WINTER 2020 EDITION

AGENCY REP ROUNDTABLE:

STATE OF THE UNION

Executives from leading manufacturers’ rep agency firms share their perspectives on the impact of the pandemic on business now and in the future.

OUR EXPERT PANEL
Don Henderson president/CFO, Hossley Lighting & Power Solutions Inc., Little Rock, Arkansas
Troy Jennings co-owner, John Moore and Associates, Nashville, Tennessee
Scott Lessing COO, Ewing Foley Inc., Cupertino, California
Matt McAuliffe president, McAuliffe, Hazel Park, Michigan
Fran Pollart managing partner, Pollart Electrical Sales, West Deptford, New Jersey

The COVID-19 pandemic has materially disrupted a broad range of standard business practices.

According to August-September 2020 “Snapshot” surveys by market research firm AIM, it’s unclear when salespeople and manufacturers’ reps will be able to visit customers again in person. As a result, building professionals report that they’re getting more of their product information through online resources, phone calls, virtual meetings and email than ever before.

Following, IMARK Electrical Now invited executives from manufacturers’ rep agencies nationwide to share some of the challenges and opportunities they’ve experienced during the pandemic and what the future may hold for electrical product sales in the near future.

IMARK Electrical Now: What have been the biggest challenges faced by your company during this public health crisis and business upheaval? Any big surprises?

Don Henderson, Hossley Lighting & Power Solutions, Little Rock, Arkansas: For us, it’s been adapting to the remote work environment, not being able to see customers in person, working to protect our team’s safety and upgrading our digital media campaign. The big-gest surprise has been the number of projects that have been put on hold or cancelled.

Fran Pollart, Pollart Electrical Sales, West Deptford, New Jersey: Working with our outside sales team to adjust from making in-person sales calls to our electrical distributor (ED) custom-ers to virtual sales calls and training them to use digital media have been challenging. I believe that one year from now, we’ll likely be better off as an agency, as we’ll be able to use both digital and in-person sales calls as a way to see all customers more often. It’s amazing to see how creative our sales team has been during this time; seeing them meet with customers outside in parking lots or at the local convenience store and show new products or just have a conversation about issues has been inspiring and really shows what your team is capable of in the face of adversity.

Matt McAuliffe, McAuliffe, Hazel Park, Michigan: The biggest challenge for both our outbound salespeople and managers has been adapting to the new technologies necessary to regain access to customers. New methods of interaction needed to be adopted or sales professionals would become un-productive overnight. Our team spent significant time relearning how to gain access to customers. At the start, we thought we had two choices—either learn new methods and technology or wait for COVID to end. Now it’s clear that we didn’t have a choice, as access to customers continues to be restricted.

Scott Lessing, Ewing Foley Inc., Cupertino, California: The biggest challenge for us has been dealing with the unknown. Luckily, our Microsoft 365 platform allowed us to go “virtual” instantly, so we had minimal technical issues supporting employees at home. We then turned our attention to a few things out of our control, such as the issue of when we’d be back in the office. For several months, we kept setting the bar on the first of May, the first of June, the first of July, etc. Other issues we’ve grappled with have included our expectations of outside salespeople, how we make our offi ces COVID-compliant per our county, how we handle expense accounts and vehicle expenses and whether/how we apply for the federal Payroll Protection Program loan. We also wondered what our peers were doing and how we could get better visibility into sales and commissions in order to make timely staffi ng and expense decisions.

Troy Jennings, John Moore and Asso-ciates, Nashville, Tennessee Demand creation hasn’t taken on new meaning, but the methods have changed and will continue to evolve moving forward—we think for the better. The current rep model handles many of our manufac-turers’ “back offi ce” duties, which forces us to fi nd new ways to keep the goal of selling at the forefront of our work. A lot of great ideas will come out of this period, some of which we’re already capitalizing on. While it’s not exactly a big surprise, expe-riencing the world on backorder has made for a wild and educational ride.

IMARK Electrical Now: In your opinion, what are likely to be some lasting changes to the agency rep business that result from the pandemic?

Pollart: Marketing for my agencies will be more important than ever, as our team may end up making 60% fewer in-person sales calls than before. This will require us to reach our customers (EDs, contractors, facilities, etc.) in a new way. As owners, the investments we make in hiring marketing people to do this work and train people on new ways to make calls are great ways to separate our agency from others.

McAuliffe: Technological tools that had been available prior to COVID but were lightly used—e.g., video meetings, strategic local marketing through direct customer campaigns and a heightened focus on planning—have developed into a larger part of our operations. There’s been a greater awareness of the need for deeper user interaction from the sales office team and less dependence on others’ access by man-ufacturer clients. In addition, emphasis on CRM use and reporting related to end-user customers and project pursuit have increased. Inbound and outbound sales responsibility within the sales office has also blurred and the value of salespeople has become increas-ingly tied to their technical ability and owned relationships.

Henderson: The role of the inside sales representative has been brought to the forefront. Many organizations may not return to an in-person call environment. We’re challenging our demand creation and sales teams to hone their presen-tation skills and focus on creating their own marketing collateral to present to customers based on a market basket, vertical-focused strategy.

Lessing: The most pronounced change will be how our manufacturers use us as a resource in the field. For example, reporting from the field has evolved over the years from “call reports” to “monthly reports” and, increasingly, CRM input. I believe that our manufacturing partners will rely even more on direct CRM input as travel by regional manag-ers continues to be impacted by the pandemic and subsequent budget constraints. I think they’ll want to know what we’re doing for them beyond sales calls and opportunity pipelines. For example, what do our marketing and social selling platforms look like? Can we grow a pipeline with Teams or Zoom calls? What have we done for them lately?

Jennings: The disruption has given all of us a chance to re-evaluate how we go to market. Our approach to team deployment will undergo lasting changes. We’re still a connected “people” business, as well as a techni-cal business that’s been given time to design new systems and processes to evaluate, service, inform and sell. Many of our old practices have been long overdue for a departure. I believe that reps are more open to the newest possibilities that technology has to offer.

IMARK Electrical Now: What resources and capabilities will be developed by leading rep agencies to help their manufacturers maintain and increase their market share in the current and near term?

McAuliffe: We’ll develop additional marketing capabilities for local direct user campaigns, such as CRM for cus-tomer and opportunity management/communication, as well as skilled technical sales capabilities for direct customer specification contact and demand creation.

Lessing: Virtual meetings aren’t going away—ever. So, like the cold call had to evolve, so does the modern sales call. The video meeting has to be efficient, relevant and timely. Produc-tion value is essential—e.g., centered camera, proper lighting, good audio with minimal background noise, etc. The family dog isn’t on the payroll and shouldn’t be part of the call, and folks should dress and present themselves like they want the order. Per Oratium’s Tim Pollard on the three pillars of successful virtual meetings, reps need to master their platform (Teams, Zoom, Webex, etc.), “craft the conversation” by rehearsing and refining their mes-sage, and create trust. Finally, the “marketing” in “sales and marketing” will also be critical for successful rep agencies. Are your contacts from the meeting in CRM? Have you set follow-up reminders and topics? Is it appropriate to send a sample in advance of the meeting? Did you ask if you could quote their requirements? I believe these are among the new skills successful salespeople will need in order to take market share in our new environment.

Jennings: A “start-up mindset” is where I want our company to be. Analytics help guide our decisions, but speed is what we’ll need to get the prize. We must be early and well-informed. The processes of connecting needs to solutions, people to ideas and data to reality as fast as possible will require knowledge and implementation of new digital “connecting” tools along with the ability to make informed gut decisions fast.

Henderson: I think that major invest-ments in technology—e.g., CRM and proactive manufacturer and customer reporting and digital communications—will be key.

Pollart: As agencies, we have to think long-range. The days of just working with EDs are over and nearly 60% of our time must be spent seeing end users so that we can drive brand preference; that way, when the con-tractor goes into an ED, he’ll ask for our products and go to our stocking ED partners. In essence, the contractor will be our salesforce; then, with the help of our marketing team, we’ll be hitting customers from all sides. This will end up being the new way to go to market and to support our ED partners.

IMARK Electrical Now: What are some of the key attributes of manufac-turers that have done the best job of helping your company to grow share during the pandemic?

Jennings: Flexibility, straight talk, and patience win the day. Not all manufacturers have mastered all three of these, but all have been given a fresh opportunity to learn and grow.

Henderson: The most supportive manufacturers have provided and supported the production and dissemination of digital content.

Lessing: According to recent research from Channel Marketing Group and DISC Corp. conducted for NEMRA, some of the top 2021 initiatives from manufacturers surveyed were new product introduction, e-marketing content for reps and distributors, and new product webinar content. Most of our manufacturing partners have these or similar initiatives. Many manufac-turers have pared down or eliminated traditional marketing departments, and I feel that that function is being pushed down to the reps. We’ll need new prod-ucts to open doors (or get customers on-screen), and we’ll need the content to support those sales efforts digitally.

McAuliffe: Good marketing collateral and product support have been key, as has ongoing support through employee retention, manufacturing up-time, and consistent inventory.

Pollart: The pipeline is broken due to COVID–19 and issues in China and became a worst-case situation. The factories that are doing the best job didn’t cut back inventories and fi gured out that having more finished goods (over 30 days of stock) in their pipeline is a good thing. So, whoever had extra stock in their warehouses and/or who could adapt faster is winning. Also, those who already had strong market-ing databases intact are way ahead of the competition. Factories that provide support to agencies with digital media will win in our new sales world.

According to a recent study by Coresight Research, 25% of the nation’s 1,000 shopping malls will close within five years (https://cnb.cx/31yVqju), and while office build-ings won't go away, many will have different layouts and floor plans. Following, our experts share their forecast for those sectors as well as any future bright spots they see in the construction market.

  • Don Henderson (president/CFO, Hossley Lighting & Power Solutions Inc.)—“We’ll be using information databases and technology (CMD/Dodge) to effectively analyze and deploy our resources in vertical markets—e.g., health care, educa-tion, food/beverage, information technology, oil/gas, renewables, etc.—as they ebb and flow. Our analysis currently shows that health care and education should remain strong in the short term. We need to stay ahead of the trends and adjust our strategy accordingly.”
  • Fran Pollart (managing partner, Pollart Electrical Sales)—“I think that people like being outside now and want to stay outdoors if the weather permits, so outside living will be more than just a deck on your house or chairs on the side-walk for restaurants. I also think that offices will change to more open and individual space for office workers. As much as people say that they want to work from home, this will pass, as people like and need the separation of work and home. Malls will die, open-air cen-ters will thrive and housing near open-air centers will continue to be a win for developers as people want to walk around and enjoy being outside and less reliant on driving.”
  • Matt McAuliffe (president, McAuliffe)—“From our position in the industrial automation, industrial MRO and construction markets, I believe that remodel and redevelop opportunities will drive increased construction spending. Many operational job functions will remain offsite or home-based, reducing capacity needs. Functions requiring collaboration (such as management, sales, marketing and design) will return to the office, but space, safety and comfort will become more important; accounting, finance and task-based engineering or design can continue to be offsite. Many of our industry’s specification influenc-ers will remain home-based, presenting a challenge to the specification sales team.”
  • Scott Lessing (COO, Ewing Foley Inc.)—“One of our biggest challenges has been dealing with the unknown, and this extends to various market forecasts as well. For example, a recent Moody's Analytics REIS report states that post-COVID apart-ment development in the U.S. is expected to be down 15.6%, office development will drop 10% and retail will fall 15.7%, while industrial development will increase by 3.6%. By contrast, a recent NEMRA survey of electrical distributors by Channel Marketing Group and DISC Corp. reported that the renovation market was strong, the new construction market exhibited some weakness and the industrial segment had the most weakness. In a word, ‘unknown.’”
  • Troy Jennings ww(co-owner, John Moore and Associates)—“I see the development or re-develop-ment of the suburbs as a bright spot. Smaller office buildings on affordable land could create new smart space design. Restaurants are likely already re-thinking their use of space (especially outdoors), which also requires affordable land. In our area, many shopping venues seem to have been ahead of the curve, opting for open-air designs versus traditional malls. Shopping malls could eventually convert to community, university, and even sports-related space.”
Susan Bloom
Susan Bloom is a 25-year veteran of the lighting and electrical products industry. Reach her at susan.bloom.chester@gmail.com.