Engineered Products Company
SGS Wires EPCO for Top Line Growth.
A supplier of specialty products to electrical contractors and distributors/wholesalers experiences flat sales as its smaller product line competes for rep agencies’ share of mind.
Sales Growth Specialists challenges the management team’s excuse-making mind-set, and facilitates their transformation to accountability-based sales management.
Bottom Line Results
- YTD sales improved 31%.
- Improved communication processes have strengthened management team effectiveness.
- More frequent, structured communication between management and independent reps clarifies expectations, holds reps more accountable, and enhances rep share of mind.
Accountability Enlightens Sales Management
When Engineered Products Company (EPCO) closed its books at the end of 2002, the company’s profits concerned President Jack Schuster, who recognized cost improvements that created good margins were responsible for profit results. “What I didn’t see troubled me – lack of revenue growth. The top line was flat, and while we offer many items for booming residential market, 60- 70% of our sales volume is for commercial and agricultural facilities. With both of these building types still flat or in decline, I realized that we needed help turning sales around.”
So he contacted Sales Growth Specialists (SGS) for sales management expertise. But the road to performance improvement is not for the faint of heart. And like other companies that SGS has helped, EPCO had to slay the protector of the status quo – lack of accountability. “I remember how shocked I was with the results of our sales force evaluation,” Schuster explains. “When we agreed to this diagnostic step, I really didn’t think it would be such a blow. Essentially, we (Schuster and his two regional sales managers) found ourselves the cause of the problem.”
SGS President Danita Bye introduced Schuster’s team to an objective assessment tool that revealed EPCO’s sales management processes lacked accountability. Schuster did not hold his sales managers accountable, and the sales managers did not hold their independent reps (who sell to distributors) accountable. “My knee-jerk reaction was defensive,” Schuster admits, “but after a weekend of thinking about the situation, I knew Danita had nailed the issue.”
Fortifying Share of Mind
Share of mind was a big issue for EPCO, which for most of the rep agencies the company dealt with was low in importance out of the many lines they carried. “Our product line is rather eclectic, comprising bits and pieces of our largest competitors’ product lines. So the distributor gives us some items for certain reasons such as price, quality, rep relationship and service. But the large competitors have a leg up on share of mind because of their broad product ranges.”
Equating size of EPCO’s product line with commissions, Schuster shares his initial skepticism about the concept that EPCO could hold their reps accountable when the company provided an average of only $1,200 in commissions per month to its 35 rep firms. “How could we track deals when our reps don’t report to us? And if we couldn’t hold reps accountable, how could I hold my sales managers accountable?” he says.
Tools Promote & Measure Progress
Bye boiled the answer down to a fairly simple concept – follow- through – planning, executing and checking up to ensure results. She introduced EPCO’s leadership to key management tools for building a culture where people take personal responsibility for results.
The annual business plan anchors the process. Schuster and the appropriate regional sales manager have a teleconference with each rep agency in which each sales rep offers a forecast of sales for the year. The EPCO sales managers massage the reps’ forecasts with other factors to come up with numbers they agree to be held accountable for. The quarterly plan is the instrument that holds regional sales managers accountable to him and the reps accountable to the regional managers.
The opportunity board, with its listing of potential opportunities and who is responsible for each, is a key tool for ongoing communication with each rep and managing progress. “It helps us focus continuous attention on results apart from key daily operations (marketing, operations and IT),” Jack explains. “The documentation forces analysis of situations, and leads to greater accomplishment.”
Internal communications have improved dramatically since the introduction of monthly accountability meetings. Employees now have clear expectations that are in synch with management. Everyone knows where they stand and how to prioritize.
SGS also helped EPCO sales managers with coaching by training them on how to identify rep behavioral styles and coach for the various styles. In addition, EPCO is using an SGS- recommended scorecard that identifies the characteristics of good rep candidate and evaluates potential candidates.
Foundation for Continued Progress
In retrospect, Schuster summarizes EPCO’s progress. “It got worse before it got better. There was lots of excuse making and blame-game playing. We had to admit we were not effectively managing the reps. It required a total mind-set change. Instead of questioning our right to manage, we own the right to hold our reps accountable, because in fact rep commissions are our biggest expense.”
Accountability has also helped maximize results of the company’s marketing efforts. “Our first promotion generated an 87% increase in unit sales. And although our second promotion wasn’t so stellar, it did influence sales. We believe that our accountability-based relationships and our marketing efforts are working together to capture greater share of our reps’ mind,” Jack says.