it is about knowing your customers, knowing their business, understanding their needs and obstacles, and most effectively identifying what they need, all the while managing product availability, cost, and, most importantly, implementation and execution of solutions to them.
Your present role takes you into a broader spectrum of retail segments, such as big-box, grocery, restaurant, and department store, than you experienced as an LP executive. Have you found differences in the purchasing process or priorities?
BLAKE: There is. While overall profit enhancement is still the goal, different attributes of the business are important for different companies. For example, exception-based reporting in the grocery environment focuses more on cashier performance metrics than the traditional front-end theft scenarios. The food-and-beverage segment has a completely different set of overall challenges, plus specific requirements for the various types of restaurants, such as quick serve, table service, bars, et cetera. You have to craft solutions that meet those business needs.
MAY: Each of these industries is unique in their go-to-market strategies, margins, customer demographics, employee demographics, how they measure loss, customers, and store site selection criteria. As a result they do have different priorities, but not necessarily a different purchasing process.
McMENIMEN: I think the differences are tied closely to the type of business and the margins in that business. The spending and the priorities in grocery or restaurant are very different in comparison to department store and specialty retail. The budgets appear to be much tighter and the process for which projects get approved for funding appear to be less autonomous and far more detailed and requiring justification and approvals at a higher level. It also varies with the threats against that business, where a fast-food restaurant or convenience store, for example, will have a far greater emphasis and spend on preventing robberies than will a large department store because of the emphasis on cash payment and thus the availability of cash in a store.
ROSENTHAL: Every company has different processes and procedures for making purchase. From the LP executive to procurement, you have to know how to navigate through each individual company's layers to be effective. You need to make good contacts within each department and understand the companies procedures and never assume they are all the same or even similar. For example, there are differences in purchasing procedures between public and privately held companies, not to mention the difference in selling to the military exchanges. The most fascinating and interesting part for me is learning about each of the vertical markets, understanding their needs, and the differences in what the root causes of loss are within each.
In what ways, if any, do you think the decision making on purchasing products and services has changed in the past decade?
BLAKE: Return on investment has always been important, but it has taken on a much more substantive role in the decision-making process. This includes the impact the results will have on financial measures, such as shareholder value. In addition, purchasers are not competing just for budget dollars; they are competing for that rarest of commodities—IT resources. Nothing that is done in retail is done without considering the impact to that area.
HOLM: The major change I have seen over the past couple of years is the involvement of a company's procurement department, where they negotiate pricing and present options, with the LP leader having input on the final decision. Many variables are looked at, and pricing, although important, is not the only factor considered. Also, I think that working closely with the LP team to develop an ROI model that can show the cost benefits is critical. We have used this tool with great success, and it has been met with great enthusiasm from our customers.
MAY: Early in my career as a director of LP, I relied on limited test environments to make purchasing decisions generally with limited input from other departments and specifically targeted at my department's goals. Over the years and especially now on the vendor side, I've found purchasing decisions typically involve all major decision makers, including LP, store operations, finance, IT, and HR. Depending on what services I am proposing, it could also involve merchandising and distribution as well as outside consultants. The process is more collaborative with a goal towards consensus building among all participants. It has also become much more rigorous in terms of proving an ROI by applying scientific methodology with high levels of integrity in the key metrics and data analytics. No longer can you simply sell products and services on intuition or gut feeling. It has to meet or exceed the strategic goals of the retailers with full disclosure on the impact this purchasing decision will have on both internal and external customers.
McMENIMEN: I think the evolution here has been even more recent than ten years, but there is more process and approvals needed to buy products and more justification on ROI than ten years ago. This is a natural evolution given the changes in the economy, and the need to be tighter with every dollar.
ROSENTHAL: Companies are doing more due diligence than ever before when it comes to purchasing. Relationships are important, and buyers still want to buy from credible and trustworthy vendors. However, procurement has taken a stronger role in purchasing decisions.