Mega Western's MEGA-REBOUND
“More sales calls, on more customers, more often,” is the mantra of Mega Western Sales. Based in Gardena, CA, the company employs around 100 people covering a sprawling territory that includes virtually all of California, Nevada and Arizona. A March 2006 expansion resulted in the addition of territory in Northern California, several new prestigious lines and, in the words of President Mike Smith, “some really great people.” All is indeed going well for this mega-rep firm.
Their consistent performance over time is sufficient to warrant being recognized as one of the top reps in the country. This reporter also thinks a big part of their story is the way they've managed to hang in and rebound from mega-adversity a couple of years ago when half their world fell apart.
The company sprang from the Crosby-Lindsey rep firm formed in 1970. Later they became known as Great Western Sales, and made the leap from Great to Mega after buying out a retail rep firm named Mega Marketing 11 years ago.
Timing was not the best for their venture into retail. It happened right around the time the secondary retail chains like Home Base and Builders Square were biting the dust. The market was consolidating into the Big Two, and early on one of those two, Lowe's, squeezed out reps from the margin chain. Nonetheless, for the better part of a decade they continued to do humongous business with Home Depot. That came to an end a couple of years ago, when Big Orange decided regional independent reps didn't suit its business model either. “Home Depot pulled the plug just about the time we had paid off the loan to buy the retail rep firm,” recalls Vice President Kevin Rantin with irony.
It was a devastating blow to the business, but not a fatal one, since the company still had around half of its business grounded in trade sales. They took the cup half-full outlook and continued to run full speed ahead on the trade side. Since they operated with separate divisions and dedicated staff, it wasn't as difficult as it would've been with commingled personnel. Although most of the retail staff had to be let go, Mega Western found trade sales positions for some of the top retail staff, including Rantin, who had headed retail operations.
In that sense, retail's demise served to strengthen their trade business. This was one of several silver linings in the cloud. Another was a sharp reduction in worker's comp insurance, which in California more than anywhere else can build to a significant business expense. The big boxes required reps to do a lot of physical labor in stocking shelves, building displays and setting up racking. This led to bumps and bruises. “All of a sudden we went from a company that didn't have a claim in 25 years to about one every quarter,” said President Mike Smith. “Our premium shot up from around $10,000 to $150,000.”
“We made some money there, but probably the biggest benefit from the retail side was giving us more merchandising expertise,” commented Vice President Dave Dempsey. “Plus, when we had capital needs on the trade side, the income from our retail business came in handy, and vice versa.”
Managing size & diversityDespite the retail loss, its trade sales business alone makes Mega Western one of the largest plumbing rep firms in the country. March's expansion makes it more so, and generated a line of questioning for this story that had to do with the challenges of managing such a large rep firm.
The three principals acknowledged a yin and yang in vendor perceptions of such a large company. On one hand, they have resources available to accomplish many things smaller firms cannot - starting with the fulfillment of their “More sales calls …” mantra. On the other hand, some potential vendors back away out of fear they may suffer from lack of attention.
The company has responded with an organizational structure that assigns specialized line captains and managers for each of the company's nine customer groups. Each principal takes overall charge of three groups. Mike Smith oversees the Builder, Kitchen/Bath and New Work groups; Dave Dempsey is in charge of the Buy-Sell Warehouse segment, plus Tools and Other Wholesale sectors; Kevin Rantin is the go-to principal for Commercial, Hospitality/Urban and Repair & Remodeling (R&R) segments. “We really don't look at ourselves as a humongous firm,” said Smith, “but as a series of small rep agencies. Each group handles only certain lines, and through our line captains we are able to give quite specific focus to each of our vendors.”
As evidence, Smith pointed to an admirable record of longevity with major lines. Mega Western has represented Alsons and BrassCraft going all the way back to 1972, Pacific Plastics since 1983. They've had the prestigious Delta line since 1995, and have been with Rheem, Briggs and Wheeler Rex since 1998. All, of course, with nothing more than the standard 30-day contractual guarantees.
Almost all sales are made to traditional plumbing wholesalers, but the company's “more sales calls, on more customers …” emphasis is aimed at building demand through other customer categories. Thus, Mega Western sales reps call on builders, remodelers, kitchen & bath dealers, specifiers, building authorities, maintenance staff and anyone else with influence over a sale in a given category. In particular, said Smith, “We dedicate a team of specialists to home builders. And staying in front of the plumbing contractor is critically important in our business. Maintaining their support is essential.”
“Our vendors want us to increase market share,” commented Dempsey. “If we called only on our wholesale friends, we might be able to bump that up a half a percentage point or so. The real value-added service we can offer our vendors is to stimulate greater demand at the grassroots level.”
Mega Western's organizational scheme means that sometimes two or three of their salespeople might be calling on the same person for different reasons. A plumbing contractor, for instance, might get called on by someone from the Builder group, as well as sales reps from the New Work and R&R groups. This got the devil in me to start advocating.
Contractors keep telling me they are pressed for time like never before. Wouldn't they get annoyed being visited by so many sales reps from the same company? I asked.
“They would if we wasted their time,” Smith replied. “I can't recall ever receiving a complaint about it.
“Usually these calls are for a special reason. Maybe one of our lines gets buried in specification. Or, sometimes a builder may hire a plumber who at one time had a problem with one of our products and swears never to use it again. In those cases, we may have a Builder sales rep calling on the plumber along with one of our New Work reps.”
Dempsey chimed in, “Plumbers are very set in their ways. We want to make sure he's getting the right information about our manufacturers, and not responding to gossip he might hear at a supply house counter.”
The folks at Mega Western are not unsympathetic to the increased demands on contractors' time. In response, they devised for their R&R group a bound and laminated 20-page booklet called the “Delta Quick Pick.” Service contractors can get overwhelmed by Delta Faucet's 3-inch thick catalog, so the “Quick Pick” guide simply culls the company's hottest selling faucets, spouts, accessories, showerheads and shower valves into a narrower sampling. Products with asterisks denote products immediately available at local distributors. “'Quick Pick' has been very successful,” said Dempsey. “It's driven a lot of business to our distributors.”
Inside support teamAs its slogan makes clear, Mega Western views in-person sales calls as its main reason for being. The three principals share administrative duties, which frees up each to spend time visiting customers. “You cannot take people for granted,” said Dempsey. Added Smith, “The critical part of what got us here is communication with customers. We can delegate the order writing part, but they still need to see us.”
Inside support is crucial to a large sales organization. The agency's 50+ outside salespeople are assigned radios with which to communicate with inside support staff. This is to avoid tying up phone lines, which are reserved for customer inquiries. Smith estimates that about 90% of inquiries can be handled by the person answering the phone. Otherwise, they will get switched over to a line specialist who can respond in more detail. Mega Western handles over 2,000 phone calls per day, yet favors the personal touch over an automated phone system. “We want to avoid the 'touch one, touch two' syndrome,” said Dempsey. “If our customers ever tell us that's what they want, we'll make them happy, but right now they seem to prefer the way we handle calls.
“A good sales support team enables us to do what we do best,” he remarked. “If I have to spend a half-hour on the phone, that's one less sales call I can make.”
The agency promotes the fact that somebody will pick up the phone at 5:30 in the morning until at least 6:00 every night, as well as on lunch breaks. “So many competitors have nobody answering the phone during lunch breaks,” said Dempsey. “That frustrates customers. Such a simple thing, yet it's surprising how many people you can't reach around noon time.”
The agency's resources enable it to provide a host of other value-added support services that are beyond the capacity of smaller rep firms. For instance, for the Oliveri sink line they operate a hole punching machine to configure sinks any way a customer desires - within an hour or two, according to Smith. Oliveri is an Australian manufacturer that Mega Western handles on a buy-sell basis. The company's 40,000-sq.-ft. warehouse is jam-packed with Oliveri products, and wholesalers cannot afford to stock the line in all configurations. Custom hole-punching is a low-cost alternative to give them what they need in a timely manner.
Similarly, Mega Western is UL-listed to perform electrical conversions on electric water heaters, depending on the application. Mostly these orders are handled on an emergency basis for commercial grade units. This, too, diminishes the need for wholesalers to carry excessive inventory. Mega Western also manages a full inventory of replacement parts for Delta Faucet.
Looking aheadAs we went to press, Mega Western principals were busy finalizing the organizational structure for their expansion into Northern California and Nevada. A former principal of Buffington & Associates, Frank Mullin, and several other key associates were retained, bringing with them a bulging list of customer contacts and considerable goodwill in the Northern California territory. “We are centralizing our customer service and sales support in our Gardena office, freeing up the team in the North to focus exclusively on time with the customer. Frank is a genuine man with great relationships, and this will enable him to go back to his strong suit, selling, without the burden of administrative duties,” said Smith.
No rep in today's world can feel completely secure what with the reality of 30-day contracts staring everyone in the face and the industry consolidating at all levels. However, the folks at Mega Western have more reason than most to remain optimistic. Mega Western managers participate in a number of vendor and distributor Advisory Councils, so they get a preview of big picture thinking about industry affairs.
I asked the principals what specifically can a rep firm such as theirs do for the large supply chains that they could not do as well for themselves. Smith responded, “I'd hate to hang my hat completely on this, but we're still better at nuts and bolts relationships. Maybe the best wholesaler salesmen have the kind of strong customer connections we do, but most do not.” Dempsey added, “For our vendors, wholesalers can't supply the same kind of value we do, because wholesalers for the most part really don't care which brand they sell as long as they get the sale. We serve as advocates for our vendors, and I don't think they want us to be cut out of the chain.
“Plus, the manufacturers and wholesalers don't have the manpower to troubleshoot and provide customer service the way we do. An 800 number isn't going to get needs taken care of at the local level. Take us out of the mix, and somebody else is going to get those 2,000 phone calls that come into this office each day. Good luck with that,” said Dempsey.
Smith sees a definite trend toward larger rep firms. “I'm not trying to bang on the manufacturers, but most of today's commission rates just aren't enough to support a small agency, especially a new startup. Manufacturers are looking not only for selling responsibility, but expect the rep to handle customer service and technical product support as well. For that you need to bring in more lines to provide the volume needed to support a service infrastructure. Commissions aren't going up and expenses are, yet manufacturers are asking us to do more. That means spreading the overhead around,” said Smith.
Bigness does not mean losing touch with your roots. I concluded the interview as I always do, by asking the principals if there's anything we missed discussing that would be good for our readers to know.
“Yes,” replied Dempsey. “Please mention Bob Crosby, the original owner. Bob is retired and living in Florida, and we still abide by the principles he started this business with more than 35 years ago.”
Meet Mega Western's PrincipalsMega Western Sales is owned and run by a troika of industry veterans from diverse backgrounds but sharing a common business philosophy built on relationships and service.
President Mike Smith got his start 34 years ago in Texas working “as assistant to the warehouse assistant” for the large McEwen & Bennett rep agency where he was related to the boss (which helps explain the initial job description). They were Delta reps and he built relationships within Delta that continue today.
Smith also worked for the large Texas construction plumbing firm Christianson Co., which was subsequently absorbed into Ampam. That was followed by stints with Eljer and its Valley and Eastman divisions, which he served as national sales manager. He later filled that same role with Price Pfister before being recruited by Dave Dempsey to come aboard what was then Great Western Sales.
Dave Dempsey is a 40-year industry veteran whose career got started by working for a local plumber in Ventura County, north of Los Angeles. He graduated in 1972 with a degree in Business Administration from the University of Wyoming, then in 1973 joined the then Crosby & Lindsey rep agency. In 1980, along with two partners, he purchased the agency and created Great Western Sales.
Kevin Rantin worked for Delta Faucet in Canada before moving to Black and Decker's Price Pfister division, where he first met Smith. Rantin left to work for RSI Home Products but about six years ago was recruited by Smith to run the retail side of Mega Western's business. When that sector disappeared, Rantin remained on board with the trade side of Mega Western's business.