Interesting phone call from a client a little while back. He’s the Marketing VP for EMEA for a mid-sized healthcare multinational. At present US domestic accounts for about 70% of the company’s turnover, and my guy’s brief for EMEA is to redress that slow start they have had and dramatically grow the top line and market share over the next five years. He had been with the company only a couple of months when this call came through.
VP: Rowan, I think I may have a problem.
Me: Oh? So soon?
VP: Yep. I just took a call from the CEO telling me to load the trade in advance of quarter end.
Me: Oh no!

[Loading the trade is when you ring up your wholesalers, distributors and/or agents and essentially beg them to take extra product off your hands so that you can hit your numbers for a reporting period. Typically, you have to give away longer credit terms in order for them to even countenance this, as it plays hell with their inventories and stock turn rate. It also means that you will start your next reporting period with sagebrush drifting through your orders department as the channel will be stuffed to the gills with product and have no need to call you.]

VP: And before you ask, yes, I went back through the sales history and yes, there has been a pattern of this in the past. So this isn’t some one-off designed to paper over the cracks in a diligence process.
Me: Oh no! So are you going to make the calls?
VP: (deep sigh) I’m going to have to …

The problem with loading the trade like this, quite apart from the financial stupidity of robbing Peter to pay Paul, is that calling a decision-maker and asking them to do this for you has a significantly deleterious effect on your credibility. In this instance, my guy had only been with the company for a short while; he had toured around and met the marketing teams in all the affiliates; he had been introduced to the senior players in the channel and he had come with the message that he was the new broom, charged with dramatically improving everyone’s pocketbook through increased spends and (hopefully) sales.

Now he was having to go back to all those people and essentially say, “Remember all that big talk from last week. Park that. Our chicken-ass CEO needs to hit some mythical number so that he looks shiny to Wall St (and probably so that he qualifies for his bonus and options) so he has told me to stuff the trade. And instead of telling him that it’s stupid, pointless and bad for business; I am now asking you to do that stupid, pointless and bad for business thing …”

You can imagine how the Marketing Directors in Spain, Italy, UK, France, Germany and the other smaller markets reacted. They all said, “Yes Boss.” Then they hung up the phone and rang a colleague and said, “We’ve got another chicken-ass VP guys. He looked good when he was on his tour; but as soon as Chicken Licken [the CEO] started stressing, he caved.”

Funny way to run a business …

What should this VP have done?