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FEATURE STORY
Give your business a unique advantage
Take a look at the Smoker FriendlyŽ Dealer Program
By Melissa Niksic
President Terry Gallagher addresses the full gathering of more than 300 attendees at the Opening Ceremony of the fifth annual Smoker Friendly Trade Show and Conference held in September. |
In an increasingly tough market, tobacco retailers struggle to distinguish themselves and provide exclusive services to their customers. The new Smoker Friendly® Authorized Dealer Program offers retailers a way to effectively market themselves to consumers while simultaneously snuffing out the competition.
“This is a program geared toward existing tobacco retailers who could benefit from our brand,” says Terry Gallagher Jr., president of Smoker Friendly International, LLC. “We created this program because we wanted to take care of our brand and also take care of our retailers.”
The Smoker Friendly brand originated in the early 1990s and includes a selection of competitively priced cigarettes, premium cigars and pipe tobacco. The company’s new Smoker Friendly Authorized Dealer Program launched in Spring 2006 and gives retailers access to a private line of tobacco products.
“We used to be a licensing program, which became kind of stagnant,” says Mickey Falconburg, vice president of sales and marketing at SFI. “Back then, retailers would pay a one-time licensing fee of $10,000 to carry our products. But the tobacco industry has changed so much over the years and we felt like we ought to come up with something new.”
Unlike the company’s former licensing program, participants in the Authorized Dealer Program do not pay any money up front. Retailers must sign a one-year agreement and make an initial purchase of $2,000 worth of Smoker Friendly products. Also, participating retailers must display three pieces of Smoker Friendly signage—a decal, a neon-lighted sign and a product menu board—to identify the store as an authorized dealer.
“The only way we make money is by getting a small royalty off all the Smoker Friendly brands, which are offered at a rebate cost to our retailers,” Falconburg says.
Attendees and speakers get an opportunity to mingle and network at the Opening Night Sponsor Appreciation cocktail party in the garden at the September conference. |
Eliminate the competition
In addition to receiving rebates on Smoker Friendly products, retailers participating in the Authorized Dealer Program are guaranteed an exclusive selling territory. The area can be defined in various ways, but is generally determined by zip code.
“When you sign up for the program, we give you the advantage of being the only Smoker Friendly retailer in your area,” Falconburg says. “The exclusivity is important because retailers know their customers won’t be able to go elsewhere to buy these products. That’s something retailers can use to market themselves.”
Gallagher says that certain exceptions can be made if multiple retailers located within the same territory or zip code wish to enroll in the program.
Mary Szarmach, vice president of sales and marketing with The Cigarette Store Corp., shares some insights with the Smoker Friendly retailers. |
“We have a case like that right now, where a retailer is expressing an interest in an area where we already have our own stores,” he says. “I think we’ll probably go ahead with it because there’s still a benefit there. These are CTS stores. There are only between 12,000 to 15,000 CTS stores in the entire United States, which isn’t a whole lot when you compare it to the 180,000 convenience stores in the country. Even if you have two stores on opposite sides of town selling the Smoker Friendly products, it’s not going to hurt business and it’s going to help effectively build the brand.”
Gallagher and Falconburg say that multiple territories will never be awarded unless all the retailers within the area are in agreement.
“We’ve never really run into that situation before, but if it happens, we’d talk with all the parties involved and see if the arrangement could be mutually beneficial,” Falconburg says. “We would never take away the exclusivity rights unless a retailer agreed to it.”
Group benefits
Members of the program are eligible to receive discounts from other manufacturers that are offered exclusively through Smoker Friendly. Retailers are also encouraged to participate in monthly sales contests that are sponsored through the program.
“We’ll pick a certain product every month and see who can sell the most,” Falconburg says. “Then we’ll distribute $3,000 to $4,000 of prize money among the top-selling stores. It’s great. We want people to have fun and realize that this business is fun.”
Falconburg says that Smoker Friendly is the only company offering a dealer program that encompasses such a large product line.
“We offer good quality and competitive pricing with our products,” he says. “We don’t turn a blind eye to the major brands, but this is an alternative to consumers and it’s something selective that can only be purchased at these participating stores.”
A growing network
Smoker Friendly currently has 327 authorized dealers nationwide, including 90 of its own stores. As of Oct. 31, 87 retailers have signed up with the new Authorized Dealer Program since it debuted last spring. Falconburg reports that no retailer has ever dropped out of the program, “We’ve never lost a member!” he says. “I think that’s definitely a testament to the staying power of our brands.”
The dealer program is only available to owners of cigarette and tobacco stores; convenience stores and other retailers are not eligible. “We’re being somewhat particular about who we let into the program because we really want to appeal to the CTS,” Falconburg says. “We feel like that’s where the future of the tobacco industry is really at.”
Smoker Friendly’s September conference and trade show gives retailers the opportunity to learn from guest speakers and see exhibits from more than 60 manufacturers. |
Falconburg also alludes to the selectivity of the dealers coinciding with the limited availability of Smoker Friendly products. “When we first started talking about doing the program, we likened it to a Harley-Davidson dealership,” he says. “You don’t see a Harley-Davidson dealership on every corner, but people still flock to those places because that’s where the quality products are.”
Klafter’s, Inc., which operates 16 Smoker Friendly stores, has sold Smoker Friendly products since the mid-1990s.
“We just happened to see the stores back then and liked the program very much,” says Lee Silverman, president of Klafter’s. “The program was the first of its kind back then. It was new to the tobacco retail industry, so we decided to give it a try.”
The products were so successful that Klafter’s eventually changed the name of all of its stores to Smoker Friendly. Silverman says that the Smoker Friendly brand increased his customer base. “The products are proprietary, so being the only store in the neighborhood with the Smoker Friendly name is a large benefit,” he says. “Customers know where they can access an affordable, quality brand.”
Darren Collett of Collett Enterprises, Inc., signed up for the Authorized Dealer Program in July 2006. “Our stores were part of a franchise that was not big on teamwork and working together,” Collett says. “We really felt that Smoker Friendly knew how to franchise, and that’s what we wanted for our business.”
Collett thinks the dealer program is especially beneficial to small retailers due to Smoker Friendly’s connections with larger manufacturers.
“Unless you’re one of those retailers with 300 or more stores, you don’t generally get to connect with the top manufacturers,” he says. “Smoker Friendly makes those connections possible for us.”
Although the program is still in its infant stages with Collett Enterprises, the retailer has been experiencing a 10- to 15-percent increase in Smoker Friendly products in the past six weeks.
“We’ve been educating our store managers, and some people from Smoker Friendly are coming out to have a mini-conference with us to educate us on selling,” Collett says. “This is a top-quality product, fully MSA-approved, with great tobacco. We want to grow our business, and I think doing so with this brand is the way to go.”
A way to connect
Collett attended the fifth annual Smoker Friendly Trade Show and Conference, which was held in September 2006. In addition to meeting and networking opportunities, the show featured guest speakers and exhibits from more than 60 manufacturers.
“I was very impressed with the quality of the speakers and the variety of topics presented,” he says. “It was a great opportunity to share ideas with other people in our business.”
More than 300 people attended this year’s conference. Every retailer participating in the Authorized Dealer Program received an invitation. Smoker Friendly offered one airline ticket and three nights of accommodations to each participating dealer/retailer.
“The show presents us with a great opportunity to connect with our retailers,” Falconburg says. “That’s really what our Authorized Dealer Program is all about. We want to work with tobacco retailers and help them make more money. We don’t want to change the identity of an existing store; we just want them to have a great brand that they can call their own.”
Falconburg sees the dealer program as a true partnership between retailers and Smoker Friendly. All participating retailers are invited to participate in monthly conference calls with Smoker Friendly to discuss concerns, answer questions and offer advice.
“It’s good for us to talk with our retailers on a regular basis so we can find out what’s on their minds and do our best to assist them in any way that we can,” he says. “We know everyone’s very busy, so we try to keep the calls to an hour or an hour and a half, but we find them incredibly useful, and so do our retailers.”
Collett thinks that one of Smoker Friendly’s best assets is its outstanding service to retailers. “It’s very personal,” he says. “They’re always there to help or answer questions. If you leave them a message, it never goes unanswered, and you usually hear back from the company president himself.”
Smoker Friendly is working to enhance the Authorized Dealer Program by incorporating a bonus award. The company is currently developing a plan, which will stipulate that if the Smoker Friendly brand is ever sold, retail operators will be entitled to a percentage of the net sale price.
“The actual number or percentage would be based on the amount of products each retailer has sold,” Gallagher says. “They’d be entitled to a share of the profits because they helped us build our brand.”
The new bonus aspect of the program will not change any of the existing requirements for participating retailers. Details are expected in early 2007.
For more information, visit the Web site at smokerfriendly.com or contact Mickey Falconburg at (888) 751-2785, ext. 238 or mfalconburg@smokerfriendly.com.
All photos courtesy of Smoker Friendly® International, LLC |
