Members of WIT & Co., a buying group comprised of independent plumbing, heating, and cooling distributors, recently convened in Phoenix for their annual Fall Networking Meeting. The two-day event consisted of committee and shareholders' meetings, as well as best practice sessions dedicated to innovative marketing, technology, and business techniques.
The lively speakers offered timely information on everything from improving sales performance to how to market to different generations. With attendees concerned about evaporating profit margins and a continuing weak economy, it was clear that the marketing and sales advice could not have come at a better time.
SHARING BEST PRACTICESKevin Roquemore, director of management information systems, WIT & Co., started off the best practice sessions by giving a presentation on cloud computing. "Cloud computing is perhaps the hottest trend in technology today. Yet, with all the emphasis on cloud computing, there seems to be very little clarity about what exactly 'the cloud' means, and great confusion over whether and why a hard goods distributor should concern themselves with 'the cloud.'"
Roquemore explained that the cloud is simply a set of computer hardware, software, and storage that is delivered over a network as a service. For distributors, there are several cloud-based services that may be of interest, including customer relationship management applications, e-mail/contacts/calendaring, store/backup, anti-virus/anti-malware, productivity applications (spreadsheets, word processing, etc.), databases, and enterprise resource planning.
"It is advisable to look into existing cloud services to see what benefit they can provide," said Roquemore. "It is certainly prudent when evaluating a technology purchase to ask, 'is there a cloud alternative that I can use that will fulfill this business need?'"
Adrienne Wilkes from Plumbing Distributors Inc., and Marianne Brummett from Wiseway Inc., followed up with a session devoted to utilizing mobile technology in the workplace. Wilkes noted that distributors can use smartphones and tablet computers to increase sales effectiveness, productivity, internal communications, and customer service. "By 2016, 257 million smartphones will be in use in the U.S., while 126 million tablets will be in use." All the more reason why distributors need to implement a mobile website, she noted, so customers can obtain the information they need, wherever they are.
Brummett shared her company's experience in using Eclipse mobile apps, which it is currently using for E-pad signatures and manifest signatures/processing. "Our goal is to eventually become paperless. We will be able to do this by imaging everything, from applications to packing slips to price sheets, and attaching it to the appropriate documents in Eclipse."
The audience was very eager to hear Dan Rice, Service Supply of Victoria, speak about the ways in which he has improved sales performance by revamping his hiring, compensation, and training processes. "You have to start with the right people, so we have changed our hiring practices. We used to find people with industry experience, but today, we look for attitude, aptitude, and allegiance, and we try to stay away from recycling industry talent. We've had to make some hard decisions, and over the last six years, we've changed out about 60 percent of our workforce to a type of individual who we think is trainable."
Rice has also created a pay-for-performance environment, in which raises are based on merit - not cost-of-living adjustments. They have instituted non-disclosure and non-compete agreements that every person in the company must sign, so it is possible to share most company performance data. "We believe that if people can't see the data, they can't improve it."
In re-tooling the sales department, Rice started calling the outside sales force relationships managers (RMs), and made them responsible for all aspects of managing a customer's account, from initial sign-on to collections. "We have found our payments improved dramatically because of the relationships that the RMs have with their customers." The performance-based compensation system for Rice's RMs is determined by inventory disposition and contribution to the margin, and higher commissions are offered on new accounts and key products.
Continual training is another key aspect of Rice's plan. "We believe that once you have the right people in place and have the right commission structure, training becomes the driver. Consistent training over time drives our shareholder value, but it's in a long-term process. Training has to be seen as a lifestyle, and we have training for 1-1/2 hours every week. All sales associates are required to attend our training sessions, and we do not pay overtime. We believe if you want to invest in yourself, you will come to training."
MARKETING TO DIVERSE CUSTOMERSRounding out the best practice sessions was Kelly McDonald, author of How to Market to People Not Like You. She focused on the rapidly changing demographics of the United States and how business owners need to be tuned into these trends if they want to stay in business.
She pointed out that each generation approaches how they buy things differently, and sales techniques have to vary depending on the generation. For example, the mature generation (age 67 and older) prefers face-to-face service and follow-through on all things. Baby boomers (ages 48 to 66) want a personalized "it's all about me" experience, as well as a wide choice of high-quality products. Generation X (ages 35 to 47) is skeptical and wants accountability and honesty, while Generation Y (ages 18 to 34) demands the most out of a company.
"Generation Y is unique in that it is racially diverse," said McDonald. "One out of three is not white, and they are more connected than any previous generation. They care about demonstrated social consciousness, which means they want to look at your company and see that you have a soul. What's the impact of your product on the environment? Do you give back to the community? They also want to see demonstrated diversity. Does the company promote women and minorities, or is it a bunch of guys who are male, pale, and stale?"
The loyalty of Generation Y must also be cultivated and earned, as these individuals are prone to switching on a whim. "They don't just switch brands, they switch jobs. They'll switch on anything, and it's really because the mobile technology carriers have taught them that there's no downside to switching. If you don't like AT&T, go on over to T-Mobile."
Another trend that distributors need to be aware of is the fact that by 2041, whites will be in the minority. "More than half of the growth in the total U.S. population between 2000 and 2010 was due to the increase in the Hispanic population," said McDonald. "There are 50.5 million Latinos in the U.S., which means the U.S. is the second largest Hispanic country in the world, second only to Mexico. This is why you are not going to hear anything less about the Hispanic market going forward, because this is not a fad, it's a trend. Trends are paradigm shifts."
To adjust to that new paradigm shift, McDonald said that businesses need to rethink how they're marketing their businesses. "Marketing has to adapt. Our nation is becoming diverse. Make sure all your marketing materials reflect that diversity. And I'm not just talking about racial and ethnic diversity, I'm talking about the way people look today. Did you know that 40 percent of adults under the age of 35 have four or more tattoos? This generation uses tattoos to mark moments in their lives. It's self-expression, and that should also be reflected in marketing materials."
In addition to being diverse, a lot of business is moving online, and in order to compete, companies need to focus on what Internet suppliers can't do, which is develop a relationship centered around providing solutions for customers' problems, said McDonald. "People do not need information, they need advice. Offer expertise. You are the expert in your field. People will pay for expertise."
Finally, McDonald urged that every distributor develop a mobile website, as more people are accessing websites on mobile devices than on laptops. "No one will have a laptop in 36 months. If your website is not optimized for mobile, you need to do this immediately."
Based on the warm reception given to McDonald and all the other speakers, it was apparent that WIT members took this advice on best practices to heart.