Episode 244: 3 Trends Radically Reshaping the Promotional Products Industry

Welcome to Skucast, the podcast for entrepreneurs in the promotional products industry. Skucast shines a light on our industry's best work, features maverick personalities, and discusses what's really involved in running a modern promotional products business. Skucast is the official podcast of Common Skew.

There are undercurrents happening in the industry that start as small ripples, but eventually become waves that bring a sea change of disruption to the business. That's what this episode is about. Each quarter, we'll bring you highlights and insights from the guests featured on our podcasts, our events, in our articles that reveal an undercurrent of an idea that has the potential to completely reshape our industry and radically change your business. Hi friends, I'm Bobby LeHew, the Chief Content Officer at Commscue, and I'm joined today by Mark Graham, Commscue's President and Chief Brand Officer. Before we get to our episode, I want to invite you to join us for SKUCon held in person on Sunday, January 8th at the beautiful Frank Gehry-designed Keep Memory Alive Center in Las Vegas to hear Michael Bungay Stanier talk about the 5 Question Leader. Nick Sassaris talk about Web3 and NFTs, and interviews and stories from the industry's most maverick thinkers. And if you can't join us in person, SKUCon will also be held as a virtual conference on Thursday, January 19th. You can learn more and register for either the in-person or the virtual experience at skucon.com. But don't delay, there are not a lot of remaining spots left.

I hope to see you there.

Today's episode is brought to you by CommonSKU. The work from anywhere platform that powers your connected workflow, enabling both distributors and suppliers to process more orders easily and dramatically grow your sales. To learn more, visit commscue.com. Now here's my chat with Mark Graham on the 3 trends that are radically reshaping our future.

Well, Mark, a big surprise to us, um, and it might be a surprise to some folks listening, is that the SKU cast has increased 45% over the previous quarter, um, actually almost 50% over last year's third quarter. So year to date, that means we've had, you know, just under 50,000 plays.

And, um, I think they're all coming for you, Bobby. It's all because, right, it's all— I want to hear that Oklahoma twang. That's exactly right.

Yeah, yeah.

Um, I thought you—

I thought you said, uh, it's all Bobby listening, like trying to jack up numbers. That's true too. Um, but what's interesting is that folks in the industry are tuning in to trends, and something that you and I have always appreciated about our guests on the SkewCast is that they start speaking of trends that are happening that might represent undercurrents that are big inflection points in the industry. And we'll get into a few of these today, but we thought we would share with you in this episode kind of what Mark and I normally do is when we geek out about topics or guests that come on and we talk about the highlights.

Absolutely. And I think another genesis for, for this, this style of episode is that I I don't often review or edit or get involved in a lot of the SkewCast episodes until they're published. So I'm listening to the SkewCast episode just like everyone else, right? And inevitably I'm, I'm walking Oscar the dog, or I am driving somewhere and I'm listening to the SkewCast. And then most of the time when I'm finished the SkewCast, I'll track you down, I'll call you If it's a weekend, if it's an evening, it's in the morning, like whatever. I'll be so fired up by the guest and the conversation that I want to talk to you about it, right? And say, hey Bobby, that was a really interesting episode, or that really challenged me, and here are a couple of points. You always politely and reluctantly answer the phone, and we have a call that sometimes can be 10 minutes or it could be an hour. And I think that was kind of the thinking around this was let's talk about the things that kind of stopped us in our tracks as a way to maybe unearth some of these things for folks. And then maybe it gives people who are listening an opportunity to think about other things that we may have missed. And we'd love to know that. So, we'll see how this goes. It may be a little bit messy, but this is sort of the Marc calling Bobby post-episode to talk about the things that were interesting.

Right. Well, and Also, sometimes what happens is there is such a profound revelation through a conversation with a guest that we realize it kind of needs more airplay. Not because of pushing numbers or getting, getting eyeballs on anything. It's because it could have a profound impact on the industry. And here is a perfect example, is an episode that you and I both geeked out about was the episode with Swag Cycle featuring Ben.

I mentioned that probably the biggest reason that swag becomes obsolete is when a company rebrands, and probably one of the most famous rebrands over the last year is Facebook changing their corporate name to Meta. So we heard from Facebook several months ago around their rebrand. They And what the challenging ask was, was that they had some excess merchandise in the United States as well as excess merchandise over in Europe, in the UK, and they were hoping to facilitate donations of both of those goods. They had already gotten corporate approval that they could be donated to charity, and these were really high-quality items, nice sweatshirts and t-shirts and drinkware and notebooks and other products that have real value to the right cause. So some of the goods were in the United States and in the Southeast, and then some of the goods, like I said, were in the UK. And we donated, we facilitated those donations to two of our charitable partners. One is—

That moment I felt like it was a significant shift for the industry to have someone create a business like this. And I, I didn't know if I was on an island. And then I get your call. I didn't talk to you about it. I didn't say, hey, Mark, check out this episode. You're not going to believe this. I got your call and you felt the exact same way. How did you feel?

Well, I'll admit going into it that I was vaguely aware of SwagCycle. All companies, and certainly our clients back in our respective distributor days, have extra merchandise. It's either because they ordered a size range that's a bit off and they've got nothing but quadruple extra larges in the closet, or they've got outdated products because of a logo change, or they just have extra products that are just sort of stale-dated, whatever the case may be. All end clients have this, and I think all end clients have a deep sense of guilt about what to do with these products, right? And they don't know what to do with them. So inevitably, and I hate to say it, is that they get thrown away. And, and the— and, and no one likes that. And obviously it's, it's an environmental tragedy.

Making—

addressing the fact that there is always going to be extra merchandise. And I think us as distributor salespeople, or at least in our former days as distributor salespeople, I don't think that we really thought too much about our clients' extra merchandise. If anything, we were always just ready to fulfill the next order. And sure, we were looking for products that were sustainable and were great and were well designed to that campaign, but we were all about like getting more into the client's hands. And I, and I love the fact that there's a bit of a cradle to grave mentality here, whereas if I'm a distributor, or in this case Ben's case, and I can not only sell my client, but then 2 months later or 3 months later after the conference say I can deal with those 100 extra products, Then that way it's a sustainable, repeatable process. And I had never thought of that before in all my times of being a distributor. So that's what I think.

Well, and I had the same sort of fanboy moment you did over the idea and the concept, but I was stunned. And here's why I was stunned, because you and I, you know, we had different type of clientele. You were in Toronto. My distributorship was in Oklahoma City. We had different types of clientele, different ways of thinking. And I can remember distinctly 2 or 3 major rebrands. We're talking in the million-plus category of merchandise where the instructions were specifically that no one should ever see this old logo merchandise again. And what happened, though, I will say this now, that was— that can go back maybe 10 years. Now, eventually, folks, I think, stopped doing that and realizing that they're destroying the planet by just throwing this merchandise away and making it end up in a landfill. But now what can happen is that when I'm sitting down with a client, and this is exactly what happened with Ben, he got the idea for it because he was sitting with a customer. They were rebranding and he was thinking, what am I going to do? He's a guy who's very passionate about sustainability. And he thought, what are we going to do with all the old logo merchandise? And now what's exciting is that If I were wearing that sales hat again and I were in front of that customer and we're about to do a $1 or $2 million rebrand, I could say, look, we need to talk first of all about what we're going to do with the previous merchandise. I'm so excited about this new step in this new journey, but it's my responsibility to help us make sure that we take care of this. And wow, what empathetic ears you're going to get with most of your buyers today.

And I think the other element of that is having a really upfront conversation with the client about even the existing merchandise that you're producing for them. I don't know if the term is— if I could use the term breakage. I might be using that a bit incorrectly here, but I think you know what I mean in that if you're producing a huge rebrand promotional products order, you can look the client in the eye and say, Listen, there might be 5 to 10% of what I'm about to ship to you that may not get used for whatever reason, right? The sizes are wrong or you over-ordered or whatever the case may be. And it is our collective responsibility to either put that into other people's hands or if that logo cannot be seen again, that's totally fair. Then let's look at some ways that we can recycle that and repurpose that product. I think that that's a really interesting transparent discussion and I think that some clients may say, listen, I don't care about that. But I think a lot of them would at least stop and consider that and the fact that you've got another service that is there in the event there's extra product. Perfect world, there is no extra product. But in the event there is, and let's face it, probably 75% of promotional campaigns do have some extra element. Like let's look at the closets of corporate North America and we're gonna see lots of stuff that has got dust on it and people don't know to do with. I just think it opens up an incredibly strategic and thoughtful conversation that regardless of where it goes, establishes you as being a different player. So I love the fact that Ben's leading the charge in this area, but I think it's an exciting move for our industry.

I do too. What is this trend a countercultural signal to, do you think?

If I understand the question, I think it's addressing a bit of the white elephant in the room about our industry, which is we're an industry of sell, sell, sell. And yes, and that might sound a little bit cynical, but I think that we have probably moved to an industry of sell responsibly, sell responsibly, sell responsibly. Right.

Yes.

And sell creatively, sell strategically, all that stuff that we talk a lot about on this podcast, but the reality is that it's still sell, sell, sell. And without recognizing the elephant that is staring at me across the room is there's going to be waste. There's going to be extra product at the end of the day because of things like a rebrand or because of an overorder or because, I don't know, 10% of the conference didn't show up. And so there's extra merch. All this kind of stuff, and then being able to responsibly handle that, I think is, it's a conversation that our industry has been either scared to talk about because the buyer will go, oh, hang on a second, I'll reduce my order then if you're talking about products being wasted. And then I think the second is that we haven't really wrapped our heads around what to do with the product because we've been, we remember clients that say my logo will never see the light of day. When we have a rebrand. And I get that, right? But there's a recycling conversation that can take place. And I also think that more corporate clients are more— I think more of them are happy to repurpose old product than we give them credit for. I just don't think we've had the conversation.

I agree. And I think they're more ready and willing to have that conversation now. So the action steps obviously are start building in an upcycler's recycle plan when you present projects to customers or when there's a major project. You'll know strategic specifically when you should do that. But I think it's a really good option to have that in your sort of sales toolbox to talk with customers about. There's another trend that that's tied to, and that is Seth Godin's episode where Seth was our guest and released his book called The Carbon Almanac. And the trend I'm tying to is the moment where he talked about buyers buying right.

Right. So let's go back to systems. The Hotels are only a couple hundred years old. And the expectation in the last only 30 years is that when you went to a hotel, there would be an individual sealed bottle of shampoo for you. Well, that decision by one designer at one hotel chain led to, I don't know, 100 million, a billion bottles being created. They could have made a different decision, which is the standard's going to be there's going to be a pump on the wall. And you're going to press a button and some shampoo is going to come out and we're going to refill it every year. Right, that was a choice that led to a system. And so my blog post was about a particular, uh, series of choices that well-meaning, hard-working people at Hilton and Cisco made that led to a bottle that was hard to open, hard to read, hard to use, and ended up in large quantities in the trash.

Virtually everybody listening to this is going to go, yes, I know, I hear it from my clients all the time, right? But It's another hard conversation to have with a customer about the way they're buying because of what you just said, that we're in a sell, sell, sell environment. Of course, we want to sell more. But we also want conscientious buyers too.

Yes. And so I think this touches on a real challenge that salespeople have in probably any industry, but particularly our industry, is what do you do when the client calls you up and says, hey Bobby, I want to have 20,000 widgets, and you on the other end of the line are, that's fantastic, I just got this order, they told me what they want, and, and why would I fight that? Why would I get them to stop and reconsider that and move them into another product. All that does is creates friction, creates confusion, and to some extent is challenging a customer who has got their checkbook out with a nice order for you. And I think that happens all the time. I'll tell you that I certainly was guilty of it, uh, in my time as a distributor. That, I mean, that's classic order-taking, right? And it's a great sale and you move on with it. To pivot the conversation towards something that may result in a lower sale for that salesperson, whoever was selling those clear bottles, is not something that a lot of salespeople are really willing to do, understandably. And so how we shift the thinking towards challenging our customers and thinking truly long-term, that maybe you take a haircut on that, no pun intended with the shampoo bottle, Right. But maybe there is a short-term reduction because you challenge the customer to go with something that may be less costly, but that translates into a long-term profitable relationship because you've shifted the conversation towards something that's more strategic and maybe more beneficial for the client.

Yeah. And I think having that conversation just elevates your profession in the eyes of the buyer. We had to do this all the time when we were selling shops because buyers would often come to the shop's experience, and they might be building a shop for 1,000 people. Some of those 1,000 people are working in the field. Some of those 1,000 people are in corporate, the C-suite. And so you had all these different tastes and styles, and it was up to us to actually sell smart to that buyer so that none of us were sitting on pallets and pallets of waste and that we actually had a very proficient selling machine. The ultimate idea was to create reciprocal revenue through conscientious selling. We didn't call it that back then, but that's exactly what we were doing. It's just trying to help guide the customer towards— and, you know, we're listening. This audience is very conscientious about things like this. But, but it's just to me, it's interesting that I think now buyers are open and receptive to that types of education. And you think about it, you're the one educating the buyer on how not to buy is pretty powerful.

Absolutely. And, and I think that we, the collective we as sales and account people that are speaking to customers, one of the greatest gifts that we can have as people selling is the ability to have a conversation, a thoughtful conversation with a client about an aspect of their business. So going back to the Ben swag cycle, to be able to, as opposed to opening the conversation with the client like, hey, I've got a great water bottle that could be fantastic for your company store, Yeah, the first question is about, tell me about all— tell me about your company closet. Can we go take a look at your company closet right now? Let's go take a look at it.

Right.

And then, and then there's like this kind of deep shame that happens there, and the client's a bit exasperated. It's like, well, let's, let's start it— let's start this conversation from what's going on in there so we can reverse engineer this. And right, as I say, that's not going to always work, but at least it's an interesting way to differentiate yourself from other people. So I credit Ben for this call that I made to you. I think I was driving somewhere north of Toronto at the time, and we had this great long conversation about it.

So, Mark, I know we've sort of talked about the Fast Company article that came out, and we will reference everything that we speak about here today in the show notes. So in case you're listening or driving and you, you're not quite sure what we're talking about, we'll link to it so you can find those later. But the FastCo article, that was another takedown of kind of the, the billion-dollar industry, was— we don't have, we don't have to go through that again. We've written about this, we've recorded a podcast about it, so we'll link to those. But here's what I wanted to chat about this last week. Julia Jenks, she's a senior analyst at Trends. Now Trends is a newsletter from The Hustle, so some of you might subscribe to The Hustle. Mark, I know you love The Hustle. There are multiple newsletters now out there that are amazing experiences. Well, Trends is to me one of the most enjoyable reads that I have. And Julia created, released just 2 days ago, it's called Trends: 7 Data-Backed Predictions for the Future of Marketing. Now get this, I love it when someone outside our industry validates our industry. And she said there are there are these 7 marketing trends. Number 1, number 1 on the list, gifting. And here's what she said. Forget loyalty points. Gifting is the new customer retention strategy. And she talked about the demand, why it matters, why it's important. The global corporate gift spending more than doubled during the pandemic. Her words, not ours. And that businesses around the world are spending more on gifts for their clients than ever before. Now, the reason I'm bringing it up is because I think there's a different trend happening that the Fast Company article was citing. I think we are seeing an incredible surge in conscientious buying. We're seeing an incredible surge in demand because people know finally, after all these years we've been screaming it, that it works.

Absolutely. And, and I think, uh, it's nice to be able to see some of these articles written by non-industry people that that celebrate the industry as opposed to try to take it down. And I, you know, I think we need both, to be honest, right?

I— sure.

So, but certainly the Fast Company article was, was a giant takedown, whereas this Trends piece you're talking about seems to be a little bit more— certainly much more positive. But what I love about it is actually backed with some great data, as you say.

Yeah.

Um, I, I— maybe I'm trying to tie a thread between those two examples. So On one hand, what Fast Company was talking about was let's get rid of cheap and useless merchandise. I'm paraphrasing. And I think what the author had in mind was just this notion of like truckloads of cheap and poorly produced product that people look at and they just throw it away right away, or they just leave it in their hotel room and it's just, it's sort of there versus the gifting, which is per the other article, which is a lot more intentional. It could be based on specific information about that particular recipient. So, you may have their size, you may have specific information about them. So, the gift is curated for that particular person and put together in a box and sent out. So, that way it's a true gift. That has been tailor-designed for that individual person. That is really, really impactful and is a polar opposite of the mountain of useless, quote-unquote, product that is just given to people who don't care. And I love the two extremes. I think there's a lot in between there, of course. But the fact that that's a trend doesn't surprise me at all. We're dealing with an employment market that is still extremely challenging. And we're also dealing with customer retention and acquisition that's also really challenging today, particularly today. And so gifting really plays an incredibly important role when it's done correctly.

Yeah. And to your point, Fast Company article, there was a lot of purpose behind that in terms of something we could all agree on is senseless buying and senseless selling of swag that nobody wants or uses. We all agreed on that. But what I'm trying to draw a juxtaposition between the two is that we as an industry typically will see those big raging negative headlines and sometimes miss these because this is so powerful. She said 3 things. She said that business gifting matters because gifts can produce a 28% return ROI on lapsed customers. 19% of customers return within 90 days of receiving a gift. And one gifting campaign can result in a 36% increase in referral rates. And it's funny because those of us in the industry probably respond just like you did right there. You're like, Yeah, we all know that, Bobby. Why is this a big deal to you? And I'm saying it's a big deal because we get lost, I think, in the other headlines as an industry. And these are the things that we need to be sharing with our customer.

I'm also nodding my head because if you look at Commonsku like an end client, as a software company, we have used merchandise almost from day one. Sure, we know how the industry operates and we have a lot of great partners inside the industry. But merchandise has been an incredibly intentional part of our strategy to drive emotional connection, to drive retention, to drive new customer interest. And it all comes back to well, thoughtfully designed merchandise. And, and there's an incredibly high bar here, but we see that it works. And so I'm not just saying this as a distributor, like, oh yeah, I think my clients like promotional products. No, we use it ourselves and to incredible effect. And I think that's what this article is talking about. Yeah.

Okay. Moving on to another trend. Just two more I wanted to chat about. One is this. Sometimes what happens is that you have multiple guests that talk about a topic that they are not connecting to each other. Like, so we'll have a speaker speak on something at an event that we are hosting. We'll have a guest on the Skewcast. We'll have an email from colleagues. And that's when you start realizing there's another trend. There's an undercurrent happen. The undercurrent I wanted to mention this time was we had Michelle Bell and Nate Kuzma come on and talk about the state of the industry. And so we had a webinar with them, and they brought up— Michelle brought up the downward spiral of accuracy in the industry. Now, everyone listening to this is going to go, yes, of course. You know, you know the headaches, you know the challenges, you know what had to do with supply chain, you know, had to do a lot of things. But What I was impressed by was how hard Michelle leaned on this.

She said, in, in my time at ASI, 25 years, I've never seen these numbers this low. So you look at the, the percentage of orders delivered without errors, 84%. You know, it sounds not bad. If you look at it in the inverse though, you know, you've got 16% of orders in an industry where things have to be so on point and on time. And, you know, it's, it's event-driven and it's deadline-driven, you know, that's unsustainable.

Juxtapose her comment there about the downward spiral and that she's raising the red flag and saying, hey everybody, this is no longer a yellow flag caution. This is like problematic. We need to do something about it. We also had Joel Fried with Cutter and Buck, and then we had this amazing panel at SKU Camp. And every major supplier that we've been talking to lately is talking about one term that has to go credit to David Nicholson for coining. It's called distributor enablement. All of them are spending more resources and more money on trying to fix the inside problem that is going to allow distributors to sell easier, quicker, better, faster. But it's an interesting trend because we have been talking about this for such a long time because we sell software that powers this type of experience. But now what we're seeing is that the biggest in the business are putting significant resources behind it. But I'm going to stop. You've actually been thinking about this topic far more than I have. But did you see some of those connections being made through some of these conversations too?

So I agree that we're at red flag kind of status per Michelle. Everyone knows about the challenges with, with receiving clean orders and it's been it's been very exciting and certainly moments of challenge creating a seamless electronic purchase order interchange with suppliers. And when I talk about exciting and challenging, I don't just mean Common Skew. Common Skew is certainly a big part of this, but there's a number of other people in the industry that are also looking to put this together. So collectively speaking, sort of this promo standards philosophy So there's that on the good side, that there's a lot of things that are happening where orders that are clean that are going directly into the supplier's production software, right? So that way there's no worrying about rekeying orders and getting things messed up and also delays. So that's the good thing. I think the bad thing is that suppliers, I think, should be putting their foot down more with distributors that are submitting crappy orders. And, and I— this may be controversial, and I suspect suppliers would say, but hang on, Mark, like, we need every order we can get. Or, you know what, getting a crappy order doesn't really matter that much because we've got inexpensive labor to make sense of this order and rekey it in, and that's still worth it than turning our back on that order. And I get all of that. But I don't know if that's necessarily a recipe for great success and scale down the road. I still think that that is a mindset of I'll take any order I can get. And I think it would be very interesting if we had a couple of big suppliers, and maybe the big suppliers where they need to lead the charge, where they refuse the order unless it is submitted electronically through a couple of it doesn't have to be done with any one particular place, but just a clean electronically submitted order. And I think that some leadership from some of the larger suppliers to really crack down on this, I think would be really important. It'd be controversial and painful, but we can't continue how we are right now.

Right. What I'm detecting is Mark, you remember back in the day when the world— the, the promotional products industry went from 2 to 3 weeks production to 5 days to 72 hours to 24 hours. Do you remember how amazing and stunning that was back then in terms of being able to turn around orders that quickly? What happened back then was that every supplier got in the race to expedite their production to meet that. Now, if you were to ask any of the suppliers 5 years before if they thought that that was possible, they would have laughed you out of the room. But instead— and I was talking with Trevor Nissen about this one time at Logomarkt and asked him what he thought were some of the biggest inflection points in the industry. And he said, back then, when all of us were racing for 24-hour turnaround, that was a big deal. That was a big moment. And so my point is, I think we're at another big moment where suppliers are, maybe some just now, starting to sit up and go, oh, we need to get our in-house in order so that this, this becomes the new 24-hour rush. This becomes the new way for a distributor to suddenly turn to me before they turn to all my other supplier competitor partners.

Bobby, I think that's a really fascinating point, and, and it's an interesting precedent that we can look to. Very few distributors complained to a 24-hour rush supplier when the supplier put restrictions on that particular distributor. So some of those restrictions were—

Yeah, PO had to be clean.

It's got to be a clean PO. No proof, like prepaid order. Like, I don't know, right? But there were a series of restrictions that were put in place, guardrails that were put in place in order to expedite it so it could get out on time because they couldn't produce it on time if they had all of these like follow-up and things. And that's so interesting. Like a sure ship from Leeds was introduced like the better part of 15, 20 years ago.

Right.

So that's like ancient times. And the fact that we're now, I think, in this position where it's a little awkward, to be honest, with electronic PO submission. That either suppliers need to put their foot down and say, we're not going to accept this, or the supplier has to create some kind of incentive or some sort of reason. And the incentive might be, we're only going to produce your order if it comes in like this, right? As opposed to like a financial incentive.

Because otherwise, it's—

I think it's sending a mixed message. And suppliers will complain like, we're getting lots of crappy orders. And right, I sympathize with it. But the reason you're getting crappy orders is that you're enabling the distributors because you're not penalizing them for it. So as a result, you're going to continue to get the cocktail napkin orders. That may be a controversial statement, but I genuinely believe it's true because there's no consequence to suppliers or to a distributor from placing a crappy order beyond the fact that there might be a couple of emails back and forth with a customer service person that's like, do you want red or do you want blue? I couldn't read it on your PO. To a lot of distributors, they don't really care about that. It's just like a, you know, it's just the labor. And I think it's a really challenging mindset that we've got ourselves in and we have to be bold and we have to be strict going forward with this.

Well, and going back again, tying together all of these things that are creating an inflection point for the industry, going back to the ASI State of the Industry Report that revealed this is a downward trend over the past 3 years, not even just 4 years. This is something that's going to keep going down unless we do something dramatic. About it. So great point on that.

You don't fax your order to Amazon. You don't email your order to Amazon.

Right, right. You can't even talk to anybody at Amazon. So there you go. Marc, thanks for joining for this episode. We will be back next quarter, probably sometime, to talk about this again, to bring some highlights back to you. But I want to say this on behalf of the entire CommonsCue team. Thank you everyone who is listening. We are stunned by your support, by the fact that you keep tuning in, and we are honored that you— we are in this community with you.

Absolutely. Thanks, Bobby. This was a lot of fun, uh, certainly a lot better than those cell phone calls that I would be, uh, placing, placing post-Skucast.

True.

Thank you.

Take care. That was fun. Thanks so much for tuning in to this episode of Skucast. Be sure to keep up with our latest content by subscribing to SKU Cast on iTunes or to our blog at community.commsku.com. Until next time, friends, thanks so much for listening.