Sales strategy for the Nestle / Carnation merger.
In 1985 the $3 billion acquisition by Nestlé of Carnation was approved by the FTC, making it the largest non-oil merger in history. Consolidation in the retail food industry was widespread, often driven by the desire to leverage the marketing power of leading brands across previously smaller brands.
Unfortunately, the Nestlé strategy was interrupted by multiple high-profile insider trading controversies. Carnation, two founding family members (the Stuart brothers), and Ivan Boesky settled with the SEC in 1986 and 1987. These troubles distracted senior management from some critical integration issues, particularly in the sales function. As late as 1991 Nestlé still operated its sales forces rather separately.
Sales force integration had stalled over infighting. Although Nestlé was the acquirer, Carnation’s US organization was larger. There were significant differences among the sales forces, various proposals had failed, and the sales force integration budget had overrun. I was asked to find a solution.
Our approach took a different tack. Prior efforts had focused narrowly on sales organization and compensation. Instead, I proposed a strategy for leveraging the untapped selling power of Nestlé and Carnation. Drawing parallels to their well-articulated brand leverage strategy, I explained how a combination of multi-level selling and pressure selling focused on regional chain store headquarters would help salespeople deal more effectively with the increasingly powerful grocery store chains.
To implement the new sales strategy, all headquarters sales efforts would be consolidated into regional groups. These account executives would no longer specialize by brand. They would start presenting the benefit of a total Nestlé program, and penalize buyers who insisted on “cherry-picking” the line.
At the store level, efforts would remain brand-specific to maintain comprehensive detail coverage, and field communication would be enhanced to ensure that store level salespeople knew exactly how to execute regional headquarters agreements.
Once the sales strategy was articulated and the sales organization described, both sides were united and willing to address the compensation issues. New performance measures were created for account executives to capture total company results. Best practices from Nestlé, Carnation and industry leaders were tapped to create an optimal mix of store-level measures. Significant differences in pay levels and payout formulas were then addressed through a combination of design enhancements and transition techniques. All compensation changes were couched within the new sales strategy.
The sales forces were fully integrated within the year, and marketing program sell-through increased, as did total market share.