Canadian Electrical Wholesaler

 

Sept 17, 2018

David GordonBy David Gordon

For many, corporate success is typically defined as sales success, as sales revenue is an easily identifiable and discussed/shared metric. But in a quest to grow sales, and due to competitive pressures, gross margins for many distributors have eroded, making gross profit dollars more scarce for investment back into the business. And with operating costs increasing and investment requests accelerating, finding ways to increase your gross margin to impact net profitability is critical for long-term success.

Recently I participated in an interview with Tony Corley from Epicor and Jim Lucy from Electrical Wholesaling. The topic was “8 Habits of High Gross Margin Distributors.” Tony has written a white paper highlighting his observations of strategies that help distributors in their quest to improve profitability… essentially a roadmap. Tony’s eight habits include:   

• establishing a pricing committee   
• defining a profit margin goal   
• use “list less” pricing whenever possible   
• understand that not all customers and products are created equal   
• establish thresholds and approval processes   
• understanding value-added services – and how to charge for them   
• understand how to monetize customer service   
• walk away from unprofitable business

Tony came at the issue from an ERP company observational trend viewpoint. Not “how” they are using their ERP systems but more from the processes that top performing distributors utilize. (Watch for more on Tony’s eight habits in the next issue of CEW.) 

I shared observations from a strategic and practical viewpoint from what we’ve seen, recognizing that (admittedly) I’m not a pricing guru… not close. From a corporate strategy, sales and marketing viewpoint, we look at pricing strategy through a different lenses and I shared complementary perspectives which are highlighted in this document titled Channel Marketing Group – Improving Distributor Profitability (www.electricaltrends.com/wp-content/uploads/2018/08/Channel-Marketing-Group-Improving-Distributor-Profitability-1.pdf). Topics here included:   

• 8 causes of lack of high profitability   
• the pricing challenge includes “plugging the leaks”   
• the “whack a mole” approach and why it isn’t a viable business strategy but is needed (sales is creative!)   
• too many cooks can water down the pricing strategy. Sometimes a benevolent dictatorship is needed… and is needed to force selling vs. order acceptance and mediocre profitability   
• the need to identify root cause problems with your margin issues   
• the power of decimals and how they can improve gross and net margins by .25-.46% bps   
• overrides and how they cost distributors net profit   
• contract and SPA pricing maintenance   
• the current, and future impact of eCommerce on pricing strategies… and the need for consistency across your ordering channels

Listen to interview   

• If you signed up for the webinar and want to re-hear, click here

• If you missed the session, register for the webinar and then listen to it here

Let us know your feedback. Our goal is to add to your internal discussions and share some “thought nuggets.

”What are your biggest pricing challenges (or what you see as the industry’s biggest challenges) and/or inhibitors to improving margins?

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..

 

OlsonBy Katrina Olson

A recent CEW article by David Gordon caught my eye. The headline was, Are Your Sales and Marketing Teams Inhibiting Growth?

As a marketing consultant, writer, and trainer, I recognized the challenges and barriers that David was writing about. We agree on many issues (and their causes) facing electrical distributors and marketers. But I also hear from marketing people all the time that the C-Suite is hindering their efforts which, in turn, hinders the company’s growth.  

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2018 Electrical North American MeetingOn October 29-31, 2018, the AD Electrical North American Meeting drew over 1,000 attendees. This event attracted 151 first time attendees and representatives from over 362 companies in the United States, Canada and Mexico.

Attendees benefited from a variety of agenda topics, including: Network Meetings, Emerging Leaders Session, and Country-specific Business Meetings. New to this year’s agenda was a SPA Optimization Workshop led by industry veteran Mo Barsema. In addition, members and suppliers also attended a panel discussion on managing and measuring your digital success.

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Changing Scene

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 EFC Announces 2018 Marketing Awards Winners

2018 Marketing Awards WinnersElectro-Federation Canada (EFC)’s Marketing Awards program recognizes member organizations that demonstrate marketing excellence and innovation within the Canadian electrical manufacturing and distribution industry. Winners of this year’s awards were recognized at EFC’s 8th Annual Future Forum, held earlier this month. (Shown in photo: EFC President and CEO Carole McGlogan with representatives from Bartle & Gibson, winners of the Integrated Marketing Award — distributor under $50 million.)Electro-Federation Canada (EFC)’s Marketing Awards program recognizes member organizations that demonstrate marketing excellence...

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Peers & Profiles

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First and foremost, sitting down with Susan Uthayakumar feels more like sitting down and conversing ...
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 Young Leaders: Taylor Gerrie

Taylor GerrieOn a regular basis, our publications profile members of our industry through their responses to a Q&A. It’s a way of recognizing industry movers and shakers, and helping our readers get to know them better. 

Recently we launched an initiative with Electro-Federation Canada's Young Professionals Network to include profiles of up-and-coming leaders. We provided the list of questions below to Taylor Gerrie, Automation Account Specialist at Gerrie Electric Wholesale Ltd. in Burlington, Ontario. Here are Taylor’s responses.

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Susan Uthayakumar, President of Schneider Electric Canada: Driving Success

Susan UthayakumarBy Owen Hurst

First and foremost, sitting down with Susan Uthayakumar feels more like sitting down and conversing with a friend than conducting an interview with the Canadian president of one of the world’s largest electrical manufacturers. Of course, she exudes the confidence and knowledge her position demands, but equally identifiable are an open and engaging nature.

In a recent sit-down, we learned a little about Susan’s history and what drives her to succeed.

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Looking Back

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The best memory I keep from CEDA is the way that they accepted me when I came into the business. ...
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Looking BackThe best memory I keep from CEDA is the way that they accepted me when I came into the business. The welcome they gave to me, all of them men. (In those days there were not many women in business.) This welcome I will always remember. CEDA has played a very important role in my success.

One year our conference was in Hamilton, Ontario. Mr. Caouillette, our speaker, got lost and instead of going to Hamilton went to Toronto. I think that that was the longest cocktail hour that CEDA ever had… waiting for him to arrive. Certainly that night the head table and everyone were in good spirits.

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Looking BackLooking BackIn the 1930s to 1940s, CEDA’s Western Canada membership was very stable with old line independent companies like Horsman, Ashdowns, Brettell, Marshall Wells, Electrical Supplies Ltd., etc.

Small electrical distributors just were not acceptable for membership as they did not carry the main-line manufacturers’ goods, publish a wiring device catalogue, or employ four to five salesmen as CEDA requested.

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