PART 1: GOING DIRECT vs. OUTSOURCING

Agency Sales,  Mar 2008  by Foster, Jack

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In describing how his company goes to market, vice president of sales Bob Bukowsky notes that Ideal Industries, Inc. has been working with rep firms for a very long time. The tenure the company has with its reps ranges from three years all the way up to 70+ years; many of these reps have worked with the company for more than two decades. To explain how his company arrived at the point they are today - about three-quarters direct and one-quarter rep sales force - he refers to some early company history.

Ideal Industries, Inc. of Sycamore, Illinois, manufactures a line of electrical products that includes just about everything an electrician might need to do his job. Included are industry-standard wire connectors, fish tapes, benders, wire-pulling lubricants, wire strippers, hand tools and wire management supplies. Also included is a comprehensive family of easy-to-use test and measurement instruments

According to Bukowsky, "From our company's beginnings in 1916, we were mostly sold in territories via an independent rep sales force. Over the years, however, we gradually added some direct people. A change occurred about 25 years ago when there was a move for us to emphasize the direct sales approach. Even though we were still working with a number of reps, we made a concerted effort to hire people right out of college. We trained them for about six months and then set them loose on the territories. That approach didn't work all that well. For instance, we might hire someone, train him well and treat him like gold for half a year and then put him in the Rochester, New York, territory. The problem was he didn't know anyone there, didn't know the territory, or have the relationships we were looking for. Very soon after, he'd leave.

"After following this same approach for a couple of years and not having great success, we tried something different. Every time we have a need for a sales presence in a given territory, the regional manager and I (and perhaps a few others), would put our heads together to decide upon the most effective manner to market and sell our products in that territory. In some cases it might be a direct salesperson, in other cases it might be a rep firm."

Considering What Works Best

"The variables that come into play when a decision has to be made to go direct vs. rep aren't necessarily those of geography or density of population," he says. "The major point in favor of one vs. another is how hungry and motivated they are, and if they will do what they say they're going to do. Salespeople, in general, will say that they can do anything. It's up to us to make the right decision concerning who's going to really sell our product and give us what we consider to be the right amount of their time."

Citing examples of how various decisions have been made, Bukowsky explains, "For whatever reason, going direct 25 years ago never worked all that well for us, particularly in New York City. Given the density of the population there, you'd think that would be the way we'd go to be successful - but it never worked out. We could never get a job done. We've since switched to reps, and the results have been good."

Bukowsky then points to the Denver area, where for years, "We had a direct person who was doing a great job, but she was wearing herself out trying to cover the entire state. We made a change and kept her in Denver, but surrounded her with reps to cover the rest of the state. That's worked out great."

He concludes by saying, "What direction we go is often determined by an individual's understanding of the needs and wants of the territory. If they truly understand what the customer requires and know 'who's who in the zoo' as well as they say they do, then they should be successful with us."

Looking for the Right Fit

There are a number of similarities in how Ideal Industries and the Croker Division of Fire-End & Croker Corporation, Elmsford, New York, work with independent manufacturers' reps. Simply put, if there's a good fit, the company has a preference for the rep model.

Fire-End & Croker Corporation was started in 1930 by Anthony J. Sposato Sr., as a fire extinguisher service company, primarily serving the Manhattan area. By 2007, with the help of the acquisitions of Croker Fire Prevention, Standard Fire Hose Division of Zum Industries, and the majority interest of Superior Fire Hose, the company has become a major source of supply for many types of fire fighting and fire-protection equipment across the United States, Central and South America, the Middle East, Europe and the Far East. The company remains a family-owned, privately-held operation with offices in Elmsford, New York; Pineville, North Carolina and Euless, Texas.

Company president Paul Sposato emphasizes that an important factor in the company's ability to achieve its growth has been the use of reps. "Over the past 40 years, the Croker Division has been heavily dependent upon independent manufacturers' reps to market and sell Croker products to contractors and wholesalers involved with new commercial construction - specifically high-rise buildings. These reps had been primarily involved with the commercial plumbing sector, but have now become increasingly specialized within the commercial fire protection industry, which has emerged as an entity of its own."