Let's Talk Brokers

Apologies for missing the newsletter last week! We welcomed our second child a couple of days before we expected the little guy to come!

I am back (running on minimal sleep) and excited to keep new issues rolling every Tuesday.

When speaking to brands, one of the most common things I hear is that they are onboarding a new broker team or that they are unhappy with their current broker team. It never seems to be a brand applauding its broker team, it's my assumption that the less you hear about a broker, the better job they are probably doing.

Brokers tend to get a bad rap, so much so, that many refuse to call themselves that anymore.

Some brokers have astronomical annual churn rates among their portfolio (70%+ in some cases), but I don't actually think it's all the broker's fault. Sure, there are a ton of bad actors in the space and lazy salespeople that are just looking to milk a brand for a few monthly retainer checks, but I think a lot of the blame also sits with the brand and their unreasonably high expectations for their broker partners.

In this post, I want to speak to the handful of things I look for in a broker, and also how brands can approach the relationship with a healthy mindset.

The biggest thing to remember with brokers is that they will 100% amplify a successful product, brand, and sales process.

But, brokers will not save a failing or flat product, brand, or sales process.

There are amazing brokers out there both regionally and nationally who can help you grow your business, but we want you to be mindful that no broker is going to fix a broken business.

Here are the main qualifications I look for when picking a new broker partner:

1) More than just contacts

If a broker is saying they know your buyer well and they can walk your product into an account given their personal relationship with that buyer, run! Just run in the opposite direction.

Buyers change seats every 6-18 months now and most of them are young professionals. It is not 20 years ago when a personal relationship is going to be the gold stamp for your brand.

You want a broker who deeply understands your category and each retailer, and can position your brand story around that intimate knowledge they have. You don’t want a broker who is just bringing a relationship to the table.

Asking a broker about success stories they have had in a certain category or retailer is a great way to feel out if they are the right fit. Ask them how they would position your brand to the buyer and make sure their pitch aligns with your brand values. You want to feel comfortable with this person representing your brand without you, and that takes a lot of trust on both sides.

2) Team size

I usually stay away from small 1-2 people broker teams. I love brokers who have street teams in place that are constantly in the stores.

I want to clarify that this is different than individuals who are fractional sales professionals. Those professionals can be great because they often represent a small portfolio of brands and they can be a great bridge sales team for you in the early days.

This is more focused on small broker shops that are regional and only deal with a few retailers. They just don’t have the footprint to make sure your brand is successful once they do open up the account.

If you don't have the ability to check in on the stores, your brokers have to be able to fill in those gaps.

3) Cost structure

Unless a broker is going to act as a fractional sales director for your brand, you want to stay away from a high monthly retainer. A retainer is justified when they are providing you with more sales help than just pitching a specific retailer. They are in the trenches with you, developing your sales plan, refining your budget, and creating a forecast. These services are worth the monthly fee.

If they are just representing your brand to their retail partners, you want your broker to be incentivized to sell and not just collect their monthly retainer check.

Brokers who are maxing out their commission % and taking a small monthly retainer or none at all are the best fit for an emerging brand.

4) No gatekeepers

I can't stand if a broker is putting a wall between me and their contacts. A good broker should want you in the buyer meetings.

They view you as a team member and not a threat to their sales process. Good brokers don't fear you are going to take their contact and run, instead, they embrace your sales story and have you in on the conversations early.

They see you, the founder, as a key asset.

Make sure you establish early on that you intend to be a part of the sales process. If there is pushback, it should be flagged.

5) Long-term partners

Great brokers understand that you don't celebrate until the third order.

They are helping you with all the setup paperwork, making sure you have a solid trade spend strategy, and coaching you through the entire process. They are not dropping off once the initial order comes in, instead, they know that's when the real work begins.

Many of these things can be difficult to glean from a broker's website, so always ask for a handful of referrals. If you get pushback, it is a red flag. Talk to their current portfolio of brands and ensure that they are checking off all your internal wants.

If a broker is willing to bring you on after just one meeting, I would be skeptical. Solid brokers, will interview you as a potential client, as much as you interview them. They will be picky about who they represent, and it should feel like something you had to fight for a bit when they decide to add you to their portfolio.

Let's talk about brand expectations...If you are a brand that is experiencing flat sales or finding it difficult to grow your brand in retail, a broker is rarely going to remedy the situation.

You have to have had success selling your brand first before you find a broker.

I would advise any brand doing under $1M in sales annually to hold off on bringing in outside sales help. You have to be able to get your brand to that threshold on your own, so that you deeply understand the sales process and what works for your brand, before handing it over to someone else.

If you are opening up accounts effectively, selling through at a comfortable rate, and simply need help scaling an already successful process and product...then a broker is perfect for you.

If anyone needs recommendations for brokers, I am always happy to open up my network to any brand.

We will dive into how to effectively manage broker teams in a future issue.