Bearing Headquarters Co. looks at specific market segments to grow sales

by Rich Vurva

Most distribution company executives like to think of their companies as being sales-driven organizations. They’re fond of the saying, “Nothing happens until a sale is made.”

Jim Scardina, senior vice president for Bearing Headquarters Co. (BHQ) in the Chicago area, believes his company can differentiate itself from competitors because it has changed from a sales-driven organization to a market-driven company. The shift in thinking has resulted in dramatic sales growth in several new market segments.

Like many changes that take place within businesses, the move from a sales-oriented to a marketing-oriented culture at BHQ was driven largely by necessity. In 2002, one of its major customers, National Steel Corp., filed for bankruptcy and was ultimately acquired by U.S. Steel. The new ownership put several supplier contracts up for bid, and BHQ ultimately lost most of what had been about $11 million in annual sales.

Losing a Top Five customer account was a major blow. One of the lessons it taught company executives was to never allow themselves to rely so heavily on one customer or one market segment.

“We realized very simply that we had too many eggs in the primary metals basket,” says Scardina.

The company’s solution was to create a new sales approach in 2003 called Market Share Initiative (MSI). Its objective was to grow sales in markets where BHQ already had some experience, such as power generation or glass manufacturing, in order to be more resilient when sales soured in the steel or automotive industries, for example.

“When we went into the Market Share Initiative, we said there are a lot of other industries out there that we’re very good at. These are multi-million dollar sales entities and let’s find a way to concentrate on them, educate our sales force on them and get the sales that we need. That’s what MSI did for us,” Scardina says.

Define the market
The first step required defining the markets where BHQ would focus its efforts. In addition to power generation and glass, the executive team identified the pharmaceutical, package handling and machine tool industries as viable targets within its geographic reach, which includes 35 branches throughout the Midwest.

“We picked not only core segments in our marketplace that we focus on, but markets that our core manufacturers focus on as well,” Scardina says. “They have specialists for these industries or produce literature about these industries.”

Using data obtained from Dun & Bradstreet, BHQ identifies the key targets in each geographic region, and then begins to build an information packet about that specific market. For instance, the power generation packet contains information such as the number of power generation plants in a state or region, the year it was built, how many kilowatts of energy each produce in a year, the number of employees and other data. It also includes information on gearboxes, couplings, lubricants and power transmission products consumed in that industry. Regional executive sales directors (RESD) are charged with sharing the information packets with the company’s approximately 100 outside sales representatives.

“We’re giving salespeople everything they could possible need about each market, down to providing them with names and addresses of people to contact,” says Brian Sell, national accounts manager.

Educate the sales force
The packets also contain a brief overview of the industry and other background information to help salespeople become more knowledgeable about the industries being served. The information is gleaned from a variety of sources, including associations, government data, the Internet and suppliers. The packets typically contain eight to 12 pieces of literature from suppliers focused either on the industries or the products they manufacture used in those industries.

“We give them as much information as we can about an industry. Then we get into specifics about where to find motors, pumps, turbines, boilers and basic power plant operations,” says Scardina.

Since salespeople still have other account responsibility, the packets help them get up to speed more quickly on market segments where they may not have focused much of their efforts in the past.

Ideally, salespeople review the material in each packet before calling on a prospect. Rather than merely dropping all of the brochures on a prospect’s desk in a single visit, salespeople select appropriate literature to take along on each trip.

“If you’ve got 12 pieces of literature, give him a couple one day. Now you have a reason to go back to do some follow-up. When you do go back, you have some new literature to take as well,” Scardina says.

Over time, the hope is that prospects will begin to recognize that BHQ salespeople are more knowledgeable about their industry and their company than the typical distributor salesperson.

Often, as salespeople learn more about an industry or an account, they’ll uncover other opportunities and information they can add to the packet, Sell adds. The objective is to continually build market information and share it companywide.

Require accountability
After salespeople receive the market-specific packet, they’re required to report back to their supervisors on progress made contacting prospects. Each packet contains a key account/major initiatives call report salespeople must return to their RESD within 45 days. They can also share information using ACTS customer relationship management (CRM) software. In November, when BHQ plans to go live on a new distribution software package from VAI, salespeople will be able to use VAI’s CRM module for reporting purposes.

“One reason this initiative has been successful is because there’s accountability built into it,” Scardina says. “Salespeople know we’re regularly tracking their progress.”

The company also provides additional sales support, such as customized PowerPoint presentations or additional supplier involvement. BHQ periodically plans promotions focused on a specific industry segment.

Scardina says the MSI program has generated double-digit sales gains in each of the five major markets focused on every year. Since launching the initiative in 2003, about 30 percent of the company’s sales come from these five major market segments.

In a sales-driven organization, distributors typically identify which supplier’s product they want to promote, then give salespeople a financial incentive for boosting sales of that product. Often, the efforts fail because companies don’t give enough direction to focus their sales team’s efforts. Several years ago, for instance, BHQ beefed up its inventory of paver bearings used on paving equipment and told salespeople to go out and sell them. Eighteen months later, most of the product remained on warehouse shelves.

Today, BHQ takes a more focused approach. The company recently ran a database of paving contractors, armed salespeople with a biography of each prospect in their territory and industry-specific literature, and instructed the sales team to focus their efforts on that segment. By the end of the 90-day promotion period, the company sold more than half of its entire inventory of paver bearings.

Sell says MSI has helped salespeople become more focused in their approach with prospects.

“This helps us showcase our strengths and diversity to customers. It gives us an opportunity to talk about all of the services we offer, such as our metalworking shops where we can do repairs, our integrated supply and data cleansing capabilities, and our ability to service national accounts because of our relationship with IBC, the national distributor alliance,” he says.

MSI works because it forces salespeople to first understand the market, learn about the customer prospects in their territory, then determine what products are appropriate to promote within that segment, Scardina adds.

“The Market Share Initiative has transformed the way we go to market. It has become a way of life here. It has made a lot of difference in holding the sales force accountable and getting results we require to be successful as a company,” he says.

This article originally appeared in the September/October 2007 issue of Progressive Distributor. Copyright 2007.

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