Supply House Times sat down with four distinguished AIM/R rep members during the association’s recent 46th Annual Conference at the Meritage Resort and Spa in Napa, California, for an exclusive roundtable interview focused on key issues PHCP reps are facing in the marketplace.
The inaugural panel for this roundtable interview, which will be conducted by Supply House Times again at AIM/R’s 2019 conference in Orlando, Florida, includes: David Coleman, assistant general manager of Baton Rouge, Louisiana-based A.H. Deveney & Co.; Jon Thomas, president of Cockeysville, Maryland-based N.H. Yates & Co.; Brendan Cross of Hayward, California-based Harcro Sales; and Brian Soderholm, vice president and COO of Ramsey, Minnesota-based Soderholm & Associates.
What issues are reps keeping an eye on right now?
This topic started off with a regulatory tone (ECM pump motor regulations, Prop 65 and tariffs) and eventually shifted to some down-and-dirty day-to-day issues. “We have two or three manufacturers tearing their hair out over the tariffs,” Cross said. “One of them has had three price increases this year.”
DC: “It’s a double-edged sword with the tariffs. We understand if they go up, that just brings import pricing closer to U.S. domestic prices, but if they go up 20% people are afraid domestic is going to go up 20% to keep up the differential.”
Soderholm then steered the conversation in a more rep-specific direction toward increased work demands from the factories. “One of the biggest issues in our business today is the increasing demands for information and activity reporting from the manufacturers we work with,” he said. “We find ourselves overwhelmed with these administrative requests, unrelated to selling, to the point that we have full-time employees exclusively dedicated to reporting tasks. Not only is this costly to our agency, but we get concerned that increasing oversight of our activities threatens our sales abilities, and maybe even our status as independent contractors to our factories.”
DC: “Manufacturers are offloading more and more order-entry, notification and delivery aspects and returned goods work. They see the value of how much they save by offloading these functions to their reps, but it costs us the same amount of money to do what they were doing. Good reps find a way to do what is asked so we remain valuable to our manufacturers.”
BS: “We’re not in a position to where we can walk up to a manufacturer and say, “OK, we’ll do this, but it’s going to cost you X-amount of dollars or X-amount percentage more.”
DC: “We are the one step of the distribution channel between the manufacturer and wholesaler and contractor that has no control over the margins we make. Those other channel steps do have competitive pricing restraints, but we have a fixed-percentage income pie. When a manufacturer says we have to start doing X, we may have to hire somebody to do X and their piece comes out of our fixed pie. All we can do to affect that dynamic is sell more widgets.”
What is your firm doing differently these days to move the needle forward?
The panel agreed technology embracement is a must these days. Thomas noted his firm now outsources its IT function. “We had a guy who was our IT person at a VP level for more than 18 years,” he said. “We made the hard decision from a value standpoint to move on and it’s been fantastic. We did the same thing with HR and now get better service at a lesser cost.”
BC: “I heard a rep at an AIM/R conference 15 years ago say that you should sit down and think about your business for an hour and ID the worst thing you do and fix it and then do the same thing the next year. If you are not good at this and are real good at something else, fix the thing you aren’t good at. Just do it. We’ve adopted that. We’re always trying to up our game.”
BS: “I would recommend this to any firm that has kind of hit the ceiling where the chaos of daily life starts to interfere with taking the ball down the field. Have regular meetings on a set date that you don’t miss. Make them sacred and talk about the same thing and repeat. It creates momentum and helps with culture.
“Concurrent to that we are really shying away from any short of shelf goods from here forward. Any product we work with has to be something where we can add value, whether that’s knowledge with engineering and specifying or we are the only guys who can start or service them and that includes having service technicians. Having knowledge and the ability to do things others can’t is power. As reps, we inherently don’t have a lot of power. We have to try and create it.”
Coleman chimed in on the shelf goods topic as well. “We have to find goods where we can influence decisions. The moment Amazon can do it or retail can do it on 8 p.m., on a Friday night after the wholesaler is closed, reps have essentially lost that business. I’m not scared of that, but somebody has to have that knowledge about the products and the ability to train contractors to install and fix them. The way we do our jobs may change, but our jobs still are going to be there.”
BC: “It’s all about training. One of our initiatives is to become the rep people call when they don’t know who else to call on a particular product. We feel like that with three or four of our lines.”
How has the manufacturer and rep relationship changed over the years?
Coleman used the phrase “back-selling” to start off this topic. “The communication piece is different. You have to back-sell and have to be consistently telling your manufacturers what you are doing for them today,” he said.
Thomas added: “I think those of us who either own or manage at a high level in an agency see we’re spending more than 50% of our time selling in the other direction upstream rather than downstream. I’m willing to bet if you asked a similar group of reps in 1974, 1996 and 2005, they all would tell you they are running like crazy just like we are today. Time is finite. What a rep does is about time and resource allocation. It’s what you do with the time and how you focus it.”
What is your relationship like with your distributor partners?
“We work hard to solve their problems but not many of them view us as their partners,” Coleman candidly stated. “The good distributors see reps as an asset, but some show very little to no brand loyalty and their outside salespeople simply want to take orders from contractors. They expect to buy any brand at the best price without committing to any inventory.”
BS: “Depending on the product, the more it is commoditized, frankly the less value we are able to offer and frankly the less respected we are in their eyes. The trick is to create that reliance on our company and gain some semblance of a stronger relationship with some of their key salespeople. However, everybody in this room would agree that in our eyes the distributor still is a vital partner and that won’t change. The relationship has changed, brand loyalty has changed, but they are still a critical partner.”
If a genie gave you two rep wishes, what would they be?
“One would be at least part of the back-side rebate money distributors get be allocated to reps and the second is manufacturer regional and national sales managers have to work for a rep before taking those positions,” Thomas said.
BC: “Longer contracts and longer termination windows. I have a few where we are up to 90 days and one that is a year. We want to go the extra mile for you, but we’re not going crazy all-out if we know we could be fired in 30 days.”
DC: “We need to sell ourselves better as reps. There is a lack of value associated with the job we do and we must get better at selling ourselves.”