Burke Agency Performs Like Well-Oiled Pistons
The Burke Agency exhibits many traits in common with its hometown basketball team. Flamboyance is not their style. Teamwork, tenacity and a devotion to the basics are what have gained them acclaim as one of the top firms in the business by virtually all who deal with them.
In interviewing the father who founded the business and the three brothers who share top management duties, I found myself continuously nudging the tape recorder a little closer to the subjects. They are a soft-spoken clan to whom the limelight does not come naturally. A stranger might peg them as accountants rather than salesmen.
Nonetheless, their lines (see adjacent box) would spark envy in many a rep firm, and their relationship with most of their vendors spans many years. With Olsonite and Delta Faucet, the ties go all the way back to the agency's beginning in 1975.
Ten lines seem a meager total these days for a 25-person rep agency. “If the right line came along, we have all the systems in place to expand our business rapidly,” explains General Manager Brian Burke. “Yet, it's hard for us to justify taking on another line unless it's the right fit. First, we have to be sure it doesn't take away from our efforts with existing vendors. Then, it takes a lot of investment on our part, maybe as much as $50,000, to take on a new line. We look at it as becoming partners with our vendors.”
Agency RootsFamily patriarch George Burke started the agency in 1975 after a 20-year career with various manufacturers and five years as a partner in another rep firm in the Detroit area. Burke Associates, as it was then named, consisted of George and eldest son Bob, who perished in an auto accident in the early 1980s.
George started the agency in the middle of a terrible recession. “I did that on purpose,” he says. “I reasoned that when times are good, manufacturers would not change reps, but when things get bad, they start looking to correct problems. It's a very dangerous time for reps when a recession comes,” says the agency's founder.
The other factor was his insight that the days were coming to an end for the one-man rep firm working out of his house. “Manufacturers wanted professional sales organizations as reps - well-educated salesmen, a customer service staff and full market coverage. That means calling not only on wholesalers, but also plumbers, builders, architects, engineers, plants and institutions.” This spelled opportunity for a business-minded sales pro.
George and wife Rosemary gave birth to 11 children, the classic big Irish family. He retired in 1989 and sold the company to two sons active in the company at the time, John and Brian. They have since been joined by brothers Paul and Henry. In addition, Brian's wife Mary works in the business as CFO, and the inside sales team includes Linda Burke, John's spouse.
Family businesses with that many kin participating have a way of turning into an emotional bonfire. I asked the principals how they keep off one another's throats and got quizzical looks in return. After a long pause to reflect, Brian half-jokingly ventured to say that “physical separation is a positive thing.” John and Henry work out of the Grand Rapids office, while Paul and Brian are stationed at company headquarters in the Detroit suburb of Walled Lake. “Separation of duties also helps,” chimed in Paul. “We specialize in different areas, based on individual strengths.”
I asked the same question of their parents, and Rosemary offered that the entire family rallied around one another following the tragic death of brother Bob some two decades ago. Left unsaid but obvious is the simple fact that the Burkes are the prototype of a close-knit family. These folks actually seem to like one another. Nobody ever felt pressured to join the family business, and the six Burke children who chose not to participate all have achieved success in other fields. (One brother is a manufacturers rep serving the plumbing industry in Washington and Oregon.) Good parenting pays big dividends.
Equally important is the seamless bond between family and non-family employees. Their resumés beam with plumbing industry luster, and most have enjoyed long tenure with Burke Agency. In addition to the four brothers and Mary, those who have been aboard 10 or more years include Anne Carlton, their senior inside sales rep in Detroit; Scott Deckrow, who covers western Michigan out of the Grand Rapids office; Beth Dietzen, the showroom sales specialist in metro Detroit; and Rick Higginbotham, charged with territory sales in the Detroit area. Paul Hoffman, manager of builder services, has been with the firm nine years.
“Good people make good organizations,” comments George Burke. “All else is elementary.”
Continuity & ChangeIt's something of a cliché to say that the rep business has undergone profound changes over the years. This is certainly true, but it's equally important to note that not everything changes. Some facets of the rep business remain more or less constant from era to era. Before we delve into the changes, it's worth noting some of the continuity that undergirds Burke's business success.
Perhaps 90% of buying decisions are based on the vendor brands represented, or maybe it's 75% or less. Whatever imaginary percentage you feel applies, the remainder presents an opportunity for a rep firm to inject itself into the buying decision. Buyers may be influenced by the seller as well as the product. This is what's meant by “relationship selling.” It's a process akin to branding. People want to buy from given reps because they like them, trust them, depend on them, etc.
Rep firms like Burke Agency that stick around for a long time and seldom change vendors must have a high relationship quotient. Whether it is their high-quality lines or the agency itself that attracts customers is like asking whether the chicken came before the egg. The two work hand-in-hand.
Another aspect of rep branding is the fun stuff - all the promotional things that selling organizations do to generate customer goodwill. These frequently have nothing to do with service or product quality but sometimes overshadow the important things. Think of how many people buy certain products simply because celebrities endorse them on TV. And, would Cracker Jack have been as popular without a cheap little toy in every box?
In that vein, Burke Agency for the past 21 years has hosted an annual bowling tournament for its wholesaler customers, complete with a traveling trophy. They also are indelibly associated with the ice cream stand that marks their booth at trade shows, open houses and other industry gatherings. Over time, people become conditioned to think of Burke whenever they pass a bowling alley or treat themselves to an ice cream cone.
There is plenty of change as well. Like all reps, the Burke principals have to wrestle with an ever-evolving business that for all their experience and moxie, never gets easier. For the remainder of this article, I'll let the Burke principals speak for themselves about the changes and challenges impacting their business.
Biggest ChangeBrian Burke - “We're asked to do so many things we weren't asked to do in years gone by. It's a challenge to meet the new demands placed on us by the marketplace, and at the same time do it well and make money at it. I think we have done a good job staying current with technologies that allow us to be more efficient. By being more efficient, we have been able to meet these new demands from the industry, and keep pace with our changing responsibilities.
“Our agency now has several channel specialists, such as Beth Dietzen, whose job is strictly to call on showrooms. Twenty years ago, showrooms were not a big deal. It tended to be the last part of the sales call, after taking care of the buyer, the counter, the quotations person and so on. Then, showrooms started moving out of the industrial park, and they're difficult for the traditional salesperson to serve effectively. So we decided we needed someone who speaks their language, dresses like them and focuses on serving their unique needs.”
John Burke - “There's also been an explosion in the number of products being offered through showrooms, and we need to keep up. In the showroom business, often it's a case of needing something now that can't wait.”
Wholesaler ConsolidationJohn - “It will be interesting to see what manufacturers do as wholesalers further consolidate. For instance, in some markets there may be only three wholesalers, but there are five major water heater manufacturers. Are the companies left out of the wholesaler channel going to abandon that market? More likely, they'll figure out other ways to reach it.”
Paul Burke - “This is already happening in the high-end bathroom market. Most wholesalers are overloaded with faucet lines and such, and most won't give a second look to more decorative products. In response, a little micro-industry has formed of new rep agencies selling to contractors, kitchen and bath dealers, showrooms and so on.”
Vendor ConsolidationBrian - “It's becoming harder and harder to find lines without some overlap. Just about every vendor has a product that competes with a product we already represent. In some other industries, it's not uncommon for rep agencies to represent several lines of exactly the same kind of products. I don't know if that will ever happen with plumbing, but it's becoming more acceptable for reps to have a little bit of overlap.
“Fortunately for Burke Agency, the vendor consolidation we've experienced has been complementary in nature, and strengthened the synergies in our product lines.”
Rep WarehousingBrian - “Warehousing is not a major focus for our agency. We keep a small warehouse for hard-to-find parts or items that wholesalers can't justify buying in bulk, but this amounts to less than 5% of our sales. Yet, if the right warehouse line came along, we could handle it.
“Some manufacturers have legitimate reasons for wanting local inventory. Sometimes it's hard to get product in a few days, and rep warehouses can be used as a stopgap. Also, with a lot of wholesalers, technology has made it possible to have as little inventory as possible and still get tremendous fill rates while turning product quickly. Rep warehouses help them do that.”
Biggest ProblemsJohn - “It's becoming harder for reps to maintain true selling organizations because of new demands on our time and resources. We want to provide complete market coverage, of course, and often with channel specialists. This alone is very expensive.
“However, many manufacturers have scaled back or closed their order entry and customer service departments, and shifted those responsibilities to their reps. I think getting customer service as close to the customer as possible is a great idea, and yet I think it is fair to say that reps have not received additional compensation to provide these additional duties.”
Brian - “Another very costly area for reps is the explosion in requests for local market intelligence in the form of monthly sales reports, quarterly forecasts and annual sales plans. Reps are also an integral part of the vendor customer database management. It has just gotten out of hand, although I'm not sure what the answer is to resolve it. Manufacturers deserve meaningful feedback from reps, yet the Internet and e-mail have perhaps made it too easy to inundate reps with requests for information. Like everyone else, we have only so many hours in a day. Time spent in the office writing reports takes away from the time available to do our primary job of making sales calls.
“We have 10 lines, and that can be difficult to juggle. It boggles my mind when I see rep firms with much more than 10 lines. However, as the industry demands more and more services of a rep, we must find the revenue to pay for it all. And that often means more lines.”
RebatesPaul - “Wholesaler rebates are hitting the streets, although maybe not so much in this market as elsewhere. Also, now there are program dollars for builders and contractors coming out of the same hide. There are only so many program dollars out there. Maybe it means not running TV commercials, which hurts everyone in the supply chain.”
The Growing Clout Of BuildersBrian - “Builders often ask why they can't buy direct. But none of them has figured out how to get the water heater from the factory to the basement. The traditional distribution system works. It looks chaotic, because so much happens in between the factory and the basement, but nobody knows how to do it better, and a lot of people have tried.”
John - “I keep reading about all the fat in the supply chain. But where is it with wholesalers making paper-thin margins on direct shipments and living off of rebates? Then the plumber puts a $10 markup on a $90 item in order to pay his light bill, so I don't see any fat there either.”
Future For RepsBrian - “This industry in general holds a bright future for independent reps who are committed to evolve as the industry changes. We have a good place in the distribution channel, and provide value-added services for various players.
“I would like to see more manufacturers utilize organized and structured rep councils. One manufacturer we represent, who does have an annual rep council meeting, told me we're the cheapest expert consultants he can hire. He only has to buy us a steak and maybe play golf, and in return he gets thousands of dollars worth of advice about what his customers are thinking and what the competition is doing.”
Paul - “Reps can supply manufacturers institutional memory. We provide consistency in a chaotic world.”
Sidebar: Burke Agency's LinesBradford White
Charlotte Pipe & Foundry
Oasis & Sunroc Water Coolers