One step at a time

By strengthening its vendor base, segmenting products into logical groupings and helping salespeople develop a more value-focused approach to sales, Martin Industrial Supply wins new sales battles one customer at a time

by Richard Vurva

It’s tough to differentiate yourself when your company is known only as the place to buy hammers, drills and tape measures. Even when you have long-lasting customer relationships, at some point you risk losing business when the only way customers can tell you apart from your competition is because you stock 16-ounce, fiberglass-handled hammers made by Brand A and your competitor carries Brand B.

A few years ago, that realization caused Martin Industrial Supply to take a serious look at itself.

Despite a long history of success ($74 million in sales across three divisions in 2000), Martin recognized it couldn’t continue to grow by doing business as usual. Continued growth required a new approach. So, for the past few years, the Sheffield, Ala.-based distributor has been making strategic decisions to help prepare it for future success. It began focusing on three areas: shoring up its vendor base, segmenting products into logical commodity groupings and teaching salespeople the importance of selling value, not products.

Martin recognized that continued growth would depend on four key factors:

“We think it’s important to align ourselves with the one or two leaders in every product category,” says president David Ruggles.

Martin managers segmented the company’s line card into nine major product groupings, then asked themselves if the category leaders were present in each segment. In some cases, they weren’t. So Martin began a campaign to align itself with leading manufacturers. Over the last two years, it signed with abrasives, brush and cutting tool vendors American Saw, Seco-Carboloy, Milacron and Norton, and with safety manufacturers Uvex, Howard Leight and 3M.

“We know that our future growth will probably rely more on technical sales than on commodity products,” says James Teat, vice president of operations and marketing. “Coupled with the name brand products we already had, these brands give us a good offering to go after customers.”

Today, Martin has approximately 25 key vendors, many of which are members of Affiliated Distributors. Nearly half of these key vendors are new additions to the line card. Ruggles instructs salespeople to spend most of their time focusing on these strategic product lines.

“We still fill orders for other product lines, of course, but we don’t do sales training, run promotions or exert extra effort to present these products to the customer,” Ruggles says. “We just don’t have the time. We’re hoping that by providing technical support on those key products, it will pull through sales on all the other products.”

He also prefers to work closely with vendors who don’t load them with excess inventory simply to meet unrealistic sales quotas. He points to a recent experience with a key vendor to demonstrate why he considers it distributor-friendly.

A regional manager from Seco-Carboloy visited Martin’s Sheffield offices and asked to see their inventory records.

The vendor looked at them and said, “You’ve got way too much inventory here. You need to send these items back.”

“It was several thousand dollars worth of inventory,” Ruggles says. “We sat there with our mouths open. We’d never heard that from a vendor before.”

Paul Kieta, Seco-Carboloy’s manager of distribution and business development, says Seco-Carboloy wants distributors to stock only products with high frequency turns and products needed for customer-specific applications where local inventory is a value to the customer. It promises to ship any order received by 4 p.m. to the distributor or drop-ship direct to the end-user customer.

“We’re trying to reduce the total channel investment in inventory and help the distributor get a better return on his inventory investment,” he says. “It also helps us better plan our production because we see real-time activity.”

Teat says too many manufacturers still believe a loaded distributor is a loyal distributor.

“Programs designed to load a distributor’s shelves, especially at year end, do nothing for the distributor or manufacturer except create lower turns and replenishment headaches,” he says. “Hopefully in the future, more manufacturers will concern themselves with moving product from the distributor’s shelves to the end-user.”

That might mean introducing the customer to a new abrasive wheel that lasts longer or removes stock twice as fast. It might mean spending time with the customer to investigate a skid-resistant coating to solve a problem with slippery floors.

“If you can come up with a solution that gives them value, you’ve partnered with that customer,” he says. “You’ve actually provided something above and beyond a product.”

Selling value isn’t an easy concept to grasp. Many salespeople tend to fall back into the habit of equating cost savings with price-cutting. To help salespeople understand how to sell value (not price) and sell solutions (not products), Martin recently began emphasizing value-added selling in sales meetings.

Selling value starts with the simple concept that everyone is interested in saving time and money. It might mean increasing production time, extending tool life or eliminating unnecessary labor or material costs.

“We want to constantly hammer home the idea that when they’re out there, they’re looking for ways to save time and money,” he says.

Salespeople also attended a training session on how to document and sell value utilizing the Win-Win-Win value-added workbook developed by the American Supply & Machinery Manufacturers’ Association and the Industrial Distribution Association. The training introduced salespeople to the concepts of documenting cost savings, and demonstrating productivity enhancements and process improvements that affect the customer’s bottom-line profitability.

To make sure salespeople used what they learned, Martin introduced a new cost-savings goal for salespeople in 2001. Each salesperson must work closely with one major customer to achieve a cost reduction of 2 percent of that customer’s prior year’s purchases. The corporate goal is to show $1 million in total cost savings.

“Part of our job is to continuously tell customers, ‘You’re important to us, so this is our plan for you for next year,’” Ruggles says.

He believes that by demonstrating the value they bring to key customers on a regular basis, those customers will be less likely to switch suppliers.

“If you’re dealing with a guy who only wants to know your price, give him your price but don’t spend any more time on that customer,” he says. “He doesn’t view what you do as adding any value. You’re just a commodity.”

“Moving forward, more of our profits will come from selling services, not from the sale of the goods,” he says. “In this business, you always have to look at new and different ways to make money. If we’re looking to make a profit just selling commodities, I don’t think we have a long future.”

Selling safety services is one of the new areas where Martin hopes to see continued growth. It was a natural transition, since safety products are one of the largest single product lines Martin sells. With the addition of safety suppliers Uvex, Leight and 3M, Martin hopes to do even more safety business this year.

“We’re not looking just to sell earplugs and glasses,” Teat says. “We want to go in and show people how to avoid fines from OSHA, how to help their people work safer, whether that’s using the right safety products or having a safety incentive program that we’ll help them create. Those things add value.”

A newly named safety specialist recently completed comprehensive training from the Occupational Safety and Health Administration and certification from the Qualified Safety Sales Professional program of the Safety Equipment Distributors Association. His job will be to help outside salespeople sell safety products and also to sell safety services to customers, including confined space training and fall protection.

“When a customer has a problem, I want them to think of us first and give us a phone call,” Ruggles says.

In addition to talking to customers about safety services, Ruggles urges salespeople to discuss other service offerings available, such as bandsaw blade welding. The blade service is conducted in a state-of-the-art welding center in Sheffield that serves all the branches in a one-day time frame. Other services include paint surveys, motor usage surveys, chain sling inspections and overhead lifting seminars.

By emphasizing services, Ruggles says customers begin to look at Martin as more than simply a place to buy MRO products.

“I want to get to the point that when the MRO buyer says, ‘Why do we do business with Martin Industrial Supply?’ the answer will be obvious in all the services and value-added activities that we provide,” he says.

“We can go back to the salesman and point out product groups where he is not strong,” Ruggles says.

He and the salesman will discuss why sales in certain groups lag other groups. One reason could be the salesperson is more comfortable selling one particular product group. If so, a remedy would be to team the salesperson with one of Martin’s four product specialists (safety, electrical, electric motors and drives, and pumps and compressors) to help the salesperson get up to speed on that product group. Another solution would be to bring in key vendors for additional product sales training.

Sometimes, however, the remedy isn’t obvious until they analyze which customers buy certain product types. That may require comparing what one customer buys against sales to similar customers in the same Standard Industrial Classification (SIC) code.

For example, if the customer is a steel fabricator, how do its purchases compare to sales to other companies in SIC code 3441?

“If the average shows 27 percent of the purchases from customers in SIC 3441 are in the safety product category and you have a steel fabricator not buying safety products, you know he’s getting it someplace else,” Teat says. “That’s a good place for our salespeople to begin to target to sell deeper into those accounts.”

Teat says such data can be just as valuable to vendors as it is to distributors. In many cases, manufacturers don’t know which SIC codes use their products. He would like to see more information sharing between distributors and manufacturers.

“If manufacturers can’t tell me which SIC codes use their products, that says they really don’t have the marketing information they need to help us sell better,” he says. “Some manufacturers do a better job today than they have in the past, but there are many that don’t have a good handle on who the end-users are and how they use their products.”