Vending Machine Marketing At The Machine Level


An interview with Larry Towner, a vending consultant.


Larry-headshotLarry is a veteran vending operator who has had success in all areas of the vending business. Listen in on how to max out end-user sales,

The efficient system Which products sell best?, Product placement, Presentation, Setting the machine up, Loading the truck handling requests, optional items, New products tend to sell rapidly Part science, part art, Make the machine look fresh as well as vending machine marketing

 


EPISODE TRANSCRIPT:


Tom Shivers: I’m Tom Shivers with the Vending Business Show here again with Larry Towner, who is a vending business consultant. He has been in the vending business for many years and sold the majority share of his vending business a few years ago. Thanks for being here, Larry.

Larry Towner: Thanks, Tom.

Tom Shivers: In the last show, we talked a little bit about what to do when you get a new account or your first account. And I’ve heard you mention going forward from there what you call marketing at the machine level and vending machine marketing. What does that mean?

Larry Towner: Well, vending machine marketing and marketing at the machine level, Tom, is basically if you consider a vending machine to be a mini store, more or less it’s a small convenience store that’s located in someone else’s business. So when we talk about marketing at the machine level, when you’re in the vending business, there’s two people that you market to. You market to the accounts, which is how you actually get the vending accounts, and then you also market to the end users in the account. And when we talk about an end user, we’re talking about the people that actually put the money in the machines and purchase product.

Larry Towner: When we talk about marketing at the machine level, that’s what we’re referring to, how you maximize your sales out to the people in the account. How do you get most sales and how to … And then we tie that in also with an efficient system to actually operationally run your company in a smooth and efficient way. And a lot of what we talk about when we talk about marketing at the machine level is first off, you need to get to know which products actually sell the best. And each product there’s … If you look at the industry standards, there’s a series of products that consistently outsell everything else.

Larry Towner: This information is available from the National Automatic Merchandising Association, and from the magazines like Automatic Merchandising and Vending Times. But in general, every year it seems like … Well, it actually seems like Coca Cola is the number one selling drink. Snickers is generally the number one selling candy bar. And in general things like honey bun is actually the number one selling pastries. These are consistent to statistics that occur year after year.

Larry Towner: So you need to read through some of those trade magazines and find out what actually sells nationwide or worldwide at a high level. That’s right where you start. The second thing is how you market at the machine levels. Now, when we were running our business, what we would do is we had a specific set of things that we would run in every machine because if you’ve got a 30 or 40 select machines, just depending on the size machines that you put in, there’s always lots of space for optional products, what we call the optional products. But we would always run a certain selection of products at the machine level, and some of those would include … Snickers, of course, has been the number one selling candy bar, so we would always run Snickers.

Larry Towner: We would run a M&M yellows also and honey buns and usually Cheetos, Frito’s, Doritos, barbecue chips, and plain chips. Those were generally the largest selling potato chips. Usually, we would run like a peanut butter cheese cracker, some kind of a multi-cracker, some kind of a cheese cracker, some kind of a sweet cookie, and usually peanuts as well if we had that kind of information available. And then usually we would run Cheez-Its as well. The rest of the machine became kind of optional.

Larry Towner: Now, when I talk about vending machine marketing & marketing at the machine level, one thing you need to do is you need to kind of understand that in a machine, much like in a store … Tom, when you go into the grocery store, what do you notice? Isn’t things kind of set up in a certain way?

Tom Shivers: Well, you got produce is on one side, and you got dairy up towards the back, and meat is in the back almost in every store. And then off to the other side there may be other items, and then in the middle there’s always something like frozen foods or something.

Larry Towner: Yeah. Does it always seem funny that all the stores basically lay themselves out all the same?

Tom Shivers: Yeah, it’s Kinda like a maze.

Larry Towner: It’s Kinda like a maze, yeah. Well, the idea there is that the grocery stores and the convenience stores and also the vending industry has spent millions of dollars in research to find out where you put things because you’ll find out that they sell the best in certain locations. And in the vending industry or basically it’s in all industries. Actually, people are drawn to the center of the aisles are the center of the machine in our case. And you tend to put your best sellers at eye level.

Larry Towner: So in vending machines, you want to take your best sellers and you basically want to put them in the center of the machine. And you want to try to get them at eye level, although that’s not possible because we work in a vertical arrangement, but best sellers in the center of the machine and work your way out from that way. This is a marketing technique. Another thing when you study marketing and actual selling, what you would call selling when you’re not there, which is what marketing actually is, is you have to be aware of presentation. And presentation includes things such as composition of the color or the package, how the package looks, and things like that.

Larry Towner: Generally, it’s not a good idea to put the same color packages right next to each other. So if you have two packages that happened to be red in color, you generally don’t want them sitting right next to each other because what happens is people look at it, they tend to get confused, and if they purchased the wrong product, then they tend to do things. In vending anyway, they’ll tend to hit the machine or get mad, and they might not buy from you.

Larry Towner: So you want to keep those kinds of things aware of what’s going on. When you’re looking at it, you want products that are in similar color packages to be separated from each other. Again, this is done at the machine level, and this is done usually the first time that you set … We call it setting the machine up. When we did our businesses, we set all of our machines up exactly the same way. We did that for a reason. We did that so that we actually set our machines up the same way. We set all our truck inventories just like they are in the machine, so when you’re working in your truck, as you do your pick list, when you go in and you actually pick out what you need and what items you need to restock, you just move just like you’re in front of the vending machine to pull all your product. If you do this at work very, very well.

Larry Towner: If you just go out and throw all the product in the truck, and you can’t find it, and you can’t this … The vending business is a business of minutes, so you want everything set up smoothly, well-organized so that you can find things. And that goes for in front of the machine. When I go to my machines now, and I still have a few out there, I don’t even have to think usually what’s in a slot. I know what’s in those slots because have been doing it for years. I know that in certain places there are certain products in all my machines, and so it just makes it that much faster. I also can track my sales a little better in my head. We don’t use a computerized system and never did to track our actual sales on at the column level, meaning how many times … How many Snickers are you selling in every machine, how many this, how many that? We use general statistics.

Larry Towner: We just found it to be a little more efficient. Although if you can mine that information can be very helpful, but it’s not necessary. So anyway, that’s marketing at a machine level. One of the other things, when you market at the machine level … Now, Tom, you, you’ve purchased vending products, is that correct?

Tom Shivers: Sure.

Larry Towner: If you had vending in your company, and let’s just say you wanted something special, would you want your vendor to supply that?

Tom Shivers: Oh, absolutely.

Larry Towner: Yeah, and that’s one of the things that we try to stress. Obviously, we’re in the business of trying to give people what they want. If you give them what they want, they generally will spend more money with you, and theoretically you should make more profit. So this is talking about requests. When we marketed a machine level, while we might put in many of the same products in each of the machines, we do allow for a certain number of optional type items. And optional means that it’s not part of your standard planning grant. It’s not so part of your standard arrangement. And optional items, for me, always came from customer requests. We would do a number of things.

Larry Towner: We had suggested in the last show when you put your first set of machines out that you actually hand the customer a request list with some of the items that you have and some of the items that might have or that they might want. And when you take those kinds of lists, we would post those, those lists up on the machines regularly throughout the year, usually once a quarter, maybe once every six months, just to see if anything’s changed or if anybody wants anything new. Oftentimes, people will tell you or make a request to you actually in person as you’re servicing the machine, but sometimes it’s just a nice memory jog or if they have a little note that they can write it down, hey I want Hershey’s with almonds or something like that.

Larry Towner: Whatever it is that they happen to have a hankering for at that particular time. And those particular items go into the optional columns or the slots that you don’t necessarily have your main line things because some things, they just sell well. They sell well all the time, and you want to keep those things. At the machine level, what we find is that when you put in something new, it tends to sell very rapidly quickly. So if you put a new product in that they haven’t seen for a while, you’ll get a tremendous spurt of sales initially. They’ll come out, and they’ll purchase that initial product, and they usually buy it out very rapidly because they liked something. It’s something different, but that doesn’t necessarily mean it’s going to have longterm sales. So you have to be kind of aware of what’s happening when you put things out there, particularly if the manufacturers introduce a new product, say a new potato chip or new … whatever, a new flavor.

Larry Towner: You put it in, and you’re probably going to get a rush of sales on it initially. But then, it will slow down. So you have to be careful because you can get stuck with a lot out of date inventory. But with that said, that’s what marketing at the machine level is. I’m going to say it’s part science, it’s part art, some of it is we would change things at the machine level fairly often because it gives the appearance of it being new, and that spurs your sales. Sometimes we would also take things, and we just changed the arrangement in the machine every so often just to make it look new.

Larry Towner: And that’s another little tip to do what we call machine level marketing, where if you’re used to running Cheetos on the right side of the machine, move them over to the left side of the machine, that kind of thing. It makes the machine look fresh. It also gives you the ability to let the people know that the product actually is fresh because freshness in the vending business is critical. Don’t run out of date product. If you do, you’re going to end up not being in the vending business for very long.

Larry Towner: What comes to mind for you, Tom? Do you have any questions as far as the marketing at the machine level? I can go on for a really long time on this. There’s all kinds of little tricks, but these are some of the highlights that we’ve used through the years.

Tom Shivers: Yeah, I liked the … It sounds like you found that there are certain things that bring high efficiency to the vending business, and these are the kind of things that attack … What’d you call marketing at the machine level, getting the end user … maximizing end user sales basically.

Larry Towner: Correct.

Tom Shivers: So that’s fascinating actually, and it’s interesting that you can utilize basic statistics overall rather than collecting statistics from each machine.

Larry Towner: Yeah. Well, the industry publishes some beautiful statistical stuff. Now, that doesn’t necessarily mean that your particular company is gonna abide by those statistics. And I use one great example that the people at the bottling companies love to hear me use, at least one bottling company they love to hear me use it. In my company we had the number one selling drink in the wintertime was Coca Cola, and we track it per season just because. But we would see Coca Cola would outsell all the other soft drinks in the winter. But in the summertime, in my accounts, we had kind of a specific demographic that we hit. Mountain Dew would overtake and surpass Coke in the summertime. And overall we sold more Mountain Dew than we did Coca Cola in a year by the time we added it all up.

Larry Towner: Now, that highly counter to what the national statistics are. National statistics will say that Coca Cola should outsell everything else about two to one. And in many of our accounts that would be the case, but we had a lot of accounts with a lot of young guys. And we’re here in the South, so it’s very hot for most of the year, and they would drink Mountain Dew instead of coffee. For my company, that’s what we found out. But that doesn’t mean that we still … It means we wouldn’t not run coke. It just means that we were aware that Mountain Dew might outsell coke in the summertimes, in the hot months. And that’s local information, but you take those national things, they’re a place to start. And particularly if you’re new in the business, look at what everybody else is doing.

Larry Towner: I forget how many vendors are in the country, something like 10 or 12,000 full time professional vendors, and those are bigger companies. Everything they do can’t be wrong because they’re in business, and they’re sustaining their businesses. And so you have to learn from what they do so that you can be successful yourself.

Tom Shivers: Yes.

Larry Towner: Learn from somebody that’s been doing it for a while, and then make your changes or your particular changes later on after you get used to what you’re doing.

Tom Shivers: Yeah. It sounds like some great … just good entrepreneurial tips. Learn from the successful person to be able to do the same thing, right?

Larry Towner: Basically. There’s very little innovation in business overall. There are always the Steve Jobs and things like that, but they comprise a tiny percentage of the market when you look at all of the business that’s out there in the world. And your best ability is to identify when the market is soft and take advantage of the market versus trying to create a market, as it were. That’s basic entrepreneurial advice I learned a long time ago.

Tom Shivers: All right, Larry. Well thanks for sharing. Tell us a little about your consulting business.

Larry Towner: Well, what we do with our consulting business is much of what we’ve just described things here. What we do is we help people become super efficient in their businesses so that they can be successful. We can teach all aspects of the vending business and other businesses as well. Actually, we were talking a bit about sales here last night, and some people have since contacted me and wanted to know more about just how to sell, and do we do any sales training? So we can teach you how to sell business to business, mostly.

Larry Towner: Now, personal sales or a different issue, but in a business-to-business sales, we can teach you how to do that, can teach you how to run your operation efficiently, can come in and do … After you’ve already been in business for a while, come in and do a market analysis a take a look at how you’re running your operation. Are there things you can do to improve? Our goal basically is to help you become more profitable, and we can make you become more profitable. We don’t really want you as a customer, not in a negative way, but our goal is to make you more profitable. That’s how we get paid. We can be reached at servicegroupinternationalatearthlink.net. And that’s the best way to get ahold of us, and we’ll go from there.

Tom Shivers: All right, great. And you’ve been listening to the Vending Business Show, a publication of A&M Equipment Sales.

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