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The industry’s eleven-digit success story is assembled sale by sale, by individual reps
who pound the pavement each day. What are they thinking? What do they want? Read on...
By Connie O’Kane and Josh Vasquez
Salespeople Weigh In
For all its size and impact on our lives, promotional products remains largely a transparent industry. There isn’t a lot of research and development done on products and services. There isn’t much expansion by individual distributors. How well the industry does is directly proportional – if not wholly dependent – on the individual salespeople who do the selling.
How many clients a rep develops, how big the orders are he gets them to buy, what dollars they will commit to him/her – all these things contribute to the big billion-dollar figure we all tout each year. And in bad times like we had in 2001, the questions turn specific and street-level: How much did orders shrink? How many clients stopped buying? How many started buying cheaper? This tells the story of recession better than the Ivory Tower economists do. More to the point: How well did reps battle bad news? How did they manage with those smaller orders? How did they keep selling after losing a client or seeing a once-friendly door closed in their face?
This year The Counselor took unprecedented steps to get close to sales and sales reps in the industry. We tried to get inside sales reps’ heads, surveying them for the first time in State of the Industry history and comparing their answers with those of distributors. We wanted to see how happy salespeople are with their bosses and how pleased distributors are with their employees – an effort to see if these two Goliaths of our industry are on the same page.
The Bad News – And The Bad News
The good news is that distributors and their reps do seem to think alike when it comes to matters like compensation, sales support and work goals. The bad news is that there was some disagreement about expectations, work opportunities and the overall purpose of the parent distributor.
But the really bad news is that the industry’s efforts to educate and train its salesforce appears to be woefully inadequate.
Distributors: The Sales Flu
Think of 2001 as the year the industry got the flu. After all, a patient with the flu will usually have a couple of bad days and lose a little weight. Maybe there’s been a relapse or a bout of bronchitis, but then you eventually recover completely. Of course, it might be awhile before you’re back in the swing again. You might feel weak; you could be a little tentative; you probably don’t have all your color back. But you’re healthy – or at least on the mend.
That was the picture that emerged for promotional products in 2001 – an industry with a bad case of the flu. Everything was down, from individual order size to aggregate sales in the fourth quarter. But the industry was through the worst of it by the start of 2002.
The Prognosis
The number of orders distributors wrote was down 6%, from a median of 400 in 2000. (Throughout this section we use mostly median figures, which are the readings of the distributors exactly in the middle of the responses.)
The median order was 4% lower than the 300-piece median order in 2000. The dollar value of the median orders was down as well – $632; 10% less than the $700 posted in 2000.
When all individual orders were tallied up, distributors say they sold a median of $2,000 per client – the same as the previous year. This last fact would seem to fly in the face of some of the statistics we gathered, as well as some of the anecdotal evidence we’ve heard.
If all clients were buying the same amount, there would be no recession in the industry. One explanation for an identical per-client figure would be that while distributors lost some clients, existing clients kept buying as much as ever.
Generally, the news we’ve been hearing is that reps have been doing a good job of holding on to clients, but that clients are buying less product or opting for cheaper specialties. It could be the inevitable “margin of error” that creeps into any survey effort, or it could be that we weren’t hearing from distributors who lost money because they went out of business – or they didn’t feel like filling out our surveys.
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DR. COOPER’S SOI NOTEBOOK
What Makes Salespeople Shine?
One of the most interesting findings from this year’s research was what we discovered about salespeople. Specifically, we asked distributor principals to tell us how important they believe a number of factors are to salespeople’s success. They included issues such as, “salespeople know what is expected of them at work” and “salespeople have the materials and equipment they need to do their job right.” Salespeople were also asked how important they believe these factors are to their success. The results were compelling.
We found that for all but two of the factors we studied, salespeople rate these factors as more important than distributor principals. Not all that surprising, but it does mean that salespeople feel a number of things are critically important for them to perform well, while principals are telling us they feel these things aren’t as important as salespeople think they are.
Could this explain the difficulties that drive some salespeople to leave distributorships and start their own companies, even though many say they really don’t want the administrative responsibility?
And what are these salespeople selling? Wearables continue to be the most frequently mentioned category for sales increases in 2001, with no other product category even coming close. Obviously, this is the growth category for the promotional products industry. This trend reflects increased spending for logoed merchandise to: a) promote an organization’s brand; b) enhance company reputation; c) influence brand image and professional appearance; and d) promote team spirit and unity among employees.
More and more consumers and employees are expressing their brand loyalty and identity through clothing that makes a statement. Sometimes it’s about consumption (e.g., “I drink Coca-Cola” or “I fly American Airlines”). Other times consumers may wish to garner prestige by wearing logos identified with expensive products – such as Porsche or Tiffany – or exotic vacations, like an African safari or hiking in Nepal.
On the other hand, employees wear company clothing because they’re proud of their companies or simply because the clothing is a comfortable alternative to wearing a suit and tie to work. Companies with good reputations may enjoy goodwill spread by employees who proudly wear their logos and recommend the brands to others. However, firms that mistreat employees may find that logoed wearables give their employees the opportunity to voice complaints about their employers and warn off potential customers. At any rate, the symbolic value of wearables will probably continue (or increase) as a driving force in promotional products spending as people strive to assert their individuality, as well as their corporate identity. |
Suppliers: Another Story
If we take a look at the nuts and bolts on the supplier side of things, we see another story altogether. Actually it’s a less complete story, since statistics from the previous year are sketchy. Overall, we found large drop-offs in the number of units per order, in the dollar value of the average order and in the overall units suppliers manufactured (or imported) over the entire year.
There also appear to be big losses in annual sales per distributor.
Despite this, the median number of orders suppliers processed was up. Again, this could support the trend of clients continuing to buy promotional products, but in smaller lots and at cheaper prices.
There was another bit of good news: Suppliers said that 30% of their orders were reorders, and that figure was up by a comfortable margin over the previous year. In addition, suppliers were able to trim sales expenses, which clocked in at 7.5% of total sales.
Can’t We All Just Get Along?
Ever wonder what would happen if you put all the heartless bosses in the same room with all the lazy salespeople? The truth is, you’d probably see a lot more heart than most reps would ever believe and a lot more perspiration than even the most jaded boss would think possible.
This year The Counselor made a move to bring together reps and distributor principals – at least in Statistics Land. We asked several questions to sales rep readers of our sister publication, Strategic Promotional ADvantages, then asked corresponding questions to distributors in The Counselor’s 2002 Annual Compensation Survey. Each group was asked to rank statements from 1 (“very important”) to 5 (“extremely unimportant.”)
What we found is a lot more agreement than you might think. Distributors and reps agreed on most things that were deemed at least “somewhat important” by both camps. And they put pretty much the same weight on most statements.
But there were some areas that showed a disconnect. Sales reps, for example, thought it was quite important to know what was expected of them, awarding it an average score of 1.35 out of 5. Distributors thought these expectations were somewhat less important, ranking it 2.12.
The biggest discrepancy was over the issue of whether sales reps got the chance to do what they do best every day. Reps gave that statement a 1.51, while distributors thought it only merited a 2.39.
The other major difference was over the mission or purpose of the distributorship – that is, did it make the rep feel his/her personal job was important. Reps gave that a 1.74 on the Importance Scale, while their bosses decided it was only worth a 2.39.
Interestingly, both reps and distributors agreed on the most important part of selling: that reps should have the materials and equipment they need to do their job right. Naturally, reps valued this more highly: 1.34 to the distributor’s 1.83.
There were some lesser differences on other matters. Reps thought it was more important that their opinions mattered; that they had opportunities at work to grow and learn; that someone had recognized or praised the rep once a week; and that fellow employees were committed to doing quality work.
Curiously, there was consensus on such supposedly hot-button issues as compensation and performance reviews.
Compensation was deemed important, and both sides recognize it (reps: 1.78; distributors: 2.00). Performance reviews, on the other hand, didn’t seem quite so important. Distributors gave a 2.53 mark to the idea of someone sitting down with a rep to discuss their progress – just about the same score as reps.
WWTPD?
The other thing we did this year was to identify the attitudes and attributes of top-performing sale reps. We looked at all the same questions to see where the best reps were thinking different than the rest of their colleagues. The results were surprising – or maybe not so surprising, considering the mysteries that go into making top salespeople.
As it turns out, successful sales reps are even less concerned than other salespeople with the mission of the distributorship, performance reviews, getting praise once a week or whether their supervisor cares about their development. Good reps even seem a little bit happier about their compensation.
What’s going on here? Perhaps it’s simply that salespeople who can sell, sell. They don’t need a lot of direction or help. They don’t need constant feedback and encouragement. Just get out of the way and let them sell.
But that doesn’t mean you shouldn’t care just because they don’t. You have a lot of reps who want your encouragement so they can become those top sellers who don’t seem to care.
Our research indicates that it’s the regular words of encouragement, along with the benefits of a well-run office (necessary materials on hand, everyone knows what’s expected), that helps reps grow. More formal tools like performance reviews can still be used, but they’re not a substitute for more frequent feedback.
Staff Development
Many distributors have an uneasy relationship with their reps. Their thinking: The better the rep, the better the chance the rep will leave for another company – or found his/her own distributorship. So there’s always been a tendency for distributors to play things close to the vest. Who knows, for example, how many distributors out there still don’t share supplier addresses with their reps?
That kind of attitude can be self-defeating, and nowhere is this more evident than in the areas of education and training.
How evident? At least 60% of distributors didn’t lay out one cent for any kind of
training in 2001 – sales or otherwise.
How could that be? “I think the majority of distributor owners [think] that whatever the salespeople bring in is just extra money for them,” says Jerome Bobis, MAS, president of Beacon3.Com (asi/134565). “They’re a little too protective and won’t send anyone out to be trained unless they show promise, and
few can really detect promise at all. I think the company falls short on reaching its potential because owners are shortsighted and don’t realize how much training can really increase their sales potential.”
Bobis believes in training his sales reps. “We go to shows and take the seminars,” he says. “Also, we have suppliers come in and show us their products.”
To be fair, there are many distributors who think like Bobis. In fact, the industry is dividing itself into the haves and the have-nots. Of the roughly 40% who did offer some sales training, the median expenditure was $1,000.
Some distributors feel they can’t afford to pull their reps off the road. But those sales seminars can often save time. “Unless they’re already excellent at artwork and the procedures of it, then they will be less efficient,” says Daphne Bianchi, president of DCB Marketing Inc. (asi/173701). “They might spend a lot of time on artwork that wasn’t any good, [but] if they were educated on it, they could tell the client what would and wouldn’t work. Knowledge improves efficiency.”
Other distributors worry about the expense, but that’s another red herring. “It’s more than a long-term payback,” says Brett Hamilton, president of Go USA Inc. (asi/208784). “It’s hard to quantify the [return on investment]. I can tell you we’ve shown growth in sales every single year since we’ve been in business – since 1985.”
    
The Making Of The Rep
As with many professions, sales is one of those “you either have it or you don’t” jobs. You can fertilize a rose and you can prune it to help it grow, but you can’t make a weed into a rose. Consequently, there’s no magic mixture of experience and education that will make the perfect rep. In fact, distributors don’t even put that much emphasis on experience. Far less than half (38%) say they require any general sales experience from their new hires. And half of those distributors who do want some sales experience still don’t require that it be promotional products experience.
Indeed, experience can be a conundrum for a distributor. Someone with experience could already have screwed up somewhere else. Or they could have learned a whole bunch of bad habits. “It’s kind of 50/50,” says Carol Ragghianti, MAS, president of Ragghianti & Associates Inc. (asi/303872), “the reason being that sometimes a salesperson who’s already had training as a salesperson is way off what we do in this industry. They don’t understand our
industry and that can be difficult to deal with.”
College Counts
Experience may be overrated for some distributors, but formal education is more valued than you might think. About 80% of reps have at least some college education, with 40% holding a degree, according to this year’s numbers.
As for industry education, we’ve already noted that there’s less emphasis than there should be. Expert salespeople spend an average of seven days a year on industry education and training, but 13% of those top reps say they get no education at all. Like a lot of other industries, this one offers most of its education and training for beginner reps. The average novice rep spends 11 days on training/education, though 22% of them receive no such help, say respondents to this year’s SOI survey.
The Ultimate Rep
So what does all that training and education provide a rep? A sustained, balanced selling style that goes against some of the idealist tenets of the industry. It isn’t just following the Protestant work ethic that gets reps into sales heaven.
Working hard and staying focused – even selling smart – all come in second to building relationships. When distributors were asked to name the number one quality of their best reps, 54% said their success came from having loyal customers who reordered again and again. “I would say it’s 80% of our business,” Ragghianti confirms.
Implicit in that emphasis on reorders are some of the great virtues of the sales business: First, there’s that old saying: “It’s easier to sell more to your existing customers than try to open new accounts.” Savvy salespeople know you can build a nice business by riding that initial successful sales call for all it’s worth. One good calendar sale in a particular year, and you’ve potentially got repeat sales each year into eternity. One good co-op sale, and you may never have to call on that client in person again.
Reorders can help all down the line by directing that business to a particular supplier and building a relationship on that end too. “Loyalty has to go from client to distributor and distributor to supplier, because now it’s coming to the point that everybody can go direct, and you really don’t have time to go fishing for the cheapest guy,” Bobis says.
After cultivating reorders, “maintaining focus and not wasting time” was the next most critical quality in top reps, cited by 20% of distributors. Then came hard work – that is, making a large number of sales calls every day – selected by 11% of respondents.
“It’s important for newer salespeople, but I wouldn’t myself,” Ragghianti says. “It would be a waste of time. It’s not that it’s not good, it’s just that I have a lot of customers and I need to keep up with [them].”
Selling smart – or being selective about which prospects to call on – was cited as the number one success factor by only 9% of distributors. Still, this option has its fans. “That’s really important,” Ragghianti says. “It gives you more info about who you’re going to see and probably gets you in the door faster.”
And more than three-quarters of top reps had a mix of both small and large accounts, rather than a few very large, profitable clients. So much for the theory that the best reps get the plum accounts.
What It All Means
Perhaps the main thing we can take away from all this is that there’s no pat formula. “You have to figure out what your goals are and what you want to achieve, and [that] will determine whether a customer or prospect is worth calling on or not,” says Bobis. “Will you be able to help your goals with this client? You
have to be careful – you may have to do more than you want for the money. Concentrating on who you’re going to call on makes your presentation a lot easier, and also you have a good idea of what your goals are. You could call on everyone, but you’d just be running around like crazy.”
Selling Sales Support
It’s one of the ongoing dilemmas of the sales business: Who does the commission go to? The rep, obviously; the sales manager, usually – but what about the folks who make sure the order is right, track it and (quite possibly) do most of the work with reorders?
As it turns out, promotional products distributors don’t think much of compensating the office staff for sales they may have had a hand in, reflected in the fact that only 1% of distributors thought “outstanding sales support” was the most important ingredient in a sales rep’s success.
True, these “behind-the-scenes” people may not be out there pounding the pavement with reps, but a lot of firms swear by their sales support infrastructure. Perhaps the industry is overlooking an important resource in the back-office.
“That may be the case because they don’t have sales support or don’t have good sales support,” Bobis says. “I’ve had it both ways, and I’ve had five different people running my sales support. One was really good. The others I had to work on.”
Distributors need to think seriously about sales support – whether reps seem to like it or not. “I think if you don’t have some sort of support, then salespeople may not feel part of the team or group,” Ragghianti says. “And if they don’t feel a part of it, [your competitors] will take them from you.”
The Last Word
When all is said and done, the statistic that distributors should care most about is this: Our survey shows that distributors are fairly confident their reps are happy. On a scale of 1 to 5, with 1 signifying “extremely satisfied” and 5 signifying “extremely dissatisfied,” the average distributor felt his best reps clocked in at 1.65.
Is it true? Are distributors properly gauging their reps’ satisfaction? It doesn’t hurt to err on the side of caution.
“I think people that don’t make sure their salespeople feel important are very wrong,” says David Sprague, president of Old Fort Specialty Corp. (asi/287200). “After all, when the company wins, they win – and vice-versa.”
Connie O’Kane is senior writer and Josh Vasquez is assistant editor of
The Counselor.
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