This month’s article is the sixth in a serialization of the author’s life and career as an independent manufacturers’ representative.

Reprinted with permission from The Reputable Rep, Success in Sales and Life, by Sig Schmalhofer.

Sales by Segment

New Construction

The products installed in residential and commercial projects travel a similar route. They are manufactured, sold through a network of factory salespeople and or manufacturers’ reps to wholesale distributors, and ultimately to contractors who install them. The competition is fierce. There are many people that influence product decisions. Price is always an important factor, but is not the only consideration.

Here’s a list of key product influencers in the supply chain:

1. Distributors

Wholesale distributors aligned with particular manufacturers can sway product selection with their loyal sub-contractors who are eager to support them and the products they endorse.

2. Sub-Contractors

Personal experiences, good or bad, that sub-contractors, such as plumbers and mechanicals, have with particular products can be a big part of the final decision. In today’s market, there is an increasingly popular negotiating ploy called “value engineering” where sub-contractors have a greater influence in selecting products that will allow a project to pencil in “at or below” budget.

3. Specifying Engineers

They have a critical impact because they author the rules of engagement: specifying the product or the criteria for a product they will approve. Open specs allow for alternative products provided that the products meet specific requirements. Closed specs are rare, but if they are in play, will spell out criteria that only one manufacturer can meet.

4. Builders/General Contractors

Depending on the project, they can play hardball, overriding every other influencer. In some cases, that works to their advantage. In others, it may backfire. Delivery problems can stall projects. Quality issues, product certification/building code hiccups, or incorrect applications can lead to a job nightmare. When these kinds of problems arise, the general contractor or builder playing hardball can blame no one but themselves, which hits them hard in the wallet.

5. Architects

Products that can influence the size of rooms or will require provisions for chimneys or vents may require architect involvement. An example would be a whirlpool tub that is “special” in its size or configuration.

Rebates

This is the wildcard. I call it, “Feeding the Cartel.” Distributors negotiate programs with factories that provide them with extra discounts, but sub-contractors and builders can be swayed by a competing factory’s incentives that go directly to them.

Managing the Moving Parts

In today’s market, the reputable rep is best equipped to create product consensus by working with all of these decision influencers. The obvious place to start is at the drawing board. For commercial jobs, that’s the specifying engineer. For residential jobs, it’s the builder. But believing a product will ultimately be purchased because it is specified is akin to believing in the Easter Bunny. It’s a start, but only a start. Managing the moving parts is paramount. The reputable rep understands that. He will work his way up and down the supply chain to insure his product is purchased.

“From my perspective, the reputable rep must have the ability to cover all segments: distribution, contractor and engineer. Another important factor, particularly in the residential market, is the end-user/consumer. The advent of the internet has prompted the consumer to do extensive research when selecting a product. Social media can make or break a product line. To prevent issues from going viral, potential problems downstream must be addressed promptly!” — John Warner, Director of Sales, Laars

As John says, being a complete reputable rep who manages all the moving parts in the supply chain with a sense of urgency is the key. The philosophy that “problems are opportunities” wins the day.

“I’ve spent a lifetime calling on engineers that specify products for projects that can be seen from the freeways that crisscross Los Angeles. Much like any business segment that the rep is involved in, relationships win the day. Those relationships are by-products of the trust earned over the years at ASPE meetings and in engineer offices reviewing blueprints. Emergency visits to job sites to address surprises on jobs are my favorite challenge. Some reps shy away from calls on engineers because instant gratification is rare. But, I’ve always believed that specs are annuities.” — Ron Bradford, Signature Sales

Repair and Remodel

The repair remodel business is far less glamorous than the new construction segment. There are very few 80-yard touchdown passes to be had on in this side of the business. Three yards and a cloud of dust is the norm. But — and this is a huge “but” — this side of the business represents the lion’s share of the business. Example: There are approximately nine million water heaters sold every year. An average new construction year in the U.S. produces roughly one million homes. That’s one million water heaters. Bottom line, eight out of nine water heaters are sold in the replacement market. It’s true that many products that reps sell are skewed the other way.

Products like ABS and PVC pipe are heavily involved in new construction.

Other categories might be mixed 50/50. Any way you slice it, the repair remodel segment must not be ignored. In this discussion we’ll talk about wholesaler counter business, multi-truck repair plumbers, and luxury products sold through showrooms.

Rep agencies typically do not target Maintenance/Repair/Operations distributors (MROs) like Grainger and HD Maintenance Supply. Because of that, I’m setting them aside. Likewise, big box/hardware stores are not part of our discussion.

• The repair/remodel dynamic.

Calling on repair plumbers represents a sizeable challenge for distributors, manufacturers’ reps, and factory salespeople alike.

Depending on the market, repair/remodel (R&R) plumbers might outnumber new-work plumbers by 30- to 50-fold. Many R&R plumbers work out of their homes, making rep sales calls difficult. Because of that, most manufacturers’ reps carve out a generous amount of time at city counters, particularly with wholesalers marketing primarily to this sector. Understanding the critical importance of this side of the business, Signature Sales recently added a rep whose sole function is calling on multi-truck service and repair plumbers. The goal, of course, is education; educating the R&R contractors on the variety of products represented that could benefit them in their businesses. To be successful in the repair market it is critical for the rep to be aligned with the distributors that keep their counters busy!

Showrooms

Follow the bouncing ball. National distributors, particularly Ferguson, have made it a priority to expand their showroom business. I’m guessing they’ve spent lots of money analyzing this segment. They’ve figured out that it’s trending higher and higher. My advice: follow the bouncing ball. It’s likely filled with opportunities and sales dollars.

Like all business segments, there are challenges. Sometimes the key associates are on the phone or with a client. Patience is an agonizing virtue. While waiting, reputable reps attend to phone calls, texts and e-mails.

Carry Windex and paper towels in your car. Making the products you have on display look “spiffy” will separate you from the herd of salespeople that hit and run. Demonstrate to the showroom people that you will go the extra mile to help them. And — train, train, train. Train salespeople how to read your catalog. Ram home the features and benefits of your product that help them close a sale. Train them in the art of selling, and just as important, sell them on you. Hit-and-run salespeople are also prevalent in showrooms.

If you’re easy to reach and eager to solve problems, you’ve got a leg up on the competition. Service what you sell.

That may include talking to the showroom’s homeowner customer or even going to a jobsite or home. Get custom builder and designer leads from your showroom friends. Creating demand for your products will help the showroom and help you! Don’t take a half in, half out approach. Either commit to the showroom business or get out of it. Lack of commitment is a waste of your time and the customer’s.

“I was expanding my plumbing business to include a line of appliances. I met with a rep I’ll call ‘Mr. Big,’ who represented the incumbent vendor. Mr. Big told me we needed to support his product exclusively. Then he bluntly asked, ‘If I provide this product to you, what will you do for us?’ That was the conclusion of a short meeting.“I then met with a second vendor in the same product category. He started the conversation with, ‘Here’s what I’m going to do for you!’ He told me it would not be in my best interest to be sole sourced. We worked together to develop a business plan that was good for both of us.” — Gregg Ferguson, Ferguson Enterprises

Story Time: Saving Water

My dearly departed friend Tim Samut worked for me for many years. He was the master of asking smart questions that would sniff out huge sales opportunities. In addition to being a dear, dear friend, he had a nose for business, an ability to recognize sales opportunities, and a gift for finding a hidden treasure beneath a rock.

Timmy was in the central coast doing a counter day. One of his featured products was the Laing recirculating pump. A nondescript man (Mr. Cambria) came to the counter and picked Timmy’s brain about the ins and outs of the pump’s operation and installation. Timmy pressed Mr. Cambria to explain why he was so interested. Mr. Cambria gave Timmy a business card and told him to drop by his office at his convenience.

It was well publicized that the city of Cambria was struggling with a water shortage. Timmy never underestimated an opportunity, and this sales call was no different. He solicited the help of Bob Hutslar, Laing’s national sales manager, who joined him at the meeting. The population of Cambria was about 6,000 at the time. Since a great deal of cold water goes down the drain while people wait for hot water for their showers and dishwashing, Mr. Cambria determined that it would make sense to install Laing Auto-Circ recirculating pumps into every home in town. The city hired a team of plumbers to do the installations.

The order was for over 3,000 pumps — a sale of over $500,000! And yes, the order was shipped through wholesale distribution. Bottom line: keep your ears open, ask smart questions, and connect the dots that separate opportunity and success.

Story Time: The Gas Company

Sadly, salespeople walk past sales opportunities daily without recognizing them. They lack clear vision. They lack creativity, curiosity or both.

“Of all the characteristics we look for in choosing a member of our team, curiosity is probably most important. It is also one of the best indicators of success.” — Bruce Carnevale, Executive Vice President and COO, Bradford White Corporation

When I was in the distribution business, I was will-calling water heaters I needed for a customer. On the way back to the office, I happened to pass by the gas company in Santa Fe Springs.

I wondered what I might be able to sell them. How about water heaters?

Since the gas company lights pilots for appliances, maybe they provide or sell them as well. This turned out to be the coldest of cold calls that turned into the biggest of big deals.

With my truck full of water heaters in the parking lot and dressed like a truck driver (jeans and tennis shoes) I walked through the front door of the giant utility to do some fact finding. I was shuffled around from person to person until I met a secretary who gave me a hot tip, “You should talk to Elsa. She’s in the market for water heaters, big time!”

I was directed to another building where Elsa was located. I walked into a side, unlocked door. The first person I met directed me to Elsa’s office.

I gave her my business card, shook her hand, and said, “I understand you’re in the market for water heaters.”

Her response was amazing and shocking. “Oh my goodness, you must be a mind reader! I’ve been wondering where in the world I could purchase large quantities and get them quickly.”

I was baffled. “How many are you looking for?”

She smiled. “200 a week for the next 10 weeks.”

I was mystified. “Really?”

“Oh yes, we have a new program I’m administrating. We will be providing free water heaters to any family who is economically needy, living beneath the poverty line. The response has been phenomenal. We’ll run out of funding well before we run out of applicants. Please send me a quotation for your 30- and 40-gallon gas models.

“Last year’s program was for wall furnaces. This year, it’s water heaters. We already have agreements with licensed contractors to do the installations.”

“I’m heading to the office right now and will have a quote to you this afternoon!”

“Perfect. I’ll review it.”

After returning to the office, I faxed her a competitive quote. The following morning, I had purchase orders in hand for 200 water heaters a week for the next four weeks.

That was the beginning of a beautiful relationship!

After reading this story, you’re probably saying, “I don’t think so, Sig.” The absolute reality is that this story is 100 percent true! Unbelievable?

Yes! But, nonetheless, 100 percent true.

Was I lucky? Absolutely! But what I’ve learned in my career is that the harder I work, the luckier I get. The reputable rep lives by this adage.

MANA welcomes your comments on this article. Write to us at [email protected].