More than 80% of all electrical manufacturing firms use manufacturers’ representatives instead of company-employed salespeople to sell their products.  Some manufacturers use manufacturers’ representatives to cover at least some territories that are not served by their direct salespeople.  Many manufacturers use manufacturers’ representatives for all territories. 

Manufacturer representatives become the service bridge between the manufacturer and the electrical distributor.  Electrical distributors need reps to secure information from the factories in a timely manner, keep them up-to-date with new product launches, train their salespeople on product knowledge and selling skills, and identify market opportunities including building end-user relationships.   The questioned posed to 40 electrical distributors and 31 manufacturers were:  “What are the TOP 3 Qualities that make up your BEST Manufacturers’ Rep?”Electrical distributor and manufacturer responses were captured into the following categories with the percentage of research participants providing responses which were captured under each “BEST” category:

 

#	Distributors “BEST”  Rep Category	%
1	Provides Significant Physical Presence with Planning & Selling Skills/Product Training	100%
2	Keeps Distributor  Informed; Be Dependable & Responsive	73%
3	Possesses Right Values & Beliefs	48%
4	Partners with Distributor to Locate Market Opportunities	35%

#	Manufacturers “BEST” Rep Category	%
1	Have Technically Competent Sales Force	97%
2	Possesses Excellent Distributor, Specifying Engineer, & End-User Relationships	71%
3	Holds Strong Strategic Vision & Business Management Skills	61%

 

We also wanted to assist the electrical distribution industry in understanding the key factors independent manufacturers’ representatives value most from their manufacturers. Therefore we posed the following question to 54 manufacturers’ representatives:  “What are the TOP 3 Qualities that make up your BEST Manufacturer?” Rep responses were confined into the following categories:

 

#	Reps “BEST” Manufacturer Category	%
1	Treats Rep as a Valuable Channel Partner	82%
2	Supplies High Quality Products & New Product Development	74%
3	Provides Ease of Doing Business with World-Class Customer Service	57%
4	Affords Fair & Equitable Rep Compensation Plans	30%
5	Supplies Marketing & Sales Management Support	28%
6	Possesses Right Values & Beliefs	26%

We also asked these manufacturers’ representatives to “Name your BEST Manufacturer”.  We received 54 responses.  30 manufacturers were listed with Hoffman Enclosures capturing the most votes.  Following Hoffman as the leading vote getter was a tie for second among Ferraz Shawmut, Legrand, Lutron, RAB Lighting, and Southwire.   

Chris Brown of ABC Electrical Contractors has stops to make today at two electrical distributors. He needs to pick up material at both distributors that he requested earlier in the morning to be ready at Worst Electric Supply by 11am and at Best Electric Supply by Noon.

 

At his first stop, Worst Electric Supply, two counter salespeople are immersed in a conversation about last night's Yankees-Red Sox game. No other customers are at the counter. It is 11:10am.  Chris looks right at them, but receives no eye contact for what seems like an eternity to him.Chris feels acid building in his stomach. He pops a Tums and waits. He thinks of his customer waiting at the job-site. Finally, one of the counter salespeople grunts, "What do you want?" Chris explains that he’s here to pick up his order. He adds that he telephoned at 7:30am today about this material and requested a will-call for 11am. The counter salesperson casually looks around the counter and disdainfully responds that he doesn't see Chris' order. At Chris' irritated request, the salesperson finally gets around to locating his order. Chris has been at Worst Electric Supply for 28 minutes.  He leaves at 11:40am

 

It's a different story when Chris walks into Best Electric Supply at noon. The counter area is bustling with customers, but Chris is still immediately greeted at the counter.  “How can I help you today, Chris?" Sam, the counter manager asks with a big smile. Chris tells him that he wants to pick up his will-call order. Sam looks at the will-call staging area and says, "I'm sorry. Your order is not ready as we promised. I'll run back to the warehouse and bring it right out." Sam returns shortly with Chris' order and says, "We're sorry that we did not meet your service expectations. Here's a $20 Service Guarantee because we didn't have your order ready. We hope to continue to earn your business in the future by doing it right 100% of the time. That's our service commitment, Chris." Chris has been at Best Electric Supply for 8 minutes.  He leaves at 12:08pm.

 

Where do you think Chris Brown will take his future business? He will go to the electrical distributor that makes a service commitment and stands by it, Best Electric Supply.   Surely in this economy Worst Electric Supply not only lost a customer, but will soon end up in the corporate junkyard of electrical distributors.

 

Farmington Consulting Group (FCG) has helped electrical distributors implement customer service guarantees since 1993.  Our customer satisfaction survey research indicates that service guarantees favorably influences the volume of business they do with distributors. When asked “Does our Service Guarantee Program favorably influence the volume of business you do with us?” 39% of our client survey respondents checked “yes” Clearly customer service guarantees generate more electrical distributor sales.  We have found that customer service guarantees transform tertiary customers into secondary customers, secondary customers into primary customers, and continues to build strong loyalty among primary customers. 

 

What is a Customer Service Guarantee? A customer service guarantee is a set of two promises:  1.  A commitment by a company to its customers to make good on a promised level of service.  2.  A commitment to compensate its customers when the first promise is not met.  Successful companies promote their service guarantees to everybody.  The classic service guarantee example is Fed-Ex:  “If you want your package absolutely, positively to be at someone’s doorstep the next day, then Fed-Ex it!”  The company even guarantees a specific time for their overnight deliveries to reach the customers, or the delivery is free.

 

Why are Customer Service Guarantees Important?   There are three reasons to implement customer service guarantees: 

1.   Provide Customer Focus.  Customer service guarantees force everyone in your organization to focus on customers.  Knowing what your customers want is essential to providing them with service guarantees.  The first step is to conduct a third-party customer satisfaction survey (read Making Sure Customers Love You in January Electrical Wholesaling) to determine a) exactly what your customer’s want, and b) how you are currently performing based upon their wants. Once your survey results are tabulated through customer satisfaction indexes (CSI) and customer dissatisfaction indexes (CDI) for each service category, you can then design a customer service guarantee launch.  

2.  Set Service Quality Performance Metrics.  Customer service guarantees generate feedback.  A guarantee creates the goal and sets the service levels for your customers’ expectations.  A service guarantee compels you to create a system to discover errors.  It forces you to discover why each service shortfall occurred and improve each service delivery process to prevent further service errors. Service guarantees require your company to gain control of its service quality. 

3.  Create Key Competitive Advantages.  Our customer satisfaction survey research also reveals that electrical distributors who implement customer service guarantees acquire two to three competitive advantages within one year.Examples of service guarantees that can help your company achieve competitive advantages are:  Counter Will-Call Service, Order Fill Rate, Order Accuracy, Timeliness of Deliveries, Emergency Deliveries, Invoicing Accuracy, and Treatment of Credits & Returns.

Examples of Customer Service Guarantees

25/25 Will-Call Guarantee:  We know that electrical professionals are continually frustrated when they arrive at a distributor to pick up a will-call order, only to find out that it isn't ready. Then they have to waste valuable time sitting at the counter, waiting for their will-call order to be pulled and processed. This won't happen to you at any Best Electric Supply counter and that's a guarantee.  When you place your phone order, specify that it is a 25/25 order and Best Electric Supply guarantees it will be ready in 25 minutes or less.  If you arrive in 25 minutes and your 25/25 will-call order is not ready to go, we will issue you a $25.00 Customer Service Guarantee.

Order Fill Rate Service Guarantee: 100% Fill Rates are the only acceptable performance level from your electrical distributor.  Best Electric Supply guarantees that on our TOP 250 Products we will never be out of stock.  If we are out of stock, we will issue you a $25.00 Customer Service Guarantee.

 

Order Accuracy Guarantee:  100% Order Accuracy is what you should expect from your electrical distributor.  Best Electric Supply guarantees your Order Accuracy.  The item that appears on your ticket will be the exact item and quantity you receive.  If we don't get it right, we will issue you a $25.00 Customer Service Guarantee Certificate. 90-Minute Delivery Guarantee: 

 

On-Time Delivery is also the only acceptable performance level from your electrical distributor.  Best Electric Supply guarantees delivery of orders placed between 8am and Noon will be delivered within 90 minutes or we will issue you a $25.00 Customer Service Guarantee. 

 

25-Minute Emergency Service Response Guarantee:  Because you cannot schedule power or equipment failures, we offer a 24-Hour Emergency Service.  Call Best Electric Supply 24 hours a day, 7 days a week at …….   Leave a message and a Best Electric Supply salesperson on-call will be paged.  That salesperson will respond within 25 minutes, or we will issue you a $25.00 Customer Service Guarantee. Invoicing Accuracy Guarantee:  Best Electric Supply guarantees an accurate invoice the first time.  If we fail to provide you with an accurate invoice we will issue you a $25.00 Customer Service Guarantee. 

 

Instant Credit on Returns Guarantee:  Best Electric Supply guarantees that will issue you a credit on stock material purchased from us and returned to us within one business day of receipt of material.   If we fail to issue an instant credit, we will issue you a $25.00 Customer Service Guarantee.5 Key

 

Success Factors.  Your customer service guarantees must contain the following five key success factors:

1.      Must Be Unconditional.  A good service guarantee has no conditions.  They are for every customer, first time or long-standing.  If you cannot guarantee all elements of a specific service unconditionally, don’t bother developing one.  

 2.      Must Be Specific & Easy to Understand.  A good service guarantee is written in simple, concise language that pinpoints the promise.  As with the above customer service guarantee examples, you must promise something specific, such as a 90-minute delivery guarantee, order fill-rate on 250 products, will-calls picked & staged within 25 minutes, 25 minute emergency response guarantee, all shipped orders will have both the items and the quantity 100% correct, etc.  These are all measurable and no “gray” areas exist.  Customers know precisely what to expect.  Customer service guarantees define each employee’s role and responsibilities in delivering superior customer service.  Employees know precisely what is expected of them.   

3.      Must Be Meaningful.  A good service guarantee process is meaningful in two respects:  1) it guarantees those aspects of your service that are most important to your customers, and 2) it has financial significance to your customers by providing a payout when a service promise is not kept.   A payout that creates financial pain when errors occur is a powerful statement to customers and employees alike that your company demands customer satisfaction.  Putting a company’s profitability at risk provides every employee with a solid incentive to improve upon service shortfalls.

4.      Don’t Over-Promise.   It's important to offer customer service guarantees that are within your capacity to deliver. If you can't consistently meet your service guarantee, it will advertise to your customers that you have a service weakness.  One example is ABC Electric Supply (fictitious name for a real electrical distributor) recognized that order accuracy was of primary concern to his customer base. However, ABC Electric surmised that installing a service guarantee prematurely would be a mistake because their error rate was too high. ABC had no measurement system in place, so they installed a tracking system. ABC then combined a new tracking system with a warehouse incentive plan to provide individual and team rewards for high order accuracy. With a successful tracking system in place, they now could define root causes of most of the errors and provide solutions. Within months, the order accuracy rate for this electrical distributor greatly improved. ABC then implemented a service guarantee the competition could not match.

5.      Provide Employee Service Guarantee Training.  Before introducing your service guarantees to your customers, you must first thoroughly provide customer service guarantee training to all your employees.  Every employee should be encouraged and empowered to administer customer service guarantees.  Your people must cheerfully and proactively give out service-guarantee pay-outs when the service level is not what your customers expect.  This is a critical step, because your aim is to provide hassle-free service that will delight your customers. Don't ever burden your customers with having to ask for a guarantee pay-out.  A customer who is already dissatisfied should not have to jump through hoops to receive his service guarantee.  Recognize and even reward employees who cheerfully and proactively give them out. 

 

FCG has developed a 4-hour customer service guarantee training module for electrical distributors that motivates every employee to take active ownership as a service guarantee provider. Customer service guarantees will significantly shape the service quality of your company, improve customer satisfaction, and increase sales and profitability. Don't think it's crazy to pay customers for your service failings. You will go out of business if you don't guarantee customer satisfaction. Very few customers will take advantage of you. They don't want the money; they want an electrical distributor who can deliver on the services promised by doing things right the first time, every time.Customer service guarantees make customers choose your business over all other electrical distributors.  Customer service guarantees launch a chain reaction that engenders truly breakthrough service for your customers. And if you aren't willing to stand behind this mission, you will soon join Worst Electric Supply as another distributor dinosaur.

Based upon our 26 years conducting actionable customer satisfaction research for the electrical distribution industry this article will address: 

1. Why customer satisfaction is your most important company measurement.

 

2. Why your customer satisfaction survey process must be an objective, structured, continuous process.

 

3. The key factors most important in determining whether your customers continue to do business with you.

Most Important Measurement 

 We at FCG have been involved in the measurement of customer satisfaction during the last 26 years.  I have been fortunate to work with many well respected, leading independent electrical distributors in conducting their customer satisfaction research including Springfield Electric Supply Co., Western Extralite, The Hite Company, Granite City Electric Supply, Summit Electric Supply, and Electric Supply, Inc.  Additionally, during 2008 the leading distributor of electrical products worldwide, Rexel selected us to do their customer satisfaction research.

Customer satisfaction is your determining factor for sustainable profitability. If customers are not satisfied, they will find other distributors that will meet their needs. Poor Customer Satisfaction Index (CSI) ratings are a leading indicator of future decline even if current financial health indicators are positive.

Winning companies view the current economic downturn as an opportunity to gain market share. They conduct customer satisfaction studies annually to identify what their customer values and how they are currently performing. They then execute specific actions to provide their customers with more value earning them more business.

For electrical distributors whom we have continuously tracked customer satisfaction measurement annually, we find one common denominator – they achieve continuous, sustainable competitive advantages.  We have found through our electrical distribution research that maximizing customer satisfaction will increase sales, improve profitability, and grow market share. 

 

We are now in the midst of a prolonged economic downturn, the likes of which none of us have ever witnessed.  Most electrical distributors are immersed in cost cutting strategies, which will likely have a negative impact on customer satisfaction as employees are laid off, deliveries are reduced, etc.

 

Look at the cost cutting measures that the U.S. airline industry has undergone and the concurrent downward spiral in airline customer satisfaction.  Yet Southwest Airlines is ahead of all other US airlines in customer satisfaction with a Customer Satisfaction Index (CSI) rating of 79% during 2008.  Unlike the other airlines, Southwest did not reduce aircraft, cut back on flights, raise ticket prices, charge for a second checked bag, etc.  The entire airline industry recorded a dismal poor 62% CSI rating versus Southwest’s 79%.  As a result, Southwest continues to grow and remains the industry leader in profitability.  Southwest Airlines is the lone bright spot in the U.S. airline industry due to their strategic approach to lead the industry in customer satisfaction.   

Customer Satisfaction Index (CSI) rating is derived by adding the number of Excellent (rating = 5) and Very Good (rating = 4) scores and dividing by the total number of responses to obtain a CSI percentage. 

 

Whereas Southwest Airlines achieved a 79% CSI rating during 2008, our leading electrical distributor clients achieved between 72-74%.  These electrical distributors concurrently achieve high ROTA (Return on Assets).

 

Like Southwest Airlines, smart electrical distributors will seize this economic upheaval as a great opportunity to take market share from their competition by achieving higher levels of customer satisfaction while those around them provide lower satisfaction levels. 

 

Both the airlines and electrical distribution navigate in mature industries.  Are you going to be a Southwest Airlines electrical distributor that garners high customer satisfaction and results in continued sales growth, improved profitability, and sustainable competitive advantage?  Or are you going to be among the dinosaur “legacy” carrier electrical distributors that only focus on cost cutting measures during 2009 and is the recipient of declining customer satisfaction?         

Measurement Process 

Customer satisfaction is a formalized, objective tool for accurately measuring how your customers rate your people, your customer service processes, and how you compare to your competition by customer type (primary, secondary, tertiary), by market (contractor, industrial, institutional, etc.) and by branch location..  

 

The primary intention for customer satisfaction is to collect information on how an organization is performing in the eyes of its customers and what specifically needs to be changed for customers to give the company more business. 

 

Both mail surveys and online surveys are effective quantitative customer satisfaction measurement tools.  Quantitative research produces statistically reliable information that can be generalized to a larger population.

 

Mail surveys are a quantitative research data collection method in which respondents’ complete questionnaires on paper and return them via the mail.  We enclose a self-address business reply envelope and a one-dollar bill as an incentive to complete and return mail surveys.  Offering an incentive is very important.  Research results show it will typically lift response rates by 10-15%.  Survey research also indicates that even a one dollar bill as an incentive garners a better response rate than an entry for a sweepstake drawing.

 

Mail surveys are best used when the electrical distributor’s target population is very well defined and easy to mail to with a contact name, company name, and company address.  Our average electrical distributor response rate with mail surveys is 39.7%.  According to the Journal of Business Logistics average mail survey response rates are 14%.

 

Online surveys are best used when the electrical distributor’s target population is internet savvy and an email list is available.   Online survey responses are faster than mail survey responses. Our average response rate with online surveys is 23.1%.  We believe the lower response rate is indicative that online surveys do not provide the cash in hand incentive of mail surveys. 

 

Customer satisfaction surveys should be sent to all your active customers and your results should be analyzed by customer type, by market, and by branch location.    

 

We are used by leading electrical distributors because they recognize we provide the following value as a third-party research firm:

1. Our user-friendly customer satisfaction survey ensures a higher response rate. 
2. As a third-party, we are able to protect identities so customers are assured confidentiality and therefore respond candidly and honestly.
3. Customer Satisfaction Indexes (CSI) is benchmarked against 34 other distributors.   
4. Our survey results are summarized and evaluated accurately and objectively with a detailed action plan to increase customer satisfaction and grow sales revenue by branch location.

Most Important Measurement Factors 

An industry’s key success factors (KSF) are competitive factors that most affect an industry member’s ability to prosper in the marketplace. 

To be successful here are three KSF that drive electrical distributor customer satisfaction: 

 

1. Friendly, Responsive & Knowledgeable Service Providers including person who answers the phone, counter salespeople, inside salespeople, outside salespeople, warehouse & delivery people, credit people, etc. Knowledgeable.

 

2. Order Fulfillment Process that provides High Order Fill Rates, High Order Accuracy Rates, and On-Time Delivery.

 

3. Prices that are Competitive, Consistent, and Accurate.

At a minimum your customer satisfaction survey design must include questions that rate these three KSF.           

 

At some electrical distributors we have recently found that they have conducted their own customer satisfaction surveys.  They reported high levels of customer satisfaction but declines in sales and profits.  Upon closer observation we discovered that they were polling only their best customers and that these customers were not providing candid feedback because they were reluctant to deliver bad news and not do it anonymously.

 

It’s not the Measurements.  It is what you do with the Measurements!

Taking specific actions to improve upon any low customer satisfaction ratings or competitive disadvantages by customer type, by market, and by branch location is the most critical step.  Your specific customer satisfaction improvement action plans provide your customers with more value and will earn you more business from your competition.

 

Customer satisfaction is your largest source of sales growth, profit, and sustainable competitive advantage. If customers are not satisfied, they will find other companies that will meet their needs. Poor CSI ratings are a leading indicator of future decline even if current financial health indicators are positive.

 

The greatest opportunities abound when your competition is running for cover and waiting out this economic storm.  Now is the optimal time to enlist a third-party research firm to objectively determine what your customers’ value most, how you are currently performing, and what specific actions you must take to gain more business.

 

We all know a company’s first impulse when bracing for an economic downturn is to cut costs.  Smart electrical distributors also employ a dual guerilla tactic to take market share.Both electrical distributor revenue and profitability are at risk during an economic storm.  Cost cutting can only take a distributor so far.  It is a short-term strategy.  Revenue growth comes about during an economic downturn by intelligently taking market share. 

Winning is not cutting costs.  It’s taking share from your competition.  Taking share is “The Art of War”.  War is the ultimate competition.   “The Art of War” is a Chinese military study that was written by Sun Tzu around the year 500 BC.  It is the first and one of the most successful books on strategy.  Sun Tzu was the first to recognize the importance of changing conditions in a competitive environment and positioning strategies. Even today under the most competitive of circumstances most electrical distributors do not know very much about their competition.  They fail to exhibit strategic judgment by systematically observing their competition, collecting important data, and analyzing results.  The essential component of any sound corporate strategy is a thorough, objective analysis of the competition, benchmarking your performance versus the competition from your customer’s viewpoint, followed by a comprehensive positioning strategy.  

There are five (5) tools to assess your competitor’s strengths and weaknesses in every target market (i.e. mid-size commercial contractors, large commercial & industrial contractors, residential contractors, manufacturers, utilities, institutional, etc.) in order to develop both offensive and defensive actions:

1.      Know Your Enemies = Competitor Profiling

2.      Rate Your Enemies = Competitor Analysis

3.      Rate Yourself Versus Your Enemies = Customer Satisfaction Benchmarking Survey

4.      Position Your Enemies = Competitor Positioning Strategy

5.      Defeat Your Enemies = Strategic Positioning Strategy

To gain access to the complete Electrical Wholesaling article please visit our Resources section.

 We just completed a research study with 24 electrical manufacturers asking them one open-ended question:  “What are the TOP 3 Qualities that make up your BEST Distributors?”

All of the manufacturer responses fell under seven (7) categories.  Study findings indicate, electrical manufacturers most value:

1.  Strategic Planning for Mutual Success (92%)

2.  Effective Sales Force Deployment (58%)

3.  Relationship based upon Mutual Trust, Respect & Loyalty (46%)

4. Inventory Stock Position (46%)

5. Strong Financial Management (33%)

6. Customer Service Culture & Logistics (17%)

7. Distributor Business Processes (13%) 

The overwhelming majority of the research sample (92%) most highly value electrical distributors who engage in a corporate strategic planning process along with joint distributor-vendor strategic business planning.  If you would like a copy of this research study please go to http://fcgltd.com/about/contact

The single greatest failure in strategic planning is:

Strategy is conducted entirely with “inside-out thinking” and does not gather “outside-in feedback” from channel partners – your reps and distributors. 

According to Brian DiBella:  “In January of 2007 I took the position of VP/GM of Wiremold. After the first few months in the new position it became clear that Wiremold did not have an effective long range plan and little direction for the future. In order to actively participate in the plan development process I thought it best to bring in a consultant to manage the process and facilitate working sessions.  

Farmington Consulting Group came highly recommended from various parties in the electrical industry. When I described the situation to Tom O’Connor, he agreed to help and recommended that he focus part of his efforts on an external SWOT analysis. From there we developed a questionnaire designed to give me insight into the perception of our sales team and customers about Wiremold. This external, customer facing approach proved to be the critical decision in the process. This was an excellent recommendation from Tom. Through Tom’s confidential interview process and instant credibility with our sales team and customers, we were able get candid insights and feedback about Wiremold’s perception in the market. Although the news wasn’t good, it was critical to hear and understand the truth. This input was then used to create a long range plan that was aligned with our strategic objectives and that would address the market’s perception of our ability to execute.  

One of the cornerstones of the new plan was an initiative called Customer 1st. Since completing the long range plan and focusing on execution/implementation, we have achieved much. The Customer 1st initiative has really taken hold and the market has recognized a change in our culture. Wiremold is easier to do business with than ever before. Our marketing organization has been transformed and is the strategic driver of the business. We have implemented organization wide metrics and tools to measure performance. The metrics are supported by a variety of processes and management reviews. Discipline and execution have clearly become organizational competencies. I am convinced that we would not have made certain strategic decisions, nor put in the place the metrics and processes to drive". 

To find out how we can profitably impact your strategic planning process, email me at tomoconnor@fcgltd.com or telephone at 860.676.7876. 

 Why does the leading plumbing, heating & waterworks distributor partner with FCG year after year to conduct an annual customer satisfaction study? 

1.  Consolidated Supply Co (http://www.consolidatedsupply.com) understands the only way to increase market share is to continually increase customer satisfaction.
2.  We are the leading distribution industry market research firm:

·      Our user-friendly customer satisfaction surveys ensure a high response rate.  Our average response rate is 38.7%. 

·      Customers are assured confidentiality and therefore respond candidly and honestly.

·      Customer Satisfaction Indexes (CSI) is benchmarked against other distributors.   

·      Survey results are summarized and evaluated accurately and objectively with a detailed action plan to increase customer satisfaction and grow sales revenue by branch location.

According to Karolyn Neupert, Chairman of the Board & Owner of Consolidated Supply Co.

"Information is our friend! Nobody recognizes or uses that knowledge better than Tom O'Connor and his company, Farmington Consulting Group (FCG).  The Win-Win is in the information that comes back from our internal and external customer surveys.  It's priceless.The heart of success for business owners and top management is listening to their teams who get it done for them. Next step, manage that information. Tom is clearly the BEST SHEPHERD out there at leading that journey. This is where it counts most in business success.  Tom's magic is in orchestrating what we hear. He and his company are an outstanding resource, a company with a GOLDEN HEART.My company is celebrating 80 years of EXTRA-ordinary service and that's due in large part to Tom and his TOP TIER group leading the way for eleven years. It will afford us the opportunity to keep going for at least another 80 plus years.  My  heart overflows with gratitude and reward for Tom's shepherding. It's a treasure and paramount to the success of my family owned business, Consolidated Supply Co.Nobody does it better than Tom O'Connor and his ability to recognize the power of team and the information from that team."

We are the J.D. Power & Associates for the plumbing, HVAC, and electrical industries when it comes to customer satisfaction studies.   We help distributors with one branch location up to 300+ branch locations increase sales.

Customer satisfaction is your determining factor for sustainable profitability.  If customers are not satisfied, they will find other companies that will meet their needs.  Poor Customer Satisfaction Index (CSI) ratings are a leading indicator of future decline even if current financial health indicators are positive.

Smart companies view our current economic downturn as an opportunity to take market share.  They conduct customer satisfaction studies to identify what their customers’ value and how they are currently performing.  They then execute specific actions to provide their customers with more value earning them more business.

We survey your active customers or a statistically sound random sampling of your customer base so that you receive scientific valid information on what customers as a whole think about your people, your customer service processes, and compare your performance to your competition.  We then identify specific action plans so that you can consistently exceed expectations in every critical customer service area. 

We are pleased to report that Rexel USA today engaged us to conduct their 2008 Customer Satisfaction Benchmarking Study of their seven divisions and 300 branch locations.

Why is the leading distributor worldwide of electrical supplies partnering with FCG?

1. Rexel seeks a better understanding of its customers and markets to develop a differentiation growth strategy across the United States. Your differentiation strategy is an integrated set of actions designed to deliver goods and services that your customers perceive as being different in ways that are important to them.
2. FCG is the leading electrical distribution industry market research firm:
   • Our user-friendly customer satisfaction surveys ensure a high response rate. Our average response rate is 38.7%. According to the Journal of Business Logistics average mail survey response rates are 14%.
   • Customers are assured confidentiality and therefore respond candidly and honestly.
   • Customer Satisfaction Indexes (CSI) is benchmarked against channel partners.
   • Survey results are summarized and evaluated accurately and objectively with a detailed action plan to increase customer satisfaction andgrow sales revenue by branch location.

Customer satisfaction is your determining factor for sustainable profitability. If customers are not satisfied, they will find other companies that will meet their needs. Poor Customer Satisfaction Index (CSI) ratings are a leading indicator of future decline even if current financial health indicators are positive.

Smart companies view the current economic downturn as an opportunity to take market share. They conduct customer satisfaction studies to identify what their customers’ value and how they are currently performing. They then execute specific actions to provide their customers with more value earning them more business.

Customer intimacy is the largest source of your sales growth, profit, and sustainable competitive advantage. We survey your active customers or a statistically sound random sampling of your customer base. You receive scientific valid information on what customers as a whole think about your people, your customer service processes, and compare your performance to your competition. We then identify specific action plans so that you can consistently exceed expectations in every critical customer service area.

In today’s tough distribution industry environment, manufacturers, manufacturers’ representatives, and distributors can’t afford anything less than outstanding performance.

Are the managers in your organization doing a good job coaching your people? Most managers could use some coaching themselves, especially those companies that don’t have effective performance measures in place to evaluate and reward employees. Managers at those companies often base evaluations on quick snapshots of what they casually observe during the day.

To keep your team member’s productivity at the highest level you need to implement a formal coaching program in your organization.

Formal coaching is a performance management partnership between every manager and their associates. It develops and monitors mutually agreed-upon monthly goals and expectations that are directly linked to the achievement of overall company, department, and individual key performance measurements.

Successful business coaching is a mutual goal setting collaborative process. You listen actively to each other in reviewing results that achieved or exceeded performance expectations. Ask questions, share views, and negotiate solutions upon reviewing results that did not achieve performance expectations.

To achieve the best results, utilize the following monthly coaching report format:

MONTHLY COACHING REPORT

Name:	Coach:
Date:	Next Meeting Date & Time:
Accomplishments:
Goal/Action Tasks:		Due Date:

The manager completes the coaching report and provides a copy for the associate. He/she schedules follow-up coaching session with date & time. Then the manager checks on progress weekly, gathering feedback on what’s going well and what’s not going well. He/she reinforces positive progress and develops action plans for goals not going well.

When you get right down to it, coaching is the bulk of a manager’s job. Performance management means providing constant, thoughtful feedback and factual data on individual performance.

If your managers and associates set mutually agreed-upon performance goals and execute formal constructive coaching sessions, your employees will consistently attain or exceed their performance targets. Manufacturers, manufacturers’ representatives, and distributors who continually focus on performance management will maximize their profitability through our current uncertain economy and beyond.

FCG has trained hundreds of managers for manufacturers, reps, and distributors and would welcome any counsel you require in implementing your formal coaching program.

Since we published the NEMRA/NMG Eliminating Wasteful Activities in the Representative and Manufacturer Sales & Marketing Channel at www.nemra.org manufacturers and manufacturers’ representatives have taken and are taking the following 31 steps to eliminate wasteful channel activities. Please help us all eliminate wasteful activities by commenting on what you are currently doing in your company to eliminate waste TODAY?

System Integration Processes
Manufacturers		Reps
Conduct an “Eliminate Waste” Day at your company in which everyone has to discuss what’s repetitive, redundant, time wasting and/or stupid and how to fix it.		Conduct an “Eliminate Waste” Day at your company in which everyone has to discuss what’s repetitive, redundant, time wasting and/or stupid and how to fix it.
Install 2 computer monitors at each desktop to speed response times for your sales team.		Install 2 computer monitors at each desktop to speed response times for your sales team.
Spiff Rep internal support teams to get customers to sign up for online customer service center where customers check orders, get tracking information, request quotes, pricing, returns, etc.		Encourage electrical distributors and end-users to take course on EDI to enter quotations and sales orders to make process more efficient and eliminate manual entry of quotations and sales orders.
Create quotations electronically into your business system so Reps can enter your website through password security and acquire quotes eliminating paperwork and phone calls and allowing 24x7accessibility.		Update Rep website and/or ask Manufacturers to update their website with Manufacturer’s minimum order and freight prepaid terms. Insure customer’s secure access to correct pricing and quotations.
Implement and train personnel on EDI to make the quotations and sales order entry process more efficient and accurate.		Implement EDI through programs like NEMRA's IRIS.  Get IDEA membership and IDX Access.
Send EDI order confirmations to Reps using EDI transaction sets instead of email or fax.		Reps download EDI transaction automatically into business system sales records to track sales performance.
Add order on-line tracking.		Add order on-line tracking.
Add "track it" type link to your email signatures to promote the capability to customers.		Add "track it" type link to your email signatures to promote the capability to customers.
Document imaging program to delete file storage, paper use and cost of labor for filing.		Document imaging program to delete file storage, paper use and cost of labor for filing.
Significantly reduce SPAs. One SPA for a region or market area.		Avoid special pricing.  Sell benefits.
Execute a file maintenance project to address incorrect catalog numbers, pricing files, account numbers and related fields. These types of errors generated by rep databases should be documented, flagged, and corrected on a daily basis reducing error rates significantly.
Communication Processes
Manufacturers		Reps
Allow online customer access to and use of all drawings, technical data, installation information, digital images, catalog numbers, UPC numbers, etc.		Create one centralized database to capture all contacts, quotes, faxes, etc.
Implement CRM System.		Implement CRM System.
Join IDEA.		Join IDEA.
		Provide PDA’s to outside salespeople.
		Update Reps web-site with manufacturer’s minimum order and freight prepaid terms.
Switch from paper newsletters to email newsletters.
Maximize use of WebX type meetings.
Review and implement NEMRA Guidelines i.e. Planning the Business Year, New Product Intro, Productivity through communications and performance, etc		Review and implement NEMRA Guidelines i.e. Planning the Business Year, New Product Intro, Productivity through communications and performance, etc
Sales Management Processes
Manufacturers		Reps
Set clear sales, product, & profitability growth goals and effectively communicate them to Reps.  Provide monthly report cards to Reps.		Effectively communicate principal sales, product, & profitability growth goals; set individual performance goals; and provide monthly report cards to each salesperson.
Implement formal Coaching Program.		Implement formal Coaching Program.
Adopt Regional Manager Pre-Visit Agenda outlining goals and objectives for territory visits, also include flight #s, times, who will pick up, where to stay, etc.		Adopt Regional Manager Pre-Visit Agenda outlining goals and objectives for territory visits, also include flight #s, times, who will pick up, where to stay, etc.
Ensure all Regional Managers have completed RPM. Encourage continuous learning.		Ensure all owners and managers have completed CPMR.  Encourage and reward continuous self-improvement.
Review and implement NEMRA Guidelines i.e. Planning the Business Year, New Product Intro, Productivity through communications and performance, etc.		Review and implement NEMRA Guidelines i.e. Planning the Business Year, New Product Intro, Productivity through communications and performance, etc.
Selling Skills & Product Training Processes
Manufacturers		Reps
Utilize NAED online training for computer skills training (Excel, Word, PowerPoint, etc).		Utilize NAED online training for computer skills training (Excel, Word, PowerPoint, etc).
Take 1 Training module on NEMRA University.		Take 1 Training module on NEMRA University.
Require all salespeople to complete at least 1 skills-building workshop or seminar each year.		Ensure all salespeople have completed CSP.
		Participate in manufacturer sponsored sales & product training.
Sales & Marketing Activities Processes
Manufacturers		Reps
Adopt the NEMRA New Product and Promotion Guidelines.		Conduct product launch meetings including marketing materials, defined expectations for product seeding, feedback, & training.
		Provide timely information to specifiers, end-users, and distribution sales force on new product launches, promotions, literature, & sample kits.
Sales Activity Reporting Processes
Manufacturers		Reps
Eliminate one report, then one more, then one more until you only require or send out reports that are required to run the business. Reports should be electronic—no paper.		Eliminate one report at a time.  Reports should be electronic—no paper.
Condense Rep monthly reports into quarterly reports.		Utilize the reports available from your Manufacturers, and provide feedback on how they could be improved.
Electronically email agent commission statements and POS statements rather that printing out paper copies and including with check. When check or electronic payment arrives, agent already has the statements to reconcile.		Integrate electronic commission statements from Manufacturers (instead of manually keying it in every month) to provide quarterly update to distributors on how they are doing with your agency.
Develop a system whereby each month, each agent’s reports are copied into a folder and a zip file is sent to each principal (or post the reports on your extranet where Reps can download) with all their monthly reports in one email. Develop macros to format each report saving precious time in formatting each individually. Agents can then receive their reports within the first two days of the month depending on where the end of the month falls.
Eliminate sending copies of credits to Reps.  Most Reps file in a “circular file” or never look at them at all. Result will be saved man-hours and postage.  You can send to Reps upon request.		Request monthly credit summary transmitted electronically from Manufacturer if necessary as part of commission summary.

 

Manufacturers, manufacturers’ representatives, and distributors are all wrestling with developing and executing a winning strategy in this struggling economy.

We have found that most strategic planning initiatives result in failure because:

1. Strategy is conducted entirely with inside-out thinking and does not gather outside-in feedback from channel partners.
2. Analytical tools gathering internal and external feedback are not used.
3. There is no execution responsibility and accountability beyond the planning session.
4. Strategic plans are not continually measured and linked to a scorecard system.

 

A manufacturer recently retained us to help with its strategic business plan process.  They had performed an internal SWOT analysis but ignored gaining external feedback.  And as a result they were focused on the wrong key strategic initiatives.  We conducted confidential market research with their manufacturers’ representatives and distributor partners, facilitated a strategy session and got them focused on the top three strategic initiatives that will result in increased market share.  They are now well on the road to successful implementation.

We also recently held a strategy session with a manufacturers’ representative after conducting market research with all of their principals.  As a result, this month they announced a strategic move to reduce the quantity of lines they represent from 13 to eight manufacturers.  This industry leading decision will allow them to reposition their resources and assets to their premier manufacturers, dramatically increasing customer service, end-user activities, specification and demand creation.

After conducting a customer satisfaction study for a distributor FCG recently facilitated a strategy session and helped create a customer service guarantee program.  It clearly defines their unique value in the marketplace.  Results are in and despite our struggling economy their customers are now rewarding them with increased business.   

Whether you are a manufacturer, manufacturers’ representative, or distributor the following 10-steps guarantee a winning strategy in this struggling economy:

1. Clearly and concisely define your Strategic Objectives – your beliefs, purpose, and aspirations.
2. Conduct confidential External Market Research to determine an outside-in view of your company’s strengths, weaknesses, opportunities, and threats as well as a competitors’ analysis.
3. Conduct confidential Internal SWOT Analysis with every member of your strategy team to gain an inside-out view of strengths, weaknesses, opportunities, and threats.
4. Compile and compare the outside-in and inside-out views of strengths, weaknesses, opportunities, and threats and agree-upon the Top 5 Strengths, Weaknesses, Opportunities, and Threats.
5. Develop Critical Success Factors – the strategic issues critical to the future of your organization.
6. Craft a Strategic Goals Statement to clearly and concisely define the direction of your organization to achieve your strategic objectives.
7. Develop a 3-Year Balanced Scorecard to measure your Financial (Shareholder Value), External (Customers & Markets), Internal (Capabilities & Business Processes), and Learning & Growth (Continuous Improvement) Performance Goals.
8. Identify Top 3 Strategic Initiatives.
9. Assemble Strategy Execution Teams to support achievement of 3-Year Balanced Scorecard.
10. Conduct Quarterly Strategy Execution Team Meetings to review progress and ensure achievement of Balanced Scorecard results.

 

Start an uncertain 2008 in the right direction by following the above 10-steps to ensure your corporate strategy is a winning one.  And please do not hesitate to call on us for any counsel.

The electrical industry continues to wrestle with the need to accurately compile and communicate point -of-sale (POS) and point-of-transfer (POT) reporting.

POS is information about the end-customer transaction, including shipments directly from the manufacturer to the end-customer (direct shipments) as well as shipments from a distributor’s branch and/or distribution center to the end-customer.

POT is information about the transfer of product within a company including shipments between a distributor’s distribution center and a branch and transfers of inventory between branches.

POS/POT is designed to be an easy method for distributors who cross rep territory lines (such as buying in one territory and selling in another) to report back to manufacturers where the product is being sold. POS/POT information provides manufacturers with accurate sales information that they can use in compensating their reps and getting their sales assistance. When these reports are not correct reps are not accurately compensated for their sales, breeding distrust between the reps, manufacturers, and distributors.

NAED with its Manufacturer’s Council and NEMRA launched a white paper a little under two years ago to eliminate POS/POT wasteful activities with specific guidelines in compiling and sharing this crucial information among channel partners. Has POS/POT gotten better, same, or worse?

According to Jack Floyd, One Source Associates, who was a member of the NAED POS/POT Committee: “I have invested over 100 hours during 2007, my bookkeeper/executive assistant over 120 hours, and my VP of Stock & Flow over 50 hours on POS/POT issues. This equals seven weeks of lost sales management, marketing and sales planning, customer contacts and visits, joint sales calls, sales analysis, new product launch efforts, etc.”

Are Jack Floyd and One Source Associates alone with this claim? Certainly not! The POS/POT situation appears to be deteriorating. During this past year I have visited and worked with countless reps. What reps do, whether they tell manufacturers or not are the following:

   1. Move business from distributors with POS/POT issues to distributors that share accurate POS/POT data with them.
   2. Move rep resources from manufacturers that do not want to resolve rep POS/POT issues in a timely manner to manufacturers that resolve POS/POT issues.

One manufacturer that has successfully tackled POS/POT issues is Ferraz Shawmut. They made a decision to have an outside marketing company receive, cleanse and process their POS data into meaningful reports each month.

According to Kathy Bibaud, Ferraz Shawmut’s Channel Process Specialist:

“We worked with them to decide on the format of the finished reports. They require an industry standard format with regards to how the data from the distributor should be sent. When a new distributor is added to our POS, we hook them up with the marketing company to start the process and to get the files in the format needed. From there, the marketing company processes the information into reports that we developed together. By the 20th of each month, I receive the reports, slice and dice them into territories and include in a zip file, sent electronically, with other monthly reports sent out to each and every agent”.

Kathy added:

“We have 34 agents and I have had only one agent challenge some of the data on the reports. This issue was strictly based on the agent’s interpretation of the data. Once explained, no other questions or issues have arisen. The agents are very pleased with our new process. They receive their reports by the 2nd or 3rd day of the month so they know what their commission on POS is before receiving their check. This also is true of the direct sales commission reports which are handled in a similar process making their monthly reconciliations clean and simple”.

As consolidation in the electrical industry continues, POS/POT challenges will only increase. It is time to resolve this growing problem to the benefit of all manufacturers, manufacturers’ representatives, and distributors.