Farmington Consulting Group

Rexel Executes Differentiation Growth Strategy

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?

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.
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.

How to Implement a Successful Coaching Program

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.

31 ways YOU can eliminate waste TODAY!

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.

Winning Strategy in this Struggling Economy

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:

Strategy is conducted entirely with inside-out thinking and does not gather outside-in feedback from channel partners.
Analytical tools gathering internal and external feedback are not used.
There is no execution responsibility and accountability beyond the planning session.
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:

Clearly and concisely define your Strategic Objectives – your beliefs, purpose, and aspirations.
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.
Conduct confidential Internal SWOT Analysis with every member of your strategy team to gain an inside-out view of strengths, weaknesses, opportunities, and threats.
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.
Develop Critical Success Factors – the strategic issues critical to the future of your organization.
Craft a Strategic Goals Statement to clearly and concisely define the direction of your organization to achieve your strategic objectives.
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.
Identify Top 3 Strategic Initiatives.
Assemble Strategy Execution Teams to support achievement of 3-Year Balanced Scorecard.
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.

Is POS/POT getting better, same or worse?

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.