Independent manufacturers’ reps Kurt Kroemer and Gary Coval have a keen appreciation for the relationships they enjoy with the manufacturers they work with.
Kurt Kroemer (left) and Gary Coval head CEP Sales, Inc., Zionsville, Indiana.
The two, who head CEP Sales, Inc., Zionsville, Indiana (a suburb of Indianapolis), are quick to acknowledge the healthy relationships their agency enjoys with its principals. Consider their words:
- “We have been blessed with high-quality manufacturers to sell for, learn from and grow with, so we feel fortunate about this. If there is anything I might wish they were a little more appreciative of in our relationship, probably the only item that comes to mind is that they have a better understanding of how difficult it can be to find, break into, manage, and grow new customers. The challenges today are difficult. The personnel at our customers are often changing or working remotely. Breaking into new accounts is time-consuming and hard! When our principals come out and ride with us, we often have meetings set up and it seems easy to fill a few days or a week, but the efforts it took to make this happen can easily be overlooked.” — Gary Coval
- “When it comes to appreciation for what we do, that means having an understanding of what it takes to walk in another man’s shoes. Sure, I wish manufacturers understood all the time and effort we put into bringing a new opportunity to quote. We might have 100 emails to get to 10 phone calls to get to one account visit to pick up a print to quote. At the same time, we know manufacturers are not just sitting by their email, waiting on our RFQ. Today, everyone wears many hats, so the coordination it takes to win new business falls on every department.” — Kurt Kroemer
Together these two men can boast more than half a century of experience as reps. As a result, they’ve had plenty of time to develop their opinions of the business and the manufacturers that they work with.
As he looks back at his start with the family agency, Kroemer notes that “Sales had always been part of our family make-up and the need for travel was understood. Even from my college days, I anticipated that my career path would take me into industrial sales. I degreed in engineering from Purdue University; however, most of my electives centered around marketing. Since I wanted to work outside the family business before joining it, my first job following graduation was selling electrical connectors for a German manufacturer.
The CEP Sales team (left to right): Josh Valentine, Gary Coval, Bruno Cosentino, Kurt Kroemer, Cory Hernandez, Zach Schroeder and Case Roberts.
Succession Planning
When I was 30, Wayne Kroemer was 60 and we both felt it was time to start the succession planning of the agency. We were fortunate that my brother Bill and both brothers-in-law enjoyed the representative business. The company was successful through the 1990s and the transition to the second generation was smooth. The principal relationships stayed strong with the help of a close family-owned business.”
For his part, Coval recalls, “I started with the agency in 1994 after working 10 years with Marathon Oil Company in various sales, training and service positions. My initial months with the agency were spent traveling with our existing salesmen at the time and visiting our principals. I also worked on a few special projects as we were transitioning our Illinois territory and I did some analysis on this. We didn’t have a formal training program for new hires at that time, so it was a lot of learning on the go!”
With that as their start, Kroemer and Coval find themselves today as the owners and partners of the more than 40-year-old manufacturers’ rep agency. In that capacity, they’ve found themselves facing many of the same concerns and challenges as their rep peers. For instance:
Finding new employees — According to Coval, “This is a million-dollar question. We have been successful using LinkedIn in locating quality salespeople in the regions we have searched. Obviously, with three sons-in-law as part of our third-generation sales team, that avenue has been a success story as well. Given that our second generation was two sons and two sons-in-law, that has proven to be a successful unplanned strategy. In addition, we have worked with a few sub-reps and each of these have come from our industry affiliations (e.g., MANA), from some of our other principals, and even from some of our customers. When you have lived in, traveled and grown in a territory for more than 40 years, you can develop and utilize a great deal of resources.”
On-going product training, in this case at a steel foundry, are integral to CEP’s success.
Kroemer adds, “Gary and I have been fortunate in that our own sons-in-law had an interest in the business. They were able to shadow our daily work schedule and learn the business prior to making the career move. This covered three of the five needed employee positions. The other two were found by word of mouth and interviewing through the LinkedIn recruiting application.
“Bringing on new, non-family employees has been a challenge in itself. My personal position of being a representative changed into one of a human resource manager. Hiring, training, teaching, and being a mentor all fall into new roles of growing a representative firm. It could not have been done without Gary, who was able to share the new responsibilities.
Identifying prospective principals — Both reps point to their agency’s MANA membership as a benefit when it comes to locating prospective principals to work with. According to Kroemer, “Finding principals has really never been an issue. We have been with MANA since the start of the agency, and principal leads seem to flow to us every week. Our interest in a new principal stems from a need in the field should we find a manufacturing process or need which we cannot currently support. The world of 3D printing and additive manufacturing seems to be the latest and fastest growing segment. LinkedIn is also a good source for principal leads. However, the best fits still seem to come from word-of-mouth, especially from our current customers.”
Importance of MANA
Coval adds, “MANA has been our best avenue for finding quality principals as we have grown, and a number of leads have come in from the association. We find that companies that utilize MANA understand the business model, have the appropriate channels in place and know how to assist and prepare our salespeople. We have some principals as a result of our long-time experience in the markets we serve. We have been aware of their abilities and the timing was right for each of our companies to join and grow together. Last, a few of our principals started as customers. As we grew together and learned about each other, we embarked on a relationship when the opportunities made sense for both parties.”
Retainers/shared territorial development fees — The agency owners voiced a bit of a different view from many other reps on this subject. For instance, according to Coval, “We have only done this in our early years on a few rare occasions when the time commitment warranted it. We always felt if we were doing our job, we didn’t necessarily need retainers up front as we would build the trust and commitment and the commissions would come. More recently, we did take on a new line and handle existing accounts at a reduced commission for three years on a set schedule to determine if there was a fit for both companies. New customers were always handled at full commissions. We have grown every year and we are now on year five — this has proven to be a great relationship.”
A similar view was provided by Kroemer: “I might have a little different opinion than most on this subject. I believe if a principal is good fit for our customer base, and they support our selling efforts well by closing new business, then I do not really expect any upfront retainers or fees. However, what I do want is more security on the back end, with a minimum of one year or more termination clause. If we develop new business, then we should be protected for the long term.”
Agency succession plan — Since this agency has moved from first, to second and now a third generation, this is a subject that both men feel strongly about. According to Coval, “Having a succession plan is not only critical, but the plan must be a living, breathing document. As busy as everyone is and has been, it is often difficult to make time to do the necessary planning. We started our plan in earnest nearly eight years ago as our two older partners had announced plans to retire in successive years. Not only do you have to work on the exit plan for the outgoing, but your strategy for the future has to dovetail with this. Do you sell the company, run it until all are ready to retire, or do you expand and grow with a new sales team? We obviously chose the latter. We began discussing the appropriate details and then determining what it would take to continue with growing the company. We are now in our third generation and are actively pursuing future succession plans and transition for the longevity of the company with our five younger salesmen.”
Expressing similar strong views on this subject, Kroemer added: “When we made our decision to hire five new salespeople, one of our first steps was to discuss our plans with our top principals. Not only for me personally, but the careers of the new guys are at stake. It was important to know that using an independent sales channel would continue to be a long-term strategy at our top principals. All of our principals appreciated our new plan and supported our efforts with time and training.”
Changes in the business — Interestingly, when both men are asked what changes they’ve experienced in the practice of their professions, they both cite advances in technology as altering the way business is conducted. According to Kroemer, “I have seen the representative business change in many ways, but also stay the same. I still believe there is nothing better than the one-on-one, face-to-face business meeting. I would say these are still conducted very similar to the ones my father conducted back in the 1980s. What is now different is the technology that has increased the speed of the selling process:
- Instantaneous email communication of the quote requests from the customer to the principal.
- Tracking software to manage the customer relationship and projects.
- Commission software that pays the salespersons.
- And now, video conference calls to minimize travel.
“This increased technology has all helped to allow the sales representative to be much more productive, allowing greater sales with less time.”
Coval agrees as he explains, “In more than 41 years as an agency, we have seen significant changes, as you can imagine. Early on nearly all companies had purchasing hours either daily or certain days per week. If you arrived during those times, you would be seen and meet the appropriate personnel. Following this, most companies had reception areas where you could at least see a person and have conversations or obtain the appropriate contact information and/or leave your company information. Following down stages in the economy, several reception areas have been eliminated and you have a lobby with a phone to speak with someone inside the organization. This caused the first major change in how to approach companies and learn more about them.
“Obviously, the internet and social media have become the driving forces for information and much contact today and our younger sales force has embraced this. Covid created the current strategy, which is augmenting or expediting meetings via Zoom or Teams. Our strategy remains personal visits whenever possible as our company was built on relationships, knowledge, and persistence, and face-to-face, in-person is the best avenue to enhance this.”
Professional Employers Organization
While both Kroemer and Coval note that advances in technology have impacted the rep profession, something else they’ve done with their agency — working with a Professional Employers Organization (PEO) — has impacted how they internally conduct their business.
According to Kroemer, CEP Sales, as so many other rep agencies, is a family-owned rep firm. Its benefits were determined largely by what was good for the family. All accounting was conducted via Quickbooks and an outside accountant. “We took care of our health insurance needs using an insurance representative. Health insurance was a constant battle annually as we tried to keep cost down with rates increasing annually by 25 percent with an aging group.”
If concerns about health insurance weren’t enough, he continues that “In addition, we were faced with having employees in new and different states. That brought on a number of complexities in tax and insurance rules. Then there was the matter of benefit and retirement programs that needed to be organized for outside employees that were not family members.
“The agency’s succession plan called for us to replace owners with younger salespersons as a result of us not having enough family members who were interested in the business. And, keep in mind that by definition we’re rep salespeople — we are not versed in the business of human resources.
“The questions remained: ‘How do we take this rep firm to the next step? How do we and our employees grow together?’”
A solution to the aforementioned concerns developed when Coval, through networking contacts, learned of a service organization called a Professional Employers Organization (PEO) that handled the human resource side of a variety of company businesses. “We interviewed a number of national, regional and local PEOs, all of whom provided different benefits. Ultimately, we settled on a regional PEO called WorkSmart,” explained Coval.
He continued that WorkSmart “offered our employees a cafeteria-style insurance program where they can pick and choose the type of insurance they need from dental, vision, long-term care, etc. They handle all the IRS rules for setting up retirement programs, advising on the rules and maintaining the allowable percentages. All payroll matters are conducted online, and each employee has their own portal to review compensation and make changes. And, best of all, any employee questions regarding compensation issues are taken care of by the PEO.”
Coval adds, “We are able to pay for this company’s services by the savings we achieve in health insurance alone.”
Coval explains that while “It was a bit scary to bring in this service; there were many unknowns and we certainly wondered whether the effort would be worthwhile. Now that everything has been set up, we’ve found that it’s a godsend. We’re not sure we could ever live without it. We have no worries about growing our business or the number of employees we hire.
“What this has done for us is to allow CEP Sales to get back to doing what we do best — selling for our principals.”
Why MANA — While neither man was present when the agency joined MANA, they both made it a point to point out the benefits of their association membership. According to Kroemer, “We’ve been a MANA member almost from day one. Back before websites and emails, the consistent and interesting Agency Sales magazine was an important source of information allowing us to feel the pulse of our industry and to see and hear how other agencies were handling obstacles. This is as important today as it was back then.”
Coval concurs when he notes, “We have used MANA to identify high-quality principals and they have found us through MANA as well. I read Agency Sales monthly and am sure to scan or send the key articles to all of our salespeople to highlight key points we like to stress.”
In describing the CEP organization Coval says, “We have our two owners, five salespeople and two office personnel. All are family members except two outside salespeople; however, we claim they may as well be adopted as they are part of our family now!”
The CEP Sales, Inc., File
Start: CEP Sales, specializing in custom engineered products, has been a family-owned and operated business for more than 40 years. Wayne and Barbara Kroemer, founders of the agency, started business in 1981. Soon after, Bill Kroemer (son) and Darcey Elmore (son-in-law) joined the firm. Kurt Kroemer (son) joined in 1991 and Gary Coval (son-in-law) joined in 1994. In 1995 Wayne sold the business to his sons and sons-in-law and CEP Sales, Inc., was born. Wayne’s daughters, Ellen Coval and Anne Elmore, took over administrative duties.
According to Kurt Kroemer, “CEP Sales comes from the previous company name of Custom Engineered Parts. Our agency specialized in products which are custom and almost always require a print from the customer in order to quote. We are 80 percent metal parts, which include items such as castings, forgings and custom-machined components. Our agency represents all the common types of casting process and the various metal alloys which are poured. We quote both high- and low-volume requirements. The other 20 percent of our business is a completely different product line that includes nameplates, labels, graphic keypads and custom overlays. While product identification is much different than castings, it still requires a print from the customer to quote.
“One key to our success is that whether it is a nameplate or a casting, a custom tool or pattern is required to make the part. Once these tools are in place, it becomes difficult for competitors to move our business. Tools can make the selling timeline longer; however, it has also added security and success our firm.”
Agency Size: “Nine individuals currently, which is the largest we have been,” explains Gary Coval. “We have our two owners, five salespeople and two office personnel. All are family members except two outside salespeople; however, we claim they may as well be adopted, as they are part of our family now!”
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