WARRIORS OF - Electrical Business Magazine

SERVING THE ELECTRICAL DISTRIBUTOR CHANNEL ACROSS CANADAspring 2011Special S&D Conference issueTHE ROADWARRIORS OFelectrical salesPM# 40065710

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Spring 2011 • Volume 3 • Issue 1ContentsDistribution & Supply magazine serves electrical distributorsacross Canada. It provides distribution personnel with theinformation they need to perform their jobs better and run theirbusinesses more efficiently and profitably.FEATURES 16EditorAnthony Capkun - acapkun@annexweb.comPublisherJohn MacPherson - jmacpherson@annexweb.comAccount ManagerScott Hoy - shoy@annexweb.comAssociate EditorAlyssa Dalton - adalton@annexweb.comArt DirectorSvetlana Avrutin - savrutin@annexweb.comProduction ManagerAlice Chen - achen@annexweb.comAdvisorJohn KerrCreative DirectorEinar Rice - erice@annexweb.com16 OUR COVER STORY...Manufacturer reps: The road warriorsof electrical salesJack KohaneA number of manufacturers are turning to independent reps r atherthan salaried salespeople in their quest to dominate the mark et. Butwho are these road warriors of electrical sales? What do they bringto the table that in-house staff do not?7 Thinking Beyond Your Castle WallsConference PagesSPECIAL Supply & Distribution Council Conference Section.GO HERE for the Business Program, general Conference Information,Business Interaction & Networking, and Agenda.Cover illustrationby Dominic Bugatto7PresidentMichael Fredericks - mfredericks@annexweb.comPublished by Annex Publishing & Printing Inc.240 Edward Street, Aurora, ON L4G 3S9Phone: (905) 727-0077 • Fax: (905) 727-0017COLUMNSPublication Mail Agreement #40065710Return Undeliverable Canadian Addresses to Circulation dept.240 Edward Street, Aurora, ON L4G 3S9e-mail - dkoivisto@annexweb.comUnited States Second Class Postage Paid at Lewiston, NY(USPS-741-470) US POSTMASTER: Send address changes toDistribution & Supply, P.O. Box 8145, Lewiston, NY 14092Printed in Canada ISSN 0013-4244CIRCULATIONe-mail: dkoivisto@annexweb.comTel: 905-727-0077 • Fax: 905-727-0017Mail: 240 Edward Street, Aurora, ON L4G 3S914 Go to MarketDavid H. GreenCustomer relations: is it cool to be digital?15 Market MixJohn KerrChannel to evolve around sophisticated end users22 Best PracticesRoger PartingtonMaking the case for customer incentive and reward programs14Subscriber Customer Service RepresentativeDonna Koivisto - dkoivisto@annexweb.comSUBSCRIPTION RATES:Canada: Single issue $7.00 (including GST)USA: $11.00 (US) and International $13.00 (US) per single issueDEPARTMENTS6 S&D Council UpdateRick McCartenWhy we need EFC’s new Electrical Council now21The contents of Distribution & Supply are copyright ©2011 by AnnexPublishing & Printing Inc. and may not be reproduced in whole or part withoutwritten consent. Annex Publishing & Printing Inc. disclaims any warranty as tothe accuracy, completeness or currency of the contents of this publication anddisclaims all liability in respect of the results of an y action taken or not takenin reliance upon information in this publication.21 CEMRA ForumCindy DohertyCEMRA’s growth and role in the new Electrical SectionDistribution & Supply • Spring 2011 3

editor’s noteOpportunities with the Green RushThey are like a fl ashin the pan. Theyhave no history. Norelationships. Theirbusiness cards arewritten up and cutout by hand.For some time now , I’ve been trying to paymore attention to what electrical distributorsare doing, if anything, to get a piece of therenewables pie.When commenting on the Canadian SolarIndustries Association’s (CanSIA’s) last nationalconference in Toronto, I noted “It’s like the WildWest in here”... though it is more appropriate toliken the renewable energy industry (especially inOntario) to a gold, no, green rush. (Electrical BusinessMarch 2011, page 3)However, if we can adapt more quickly to the greenopportunity (faster than we did with the opportunitybrought by datacom), then the opportunities will begreat; environmental awareness and politics will seeto that!So wrote John Kerr in his Fall 2010 “Market Mix”column. He went on to provide some additionalsuggestions as to how to leap into—and start takingadvantage of—that green rush.In Ontario, the rush for lucrative Feed-In-T ariff(FIT) and microFIT contracts has attracted numerousso-called “solutions providers” from all partsof the globe. Don’t get me wrong: a lot of providersare stable, well-known global players with excellentreputations. It’s the other ones I worry about—theones we should all worry about: the ones who, literally,are here today and gone tomorrow.They are like a flash in the pan. They have nohistory. No relationships. Their business cards arewritten up and cut out by hand.For something as long-term as a FIT contract(say, 25 years), you would think they would be scrutinizedright out of the market. Y et they persist,and I would argue it’ s because still not enough isbeing done on our end to make C anada’s establishedelectrical channel the preferred channel forrenewables solutions.That said, it’s encouraging to see some distributorseither acquiring or developing in-houserenewables expertise to address this market segment.One person I met recently at a regional solarevent bore the title “Solar Specialist”. Our industryneeds more of him.Also, at least one distributor is taking its renewablesmessage straight to end users. Sonepar firstcaught my eye in this regar d last summer whenOsso Electric—in partnership with Solar Semiconductor—setup a 3kW mobile solar array displayat The Canadian National Exhibition in Toronto tohelp Boom 97.3 FM pump ou t its music. Ea rlierthis year, Sonepar Canada launched BlueW ay: asocial and educational online community designedto “provide and share knowledge for the sustainablecreation and use of electricity”.Not long after, I stumbled upon Sonepar at theNational Home Show. Among the staf f were twoSolar Reps, discussing renewables with all the JoeAverages attending this consumer show . Ratherthan simply encourage electrical contractors topush green solutions on their customers, the strategyhere seems to be that of creatin g demand atthe customer level, and have the customer push theelectrical contractor straight back to his electricaldistributor for solutions.Ultimately, you have to do that with which youare comfortable and willing to support. A socialmedia site, for example, may not be right for you.Mitch Joel, who returns to the S&D Conferencethis year, explains social media is the last thingyou do, especially when your heart isn’ t into it,and you feel like you don’t have the time to do it.(D&S Spring 2010, page 4)My eyes may deceive me but, looking back,I don’t see a single recognized electrical distributorexhibiting at the aforementioned CanSIA nationalconference. (I’ve not checked the exhibitor list forCanWEA’s [Canadian Wind Energy Association’s]last gathering, but will it be much dif ferent?)How you wish to proceed is up to you, but tonot proceed at all ensures one thing: that someoneelse will be munching on what little piece of pieyou now have.4 Spring 2011 • Distribution & Supply

What’s so special about being a Thomas & BettsSignature Service electrical distributor? Morethan a loyalty program, Signature Service isour company-wide commitment to providethe highest levels of service and supportto our distributor partners across Canada.Our objective? Increase your sales, reduce yourtransaction costs and strengthen our mutualprospects for growth.Rediscover the commitment behind the words.Look for the Signature Service 2011 package at your branch in May.w w w . t n b . c a

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go to marketCustomer relations: is it cool to be digital?How often have youphoned or met aperson directly to havea real conversation thatfi xed everything?With many years of experiencein business development, sales& marketing, David H. Green,P.Eng.—managing partner,Stratmarc Associates—specializes in strategy,marketing, communicationsand development ofeducation/industrypartnerships for industrial andtechnology clients. Contacthim at (705) 443-8974 ordavidgreen@stratmarc.com.In a scenario reminiscent of Chicken Little’s “The skyis falling”, one has to wonder whether the digitalrevolution is waning, as various forms of e-messagingare no longer cool, but cooling. Given the spate ofsecurity breaches at e-list houses, anti-spam legislation,overloaded Inboxes and hyperactive Spam and Junkfilters, declining open rates and increasingly cautiousinternet users, it’s hard to imagine anyone’ s product/service message being read, let alone acted upon.It is ironic, then, that the Supply & DistributionConference’s theme this year is “Thinking Beyond YourCastle Walls”, as it seems others are using fear , uncertaintyand doubt over e-communications to put wallsaround our customers and prospects. We need to bemore effective at getting through these ‘walls’.Making this digital landscape more precarious isOttawa’s passage of Bill C-28: the Fighting Internetand Wireless Spam Act (FISA), which complementsand amends other legislation, like PIPEDA (PersonalInformation Protection & Electronic Documents Act).This legislation may seriously impact the way you goto market.With FISA, Canada is actually catching up to otherprogressive countries’ internet legislation. The EuropeanUnion, for example, has some very strict ruleson digital data collection, prior consent and privacy;the United States may have more liberal rules regardinge-mail collection and use, but Opt-Out capability ismandatory. (Canada being Canada, we will likely endup somewhere in the middle.)FISA refers to “commercial electronic messages”(CEMs), which encompass any message that could“reasonably be construed to encourage participationin a commercial activity”, and transmitted any numberof ways, including e-mail, instant/text messaging (IMand SMS), social media postings and some voicecommunications.Canada’s act requires prior opt-in with positive confirmationfrom the recipient before you can send yourCEMs. (There are, however, provisions for implied consentrelating to prior business relationships, partners,existing active e-mail lists, etc.)So what do you do? First, review existing lists foraffirmative opt-ins and prior business communications.Look at your web forms and Contact Us informationareas for proper consent information, with the Opt-Inbox pre-checked as the default setting. Granted, youwill end up with smaller lists, and your sales team willhave to be careful about unsolicited mass e-mailing, butthe fines and consequences can be serious, so developpolicies and procedures your staff can follow.All of this is enough to make one think that maybeelectronic messaging is too much trouble for the returnon invested resources but, over time, it will build trustand credibility for compliant users.In a digital marketplace of tablets and smartphones,4G networks and a million “apps”—combined withan increasing cadre of customers who have “grownup digital”—some form of e-communication will benecessary, if not the norm. You’ll have to embrace thetechnology, along with its caveats.Having said that, you should also be considering allthe other tried and tested methods for engaging andcapturing new customers as complementary to the noncontactsport of e-marketing. E-communications don’tlet you shake a customer’s hand, see the whites of theireyes, or instantly read their emotions and reactions toyour conversation (the first IM!).With abbreviated and often cryptic dialogue, thewording and underlying tone of an e-mail exchangecan give false impressions; in those cases, how oftenhave you phoned or met a person directly to have a realconversation that fixed everything?Yes, there is a revival of things such as direct mail,conferences and shows (smaller and more focused,maybe), and even customers seeing a live salesperson.The whole area of personal contact and customerengagement strategy is for another column, but theseimportant interactions complement the ‘virtual’ ones,and give us a desperately needed dose of reality.14 Spring 2011 • Distribution & Supply

market mixChannel to evolve around sophisticated end usersThere’s an old saying: if you want to sell whatJohn Brown buys, you must look throughJohn Brown’s eyes. Looking through thoseeyes is a little trickier these days, as John Brown isa lot smarter, more connected and better informedthan ever.The issues facing our industry are ongoing andfluid; commodity and global pricing are stretchingmanufacturers’ ability to perform and deliver lowerprices. Commodities are being sold at greater ‘retail’points. The base of our industry’ s sales pyramidwidens as product complexity evolves.The electrical industry must determine its futurebusiness model and how it wishes to define itself.Should it adopt the path of selling product (wherefast-moving A-list items are the rule of the day), or anintegrated model with a solution-selling stance?This was easier to figure out just a few years agowhen the market kept growing, and you could sellall you had; when pricing was stable, competitorswere predictable and partnerships were a pillar.In the Sixties, issues facing our industry includedregional warehousing, the emerging Seabell buyinggroup and, before that, consignment models. Therewas even discussion over contractor buying groups.Back then, there were fewer national distributors,outlets were more numerous and the marginssimply put better.In those days, the industry was an eclectic mixof direct sales and buying direct, with some majordirect account sales and channel strategies. Whena distributor was not being serviced by a particularmanufacturer, the end user would simply buy fromwhomever had what he needed.The industry was much smaller then, too; thenationals controlled a fraction of the market (incomparison to their dominance today), more independentsdotted the field, and alliances with endusers (primarily contractors) were open—and oftenthe rule.Nowadays, the technology and scope behindproduct innovations demand engineering support,custom logistics, investment in inventory; meantime,the challenges they present in managing new ratiosand processes are already stretching our market.Many distributors are adopting green products (i.e.solar) and trying to make them part of the productmix, but they’re doing so in an environment wherebusiness models clash. Lead time for products,standardized and consistent pricing, engineeringand training support demands are threatened, asthe value that distributors offer is either misunderstoodor dismissed by an end user that will simplyabandon the channel relationship and go direct.As products become more sophisticated, channelevolution (including sourcing direct) will bethe norm. Manufacturers may have no choicebut to begin selling direct with greater frequencywhen distributors cannot offer a viable alternative.Distributors will adopt the more mature, Europeanmodel of buying direct for their commodityproducts. Contractors will leverage their technicalexpertise as integrators of more sophisticated electricalsolutions.Our challenge: to look forward without our blindersand realize that the road ahead will require usto rethink our perspectives, preferences and alliances.Will our channel revert to what it once was?Perhaps, but my money is on all the John Brownswho, for first time in a long time, will drive thechanges that impact our channel the most.Manufacturers mayhave no choice butto begin sellingdirect with greaterfrequency whendistributors cannotoffer a viablealternative.John Kerr has been involvedin the Canadian electricalmarket for over 25 years,consulting to electricalequipment manufacturersand publishing his annualresearch, “Project Pathfinder”.You can reach him atjohnkerr@kerrwil.com.Distribution & Supply • Spring 2011 15

THE ROADWARRIORS OFJack KohaneAnne Mulcahy, the former chair of Xerox and a CEO of the Y earaward recipient, once said, “The customer always comes first...you have to get face time with customers... nothing much elsematters”. But getting “face time” isn’t always possible in the far-flungelectrical field, especially so when some customers are sprinkled acrosssome very remote regions in Canada.That’s why many electrical manufacturers go to market throughindependent manufacturer representatives. In fact, the majorityof manufacturers in this industry use independent reps instead ofcompany-employed salespeople to cover at least some territories,and it’s becoming the way of doing business for a growing numberof manufacturers for all territories.Illustration by Dominic Bugatto16 Spring 2011 • Distribution & Supply

How do manufacturer reps represent?“Historically, manufacturers hired their own factory sales force toreach customers, but more companies are choosing to outsourcetheir sales,” explains Dick Roney, founder of Roney Marketing basedin Mississauga, Ont., whose team of seven salesmen work the Ontariomarket on behalf of 13 electrical firms, including Broan-NuTone,Cooper Bussmann and Klein Tools. “We make deals with people, notpaper,” Roney continues. “Our agency brings a three-prong approachto the market: our sales force, or ‘feet on the street’ who sell productand keep our customer distributors posted on new products; ourcounter servicing company (a merchandising component to keep thecounter displays of customers in shape); and our inside customerservice group.”To succeed in the rep game, one doesn’t need to be a rocket scientist,Roney remarks. “But as in any sales profession, the dif ferencebetween winning or losing an order is often razor-thin and you needto do the little things very well. It’s not always about the lowest price,and when it is, it’s often an order reps should not want anyway.”Since independent sales reps handle a number of diferent productlines, Roney believes they come equipped with a better understandingof market conditions, along with a broader range of customersthey service. “They can often sense overall market changes andopportunities earlier and more accurately than factory salespeoplefocused only on their own company’s products,” he nods.Roney Marketing’s customer service department provides quotes,expedites and handles orders and of fers customers solutions toelectrical problems. “In some cases we are it totally for that manufacturer,”says Roney. “A good customer service department in a strongagency is the ‘heartbeat’ of the agency . They talk to the customersdaily whereas our outside reps might be seen every few weeks. Ahappy customer who feels well cared for is our goal.”In earlier years, manufacturer reps were primarily brought on boardfor one main reason: their contacts and connections in the industry.While this is still one of the main drivers, there are many more,including the almost relentless need by electrical distributors andwholesalers for information on the latest products and innovations.“Reps are professional outsourced sales and marketing; just as manycompanies outsource payroll, human resources and trucking, manyothers feel the same way about their sales and marketing function...they must be ef fective and efficient to their users,” af firms MurrayChamney, vice-president and operations manager for Intralec ElectricalProducts in Mississauga, Ont., which blankets distributor networksacross most of Ontario through six regional reps, two specificationsreps and one wire specialist. The company has 15 principals on itsline card, including Alcan, Crouse-Hinds and Milwaukee Tool.“Most good reps are focused on demand creation,” Chamney pointsout. “This requires a rep firm to build this in as one of their core values.Reps know that most of the manufacturers that hire them are in direneed of this discipline.” Reps also fill the gap where a manufacturermay be weak, he adds. “The recession has trimmed many people anddepartments from even large companies. Reps ofer an easy, affordablemethod to reach niche markets.”Specialization is another plus as many reps are focused on a specificmarket area, including lighting, wire and cable, and controls,thus delivering additional expertise to a manufacturer. “The buildingblocks of successful selling are loyalty, relationships and trust, andthat’s where manufacturer reps excel,” Chamney chimes in. “W epress the flesh with customers.”Sandy Macpherson, who founded Burnaby , B.C.’s Alliance MarketingLtd. 20 years ago as a manufacturer representative servingthe Western Canadian electrical and HVAC industries, says that, forindependent sales agencies to survive in the current fluid market—one marked by consolidation, alternate channels and technology—it’ scritical they evolve to meet the changing needs of clients. “Agenciestoday must become professional marketing organizations with salesforces trained to answer increasingly technical application questions,focus on missionary sales work and create efective marketingcampaigns,” he insists.In the case of Alliance Marketing and its team of four outside salesreps, three inside customer service reps and warehouse coordinator,Macpherson says he views his company’ s role as an extension ofthe sales and marketing activities of his clients. “W e provide suchservices for our clients as market intelligence, preparing annual forecasts(as well as monthly, by product and customer), and identifyingand communicating market opportunities. If a manufacturer callsus with a product that doesn’t have a presence in our marketplace,we can usually tell him in the first 10 minutes of the discussionif the product will or won’t meet a demand and the reasons why.Manufacturers have figured out that just because the product is ona distributor’s shelves, it will not just fly off by itself. We have todevelop a coordinated process of pulling stuff off of those shelves,making sure that the channel is responsive to the customer andensuring that the customer understands how he can get his wantsand needs satisfied.”It’s that kind of up-to-the-minute market know-how and credibilitywith customers that sets independent manufacturers’ reps apart fromin-house factory reps. Most distributors and wholesalers welcomethese consultative sellers.“The building blocks of successful sellingare loyalty, relationships and trust, and that’swhere manufacturer reps excel.”Manufacturer reps keep costs downControlling costs is another huge spark that ignites manufacturers topartner with an independent agent. Reps live with 30-day contractsand volatile product portfolios. They only get one-month’s notice ifthey lose a line. They may spend their entire career building a productline in their market, only to have that line disappear because ofa merger or acquisition.Agency reps are almost always paid in a percentage of sales. Ifthey do well in selling a line, they are compensated fairly; if not, nocommission is paid. Thus, they of fer suppliers a cost certainty. Bycontrast, setting up a factory sales force requires taking on operationalcosts that an independent manufacturer rep absorbs, suchas payroll, unemployment benefits, workers’ compensation, profitsharing, bonus plans, pension plans, sick days and vacations. Addin training time for new recruits and a support network (secretaryand administrative assistants), it is estimated that the total cost forDistribution & Supply • Spring 2011 17

one factory rep ranges, on average, from$175,000 to $225,000.“We have a broad product offering andcomplementary products that bring opportunitiesthat may not be seen by a factoryrep for one product,” asserts Tony Munden,president of Munden Enterprises Ltd. inWolfville, N.S., which represents FlukeNetworks and Fluke Electronics in AtlanticCanada. “We can provide a manufacturerwith an experienced and motivated s alesteam at a very low variable sales cost. Also,... your one stopshop for• Custom extrusions• Custom lengths• High temperature products• Non-metallic conduits• Nylon conduits• CSA certified products• UL certified products• Conduit & cable accessoriesand much more...P.O. Box 665Cobourg, ON K9A 4R5Phone: (905) 355-29591-800-561-4216we have a 30-day marriage that can be severedby either party. We continually have toprove that we are doing the job.”Heading a force of four outside salespeoplecovering the Atlantic region, Mundenemphasizes that his team spends a tremendousamount of time and money driving thebusiness by marketing the products they sell.Some of his company’s initiatives designedto spur sales include conducting CounterDays, participating in trade shows, as well ashosting Lunch and Learns. For the calendarA Canadian manufacturerof metallic flexible conduitsWe take great pridein offering youexemplary customerservice andexceptionalworkmanshipFax: (905) 355-33841-800-230-9753sales@superiorflex.comwww.superiorflex.comyear 2010, Munden Enterprises participatedin more than 75 distributor-focused events.Products from principal manufacturers areshowcased at each of these events.Munden touts his company’s recentlylaunched electronic marketing program. “Wehave a database of over 1200 people, brokendown by vertical markets such as consultants,contractors, end users, utility, telecom, industrialdistribution and electrical distributors.”Munden sends out four marketing emails perweeks targeted to 1-2 market segments. Theseemails are focused on new product or specificproduct applications. “We are not limited todealing with one or two distributors, but sellproducts to every distributor in the region.One of our strengths is that no one distributorrepresents more than 20 per cent of our totalbusiness. Based on this, we are involved inthe majority of the projects within the regionbased on our broad customer base.”Mark Chowen, president of TMC Sales—astart-up independent agency formed in Winnipegin 2009—credits his enterprise’s quicksuccesses with such top-notch customers asGescan, Nedco and Guillevin to what he callshis “immediately impact on the market withhis experience and existing relationships”.Chowen asserts that, with the diversity of theelectrical market today, independent agentshave become even more valuable. “By representingmore than one manufacturer, itenables us to earn som e crossover businessby representing complementary lines, whichleads to growing the business of both or allthe manufacturers represented. An agency isan ideal choice for a manufacturer lookingfor full coverage of a territory but is unableto put a full-time factory rep in place.”Territorial intelligenceThe market intelligence offered by the independentsales agent is lauded as a godsendby smaller, lesser-known manufacturers whoneed the close relationships these reps havecemented with distributor and contractorclients to promote their products. Largercompanies may rely on agents to penetratemarkets they wish to serve better.Because agencies often sell the productlines of between 10 to 15 dif ferent suppliers,some manufacturers feel their lines justwon’t get enough attention from outsourcedsales personnel. Countering this perception,Ed Tuggle, vice-president and principalof Alberta-based D.A.D. Sales, says the keyto selling multiple lines is to maximize the18 Spring 2011 • Distribution & Supply

synergies between and among the items andsystems in the product basket.Asked how his reps balance their timewhen making calls to pitch the products ofAnamet, Bemag Transformer, Ideal Industries,Ouellet and others in Alberta, portionsof British Columbia and the Northwest Territories,Tuggle replies, “Simply put, we ensurethat our salespeople are calling on any companyor person who can potentially createdemand. There are many ways to createdemand but the bottom line is that if you’renot calling on your customer’s customer, thenyou’re not creating demand for your product.That is one of the key benefits to havingmanufacturer reps as, typically, independentsemploy far more salespersons than manufacturerswho have direct sales people”.Because the needs of each of the suppliershe represents dif fer, Thomas Brockwayprefers to limit their overall number in hisroster. He insists that this is the best wayto make his manufacturer/sales representativeratio realistic and manageable. “Wetry and have manufacturers with synergiesthat produce realistic ef ficiencies for us inour territory coverage,” says the owner ofBrockway Enterprises, who entered theindependent rep business in 1988, startingBrockway Enterprises headquartered inLower Sackville, N.S., to service all of AtlanticCanada. “Additionally, we try not to be allthings to all people and remain in the marketsegments that best suit our knowledge baseand strengths.”The local marketing edge and expertisethat independent sales reps bring to the tablefor electrical suppliers works to perfection inparticular regions and provinces. Guy Goupil,president of Contact Delage Inc. in Longueuil,Que., says his firm’s most outstandingstrength is in “Being regional, knowing ourmarket, knowing local codes and regulations,knowing how local people do business. Withglobalization, corporations have to competeagainst the lowest-cost producers from anywherein the world. Both distributors andmanufacturers have had to cut costs to meettheir profit objectives. So, when introducinga new technology or new product in the field,manufacturers know we have the regionalpresence to do this quickly”.Covering both the Quebec and the OttawaValley regions, Marc Laplante of Laplanteet Associés in Longueuil says he noticesdefinite regional characteristics. “There aresome major differences in the way businessis done in various areas. Some productswe sell in Quebec do not sell in the Ottawavalley. Some cities have incredibly strongrelationships between contractors and distributors;others are very price-driven andmargins are lower.” Laplante goes a stepfurther, stating that what sales reps aretasked to do also shifts from one territoryto another. “In some areas, the reps are theones expected to generate the work fromthe spec level, so the reps there have a verystrong engineer customer base. In otherDownload the Extech Catalog Today!www.extech.com/catalogcities, those reps are expected to be strongwith the builders or contractors. The beautyof the independent rep is that he adapts veryquickly to the variations in diferent marketconditions and requirements.”Atlantic Canada, according to Brockway,has its own challenges. “The biggestdifference comes with our market sizeand geography,” he remarks, noting thatAtlantic Canada represents 6 to 8 per centof the Canadian market, and its territoryencompasses 2.4 million people in fourINNOVATION I SELECTION I SUPPORTwww.extech.com l www.flirthermography.caDistribution & Supply • Spring 2011 19

provinces—two of which are islands. “Eachof these four provinces have very uniquepersonalities. We must adapt to each one inorder to gain confidence and have reasonableknowledge of their individual needsand expectations. I know in some Canadiansales territories this population base can becovered in a city. We are a regional rep firmand this gives us a certain level of continuityand allows for better management ofdiverse market segments.”Though the agency model in the electricalmarket is working well just about everywherein the country , Chamney pinpointssome stark realities in Eastern Canada.“Reps are embraced in some regions to agreater extent,” he comments. “In terms ofculture and language, Quebec in particularscares many manufacturers... where repsare often hired to help bridge the companyand provincial cultural dif ferences. Ontariois unusual in that it has most of the headoffices of ma nufacturers and distributors.Many manufacturers feel they need directcontrol in Ontario, opting for direct staf fhere and reps in all other territories. Ontario’ sindependent reps are working very hard tochange this viewpoint.”Nathalie Pilon, President, Thomas & Betts Canada,is pleased to announce the recentappointment of Richard (Rick) Gingras to the position of Director , Business ProcessImprovement, responsible for leading continuous improvement initiatives across salesand administrative processes.As Thomas & Betts’ operational link with electrical distribution,Rick’s role is to seek out opportunities to improve the overallcustomer experience using lean tools to reduce waste and toimprove, standardize and document business processes.Formerly Director of Logistics, Rick has been a member ofthe Thomas & Betts family since 1977. In 2003, Rick receivedhis black belt training in Lean Six-Sigma and has beeninstrumental in the roll-out of the Lean Six-Sigma culture withinThomas & Betts over the last eight years.This appointment reflects the importance Thomas & Bettsplaces on continuous improvement throughout the supplychain in order to continue delivering both top quality productsand superior service.Richard (Rick) GingrasDirector, Business Process ImprovementThomas & Betts CanadaThomas & Betts is a leading designer and manuf acturer of electrical components used in industrial,construction, communications and utility markets. With a portfolio of over 400,000 products marketed undermore than 40 premium brand names, Thomas & Betts products are found wherever electricity is used. With12 manufacturing facilities located across Canada, 80% of the Thomas & Betts products sold in Canada aremanufactured in Canada.w w w . t n b . c aThe CEMRA connectionDrawing representatives and manufacturersfrom across the country to worktogether to improve the electrical channel,the Canadian Electrical ManufacturesRepresentatives Association (CEMRA) promotesits members as industry stewardsand publishes guidelines to best practiceswithin the electrical profession. Based inToronto, this is the Canadian equivalent toNEMRA (National Electrical ManufacturersRepresentatives Association), and bothorganizations are closely linked.A division of the Supply & Distribution(S&D) Council of Electro-FederationCanada (EFC), CEMRA hosts annual conferencesfor education and networking tohelp strengthen members’ sales, marketingand management skills.“Our ethics statement, as in all committees,must be accepted voluntarily,” states Chamney.“In a nutshell, it tells us not to steal lines,and to be ethical in our business practices.Only true believers join the group. In manycases, manufacturers will only hire CEMRA/NEMRA reps due to our reputation.”Tuggle exalts CEMRA/NEMRA for providingthe tools to make an agency rep firm moreprofessional on both a systems and a saleslevel. “They are the guiding lights to our business,”he declares. “There are also numerousnetworking best practice groups and those provideus with the ability to use ideas from othersuccessful rep firms. The ethics guidelines arealso important as they provide a frameworkfor us to judge ourselves, our competitors andpotential new members, and to hold us all toa higher level of behaviour.”Commending his company’s connectionswith the association, Goupil says, “CEMRAhas given us a professional status that wouldhave been hard to acquire without its existence.It’s given us guidelines to grow andimprove the way we do things constantly.”Manufacturers are believers too. Independentreps are key to the Cooper Bussmann salesand marketing strategy. “At Bussmann, we havehistorically worked with agencies in Canadaand the U.S.,” says George Lundy, the company’snational sales manager, headquarteredin Mississauga. “The independents give us abigger bang for our buck. They are very efficientin terms of generating sales per client visit persalesman. They have created long-term relationshipswith customers; they have a deeperand better understanding of those customers’needs. They know their territory best.”Barry Marcus of Marcus T ransformeresteems his agencies. He has partnered with15 of them across North America. “For a midsizedfirm such as ours, I believe an agency isthe only way to go. From a dollars-and-centsperspective, agencies are the most cost-effectiveand affordable alternative to factory sales staf,”says the owner of the Montreal-based maker ofstandard and custom-built industrial controland distribution dry-type transformers for thecommercial, industrial and institutional sectors.“Our agents’ package of non-competing,compatible products—fuses and conduits, forinstance—is complementary to ours, and thathelps pull our products into the sale. It’s a winwinfor everyone in the process.”Roney views most reps as road warriors whoare highly trained, armed with the tools andintelligence to sell ef fectively. “Best-of-breedreps make things happen. Manufacturer representativesbuild and nurture their customerbase with meticulous care. They are the mainstayof the markets they serve. Factorysalespeople may come and go, but the topmanufacturer representatives have many yearsinvested in their territory. We work hard to sealthe deal for manufacturers and end-users—often with a smile and a handshake.”20 Spring 2011 • Distribution & Supply

CEMRA forumCEMRA’s growth & role in thenew Electrical SectionCindy DohertyThis year marks the last year of mytwo-year term as chair of CEMRA(Canadian Electrical ManufacturersRepresentatives Association,www.cemra.ca). I was the first to havea two-year term, and I found it verybeneficial, as it allowed continuity.I would like to extend special recognitionto the CEMRA board ofdirectors for its participation thispast year: (Western Canada) JohnBaron, Elect-Tech Sales; Ed Tuggle,D.A.D. Sales; Jim Modjeski, TitanMarketing Solutions; and Garry Pestaluky, Hi-TechSales; (Central Canada) Steve Collins, Collins Sales &Associates; Jean-Sébastien Bercier, Desdowd; (EasternCanada) Tony Munden, Munden Enterprises.Marc Laplante of Laplante et Associés also deservesthanks for his efforts representing Canadian reps onthe National Electrical Manufacturers RepresentativesAssociation (NEMRA) board. Thanks to Marcand his predecessors, we have full voting status onthe NEMRA board and enjo y many of the b enefitsof NEMRA membership, such as use of software,access to research and the Locator and, of course,the annual conference. It still amazes me how manypotential leads you can get by attending this eventand the S&D Conference every year!I would also like to extend a special thanks to T omBrockway of Brockway Enterprises and his predecessorsfor their work in getting reps to the table and allowingus to gain credibility in the industry. Also, complimentsto Tom for his three years of CEMRA representation onthe Supply & Distribution Council executive.We have come a long way as an organization; itwas back in the 1990s when we first approached theSupply & Distribution (S&D) Council to come intothe organization under their wing. W e now have apermanent position on the S&D Council, and thatposition will work up through theranks to become chair of the newElectrical Council Executive. S&Dactivity, you will learn that S&Dand EEMAC (Electrical EquipmentManufacturers Associationof Canada) are joining to form onecouncil—the Electrical Council—and manufacturer reps will be oneof the three key cornerstones ofthat new organization.I’d like to extend special recognitionto Ed Tuggle for his lead in the HSTproject. CEMRA commissioned an accounting firm toresearch required HST payments. This af fects repswho sell products where the office is located in an HSTprovince. (This also affects all other companies. We willmake the report available to everyone shortly.)I am pleased to remind you that the 2010 recipientof the CEMRA Academic Leadership Award wentto Curtis Flavel, a 4th year Electrical Engineeringstudent specializing in Power at the University ofSaskatchewan. Electricity has “fascinated” Curtis formany years, as he grew up being mentored by hisfather and grandfather, both of whom have worked inthe industry. Curtis’s father is an employee of EatonElectrical. We wish Curtis continued success in hisstudies and look forward to his future contributionsto the electrical industry. Also, CEMRA continues tosupport the EFC Foundation Scholarship Programagain this year.In closing, I look forward to other membersbecoming more involved in CEMRA and urgeeveryone to attend our next major meeting in Junein Quebec City at the S&D Conference.I have met a lot of industry peers as a CEMRAmember and it has helped me tremendously in mybusiness and my overall understanding of the industry.Thanks for your support.Manufacturerreps will be oneof the three keycornerstonesof that neworganization.Cindy Doherty isthe CEMRA chairfor 2009/2010, andmanages the Wire andCable Dept. at IntralecElectrical Products.She can be reached atcdoherty@intralec.com.Distribution & Supply • Spring 2011 21

est practicesMaking the case for customer incentiveand reward programsRoger PartingtonContractors expect a lotfrom their distributors,and they frequently viewrewards as a symbol ofpreferred status.Roger Partington is amanagement consultantspecializing in distributionchannels, channel relationships,and sales & marketingstrategy for manufacturers anddistributors. He can be reachedat roger@coherentb2b.com.Customer purchase incentives/loyalty programshave been around the industry since Day One,and every distributer of fers some variation.Manufacturers, too, have a big stake in thes e programs,as they provide considerable funding.The extent and variety of these programs hasexpanded over the last several years. Why? Becausethey work! Any marketing person will tell you theirprogram shows measurable sales increases whilehelping foster better relationships. Contractors expecta lot from their distributors, and they frequently viewrewards as a symbol of preferred status.In a world where competing distributors are oftenviewed as providing equivalent value, the right incentiveprogram will tilt the playing field. Contractorsnow have a variety of incentive programs from whichto choose. They also know the best way to capitalizeon these rewards is to channel a larger share oftheir ongoing purchases to the distributor with theirpreferred program.What works best?Loyalty program performance has more to do with executionthan design. The key is customer engagement,where there is no substitute for an enthusiastic salesforce and local service teams. While national programshave advantages, branch and regional promotions canbe a very effective part of the mix. Typically, these areshorter, seasonal promotions; it is easier to ramp-up theexcitement for a three-month promotion than maintainit for an annual trip or ongoing points program.Loyalty-style programs succeed when they effectivelyuse communications, analytics and customertargeting to build results over time. Because of theirscale, they can leverage communication tools andinformation technology to engage customers at keydecision points. A distributor has the flexibility toexploit the loyalty program for a myriad of short- andlong-term sales goals by adjusting points, leveragingspecial offers and targeting communications.Getting the most from a loyalty programAt the outset, programs must be built around thecustomer segments you wish to target. Payout ratiosmust offer an attractive incentive that’s competitivewith other programs. By building in reward tiers,special promotions and growth incentives, you canbetter tailor the program to maximize ROI. Customercommunications, program roll-out and sales forceengagement must keep the targeting consistent. Theprogram must strive for a high ratio of engaged customersversus those customers who earn rewards butdo not change their purchase patterns.In operation, loyalty programs must be responsiveto business opportunities. This is where analyticscome in. For example, knowing which customers areactive partcipants can guide sales strategies; knowingtheir purchase patterns can trigger opportune emailsor sales calls. Incentives that are not directly relatedto purchases but other marketing goals (i.e. training,product demos or atten dance at events) should beoffered. This way, the loyalty program is part of theentire customer engagement cycle.Communication should be personalized, frequentand engaging. Fortunately, your customer is naturallycurious: How close am I to a free trip? What are myreward possibilities? How can I earn points faster?While you have their attention, you should includelinks to new products, special of fers, new servicecapabilities and upcoming events. Capturing qualitycustomer demographic information will help youpersonalize communications and special offers.Program measurement is part of the analyticscapability and, over time, will guide the types ofpromotions and communications you employ. Analyticsdemonstrating sales performance and customerengagement also helps you justify program supportto a manufacturer.The challengeLoyalty programs are a big investment in dollars andmanagement resources, but a well designed andexecuted program will improve ROI by targeting andengaging the right customers, and making the casefor manufacturer support. Better ROI justifies investingin the analytical and communication capabilitiesthat will allow you to stand out from the competitionand earn a larger share of the contractor wallet.22 Spring 2011 • Distribution & Supply

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