Canadian Electrical Wholesaler

David Gordon

Ocotber 13, 2017

By David Gordon

In the electrical industry, capturing business is a fight for market share. And to win that fight you need the most effective sales organization. One that can get into “the right person at the customer” (be they and end-user, contractor or distributor) to prove your difference. At the same time companies need to do this cost effectively. There is a balance that needs to be maintained. For many manufacturers, the answer is manufacturer sales agents (reps).

To gain a perspective from someone who has “been there, done that,” we reached out to Jason Obetz who has worked for electrical manufacturers (and a distributor in another industry) in senior sales management roles. Jason is currently participating in Channel Marketing Group’s Executive-in-Residence program, sharing his expertise, while he is pursuing his next opportunity within the industry. Jason most recently was the EVP Sales for Omni Cable and prior was VP Sales for All Current.

His thoughts:

Face time with the customer is expensive and limited so your approach is critical to sustained growth. To be clear about “face time,” we are not talking about connecting with your customer on a mobile device; rather, your company’s representative physically visiting the electrical distributor or engineer. I have heard many debates on which sales force (independent agent or direct employee) is more effective in growing sales and which one protects your sales expense line on the P&L. In reality, should it be a debate or is it a function of company and market resources. Size does matter for a direct salesforce — the number of people needed to adequately cover the market times the investment as well as answering the question of, “Is there enough revenue potential in that marketplace to generate the ROI for the direct salesforce investment?”

It is estimated that 70% of electrical manufacturers employ independent sales agents to specify, demonstrate and promote their products on the path to maintaining existing sales and developing new business. And let’s be honest, there are some geographic markets that do not represent significant spend in your product category and couldn’t support a direct salesperson even if you had 100% market share.

The reality is the most effective representation generates the lower cost of sale with the greatest sustained growth.

Agents “eat what they kill” and are paid on what they sell regardless of the many costs associated with capturing the order. As a manufacturer, you can limit your upfront risk by not having a fixed sales cost that could be unproductive and ineffective resulting in a negative impact to your bottom line. Is that really true…? Is your risk mitigated because there is a wall built between your P&L and independent sales representation?

Some of you are probably nodding your head and saying yes. I can hear your thoughts now: “If my agent is not producing, my sales expense remains low. If needed, I can terminate the agent and have another agent hired in 30 days.” All of this maybe true, but what are the costs you already incurred with the time invested to have a non-productive agent? Have you measured lost sales or realized the diminished stock and support position in the channel? Both are difficult calculations to quantify that could place a value on your current representation. What if other agents already have your competitors?

The more effective approach to performance management is in this simple equation: Objectives + Performance = Results (O+P=R).

There has long been a tradition of manufacturers meeting with their agents at NEMRA, NAED and other national meetings to create a framework for developing annual plans. There are some excellent agents that have detailed account strategies, market plans and an objective road map that they will work during the year. How does your management supervise their representatives and ensure focus on your products? It’s important to have clearly defined objectives that start with understanding account potential, market availability, call frequency and the ability to convey your value proposition.

Next, a written sales strategy created by the agent that depicts their intended route to success. The strategy is a methodical plan of the customers, projects and products that will deliver the intended results. In addition, the strategy should include any additional costs to serve, marketing and promotions, incentive agreements and manufacturer participation costs. Lastly, a monthly check-up on progress and  quarterly review are needed to ensure the annual plan is being followed and achieved. Yes, this cadence of follow-up and review with the agent takes organization and discipline. Perhaps the manager can plan the review during one of their drop-ins and very expensive “ride along.” This is not to suggest the manager should not conduct visits with his agent. Rather, a planned visit by both the manager and agent that is agenda specific and focused on achieving the annual objectives.

In the end, your agent typically offers a lower variable cost upfront. There are potential hidden costs and a clear financial downside to an underperforming agent. The keys to success in any sales organization is having clearly defined objectives, a logical sales strategy and a consistent review process of the performance.

Whether you are a distributor or manufacturer, what is your formula for effectively managing your sales organization?

If you are a salesperson, what are the traits you most desire (respect) in a sales manager? What “support” / management and performance metrics do you want from your sales management?

Companies that are the most successful have a compassionate metric management culture. One where everyone clearly understands what is important, what key metrics are, and can openly discuss initiatives to achieve common goals. Sounds simple. Unfortunately ,challenging for many.

David Gordon is President of Channel Marketing Group. Channel Marketing Group develops market share and growth strategies for manufacturers and distributors and develops market research. CMG’s specialty is the electrical industry. He also authors an electrical industry blog, www.electricaltrends.com. He can be reached at 919-488-8635 or This email address is being protected from spambots. You need JavaScript enabled to view it..

 

Hubbell

 

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“Our agreement with Hubbell Lighting opens the door for the food and beverage industry and other sectors to benefit from our continuous disinfection technology, helping them keep consumers even safer,” says Scott MacGregor, vice-principal of the University of Strathclyde and leader of the research team that developed the technology.

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Study


A confirmation: the winds of change are now howling.

Several years ago, in a workshop at Electro-Federation Canada’s annual conference, a roundtable session described and debated the numerous disruptive technologies that are forcing us to think differently.

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Michael Gentile, President and CEO of Philips Lighting Canada, has had a long and distinguished career in the electrical industry and more recently the lighting industry. None of this is by chance. Always in decision-making circles since beginning his career, Michael spends the first 10 years first at Siemens, and subsequently in lighting at Osram as Vice President Finance and Vice President Sales and Marketing. After that, he joins Philips Lighting.

Michael agreed to share a few moments with us to discuss his career trajectory, the industry, trends, worries, and wishes. A tour of his career is also a tour through a key period in the industry and a reflection of its adaptability to new technologies — from an expert's point of view.

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Changing Scene

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Peers & Profiles

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Laura Dempsey

Owen Hurst

Laura Dempsey has been working as an outside sales representative for E.B. Horsman & Son for over 15 years, and is a member of the BCEA U40 network of young professionals. She lives in Langley, BC and is proud of her position and work with E.B. Horsman, particularly as she is the second Dempsey generation to work for the company.

Laura’s mother Shelly has worked at E.B. Horsman for over 25 years, and instilled in Laura a determination to succeed. Laura followed in her mother’s footsteps after witnessing how much her mother enjoyed her work and the people she works with at E.B. Horsman.

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Laura Dempsey

Line Goyette

I've known John Sencich since CEW began publishing. He agreed from the outset to be part of the newsletter’s Editorial Board. His contribution was regular and sustained. Always present to answer my technical questions, and refer me to the right person for additional information as needed. Always available despite his role as senior leader of an influential company.

Over the past five years, many industry insiders have cited John Sencich when I asked them to name someone who had made a difference in their lives or had inspired them as a leader.

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The path towards digitalization has put the electrical supply channel at an important crossroad: the entire electrical value chain (suppliers, manufacturers, distributors, customers) will need to strongly consider how to move from a traditional model that has served the market well for decades, towards a new model that is connected, smart and highly efficient. But how does the industry evolve from a traditional model to an integrated ecosystem?

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EFC 2018 Scholarship Program

This year Electro-Federation Canada (EFC) will award $156,250 across 62 scholarships supported by manufacturers, distributors and associations.

The annual EFC Scholarship Program reflects an industry that understands its responsibility to attract future talent. In the face of technological, demographic, and socio-economic evolution, the employment landscape is in constant transformation resulting in substantial challenges for companies as they work to define and redefine their recruitment practices. Furthermore, as competition for the brightest and the best of the next generation of business leaders intensifies, it’s more important than ever to engage young people. 

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