President & COO of Modern Distribution Management Ian Heller discusses the Marketing & Sales landscape in wholesale distribution.
Ian Heller is President/COO of Modern Distribution Management (MDM), the most trusted resource for market intelligence and industry insight to wholesale distribution executives and industrial product marketers since 1967. He began his distribution career as a truck unloader in a Grainger branch in college.
Heller left that company 15 years later as Marketing Vice President and has held senior executive positions in marketing and eCommerce at GE Capital Rail, Newark Electronics, Corporate Express and most recently as VP Marketing for HD Supply White Cap. He also founded and ran Real Results Marketing, a distribution-focused consultancy, for seven years.
Heller is one of the speakers at HARDI’s upcoming Marketing & Sales Optimization Conference in Miami from June 3–5, where he will be discussing “The 10 Commandments of Distributor Marketing in the Age of Amazon Business” with attendees.
I had the opportunity to pick his brain on some marketing and sales topics:
What is the biggest challenge you see distributors struggling with on the marketing side of the equation? What’s something they can do to overcome?
I think too many distributors see the marketing department as sort of the ‘sales collateral’ department. And while I think that supporting the sales function is absolutely one of the core functions of a marketing department, the marketing department should also own all of the customers that are not assigned to sales reps. And one thing they can do to overcome that failure is to start measuring customer life cycle. How many new customers do we have, how many customers have we lost? How many are growing, how many are declining?
If the marketing department does not manage customer lifecycle, probably nobody does. And it helps them prove their value, it helps them how to figure out the business, and it can make a very substantial difference in a firm’s financial results.
Much of your writing for MDM discusses the importance of branding and some “how-to” tips. In one article, you talk about avoiding making your company message or tagline too “aspirational” and vague. You also suggest being specific enough in the message to show what your company does. But in HVACR it seems 9 out of 10 companies (less so in the distributor segment, more on the contractor side) use flame and snowflake logos, with some kind of “fire and ice” reference. What is one way distributors can stand out and brand themselves in a way that differentiates them from other distributors?
They need their branding to talk about how their customers benefit from buying from them. Brand messages should be customer-directed or done from the standpoint of the customer. And the other thing is, if you keep using the same references everybody else uses then you just get lost in the generic advertising that everybody does. I mean, in the retail automotive industry do we really need to see Santa Claus selling cars again next year at Christmas? People like advertising that is clever, but they act on advertising that expresses benefits.
Can you elaborate on “benefits”?
If I’m an HVACR distributor, and I say ‘we get parts faster to you so you can make more money,’ then that’s meaningful to a contractor. You know, you get parts faster, you can keep your technicians more productive in more of their hours and you make more money, etc. So that’s a meaningful thing to a contractor versus some of these ads around people being too warm or freezing in their houses, everybody already knows that problem.
So correct me if I’m wrong, the Marketing mantra should be ABPV — Always Be Projecting Value.
Yeah — sometimes you can use emotional hooks, but you need to be careful with them because people are suspicious around emotional appeals. So, if you use them they need to be very well done. But business is business, people are trying to make money. If you’re selling to contractors and it costs them more money to buy from you than your competitor, then it’s not just the price of your products, but how good of technical support you have, how fast you get products out, how well do you support your customers if they have problems? What’s your return policy? All those things help contractors make more money.
So, if you have a good value proposition that’s dialed in to customer needs — which is also a marketing responsibility by the way, understanding those needs — then you can make appeals that really resonate with your target audience because it is what they want to do, which is make more money.
In your recent article, College Degree Not Required, you shared the story of how you started your career, and ended the piece with “You may find that your future VP of Marketing is unloading trucks in one of your branches.” There are a lot of people out there with marketing degrees who would make attractive candidates for marketing jobs. So, how can distributors make the connection with their current employees to tap into any unseen marketing potential? How can they get over the mental hurdle that degrees mean “better-qualified” when looking at candidates for marketing positions?
I think it’s hard to teach marketing in a college setting, because the discipline is so broad. And the marketing that works varies a lot, not just by industry, but by company size and also business model. So having a marketing degree doesn’t necessarily make you qualified to be a marketer in many different companies.
I was a guest lecturer at a pretty highly-regarded university recently and I was talking to seniors who were about to graduate with marketing degrees, and they hadn’t had an online marketing class because it’s not required. I mean, that’s nuts! It’s 2018, and you don’t have to take an online marketing class to get a marketing degree? So I was talking about really basic stuff with online marketing like retargeting and SEO, and half the room didn’t know what I was talking about. Frankly, there are people with community college certificates, or people who have just been asked by their company to figure out Google AdWords who are better qualified to get marketing jobs than these graduates from this prestigious university.
You know, I could not agree with you more on this. From what I see as part of what I do for HARDI’s marketing team, the marketing industry or rather the marketing role and how it’s evolved — yeah, you have to have this exposure to the technical side of things at least somewhat because that’s just how business is conducted nowadays and that’s where it’s heading. I totally get it.
It’s like the one constant. You have to know online marketing. That’s like the one constant no matter what marketing role you’re in, you got to understand how Google works. You’ve got to understand how basic online marketing works. And you have to understand trigger marketing. And if you’re going to understand marketing automation you have to understand online marketing. I just don’t see any correlation from over my career, whether people who have degrees means they’re any good in the job.
And I’m not against college degrees, like I wrote in that article I made my kids go to college, because there are a lot of people who do have a prejudice against non-college graduates. And I think it comes from the top. I had to strip out — and it was an arm wrestling match in some of my jobs — “college degree required” from my job descriptions because for the most part HR people really just wanted it in there because it made it really easy to screen resumes, or maybe they believe it’s material — I don’t know.
But I think the CEO or leadership of the company has to decide that we’re not going to follow that anymore because it doesn’t make sense, or that it doesn’t make sense so we’re not going to put it in place, because otherwise you’re never going to see the resumes that don’t have degrees because they’ll get screened out in the process. A lot of companies have the requirement of well, if you want to go into the management training program you have to have a degree, or they have you know MBA rotational programs. I get it, I’m not demeaning the value of those degrees, I’m just saying that shouldn’t be the binary yes/no filter as to whether or not you consider someone.
So going back to what you said earlier about marketing being seen too much as a corollary to the sales department, and tying it in with what you just said — we know the traits for the best sales people, you know, people who are hungry; they’re sharks. What are the traits you want to see in marketing people?
It depends on the marketing position, like if you need someone who is more of a designer, which you know is a part of marketing. But in general it’s someone who’s creative, but also it’s someone who can be creative toward a specific outcome. I mean you’re not just looking for artists, you’re looking for someone who can design to generate profits. No matter what you’re looking for people who appreciate that the ultimate goal is to generate profits.
You know in marketing leadership, I really like people who are very aggressive. I like people who are task-focused and they get things done, but they have very, very good team skills. And a lot of times, people who are that aggressive don’t have good team skills. So you’re looking for something that’s hard to find. So for marketing leadership you are looking for people who are more aggressive, they like to win like sales people do. They like to ring the bell in their special certain sort of area, and they’ve got good team skills. It’s a hard ask.
I see that, because you hear all the time about what makes a good sales person in terms of those traits, but like you said marketing just kind of falls on the backburner when businesses, especially distributors, are always “sales-driven”.
Well they don’t always understand what marketing can do for them. Very often when I was consulting, the head of marketing was somebody who used to be a sales person. Or it was a creative person who had designed a nice brochure at some point in time. So good marketing starts with objective. You know, ‘here’s what I’m trying to accomplish this year. I want to onboard X number of customers, I want to improve my retention from rate X to Rate Y, and I want to extend the average product purchase by account from 4 to 6, or I want to launch 100 new products this year, etc.’
Frankly, you have to have good quantitative skills to be a marketer anymore. A lot of people go into marketing because they’re trying to avoid the quantitative subjects. And I get it, I wasn’t good at math in school. But over time you figure it out, and the reality is if you can’t use Excel decently well, you probably can’t be good at marketing.
You also see this technical side always evolving, with all the constant changes and upgrades.
Yeah, but even if you weren’t good at the quantitative side of things you aren’t necessarily at a disadvantage. I used to think I was terrible at math until I got to grad school and a finance professor persuaded me that I wasn’t. It was frankly a life-changing conversation. He made me think about math differently than I ever had before. I wish I could have that conversation with everybody who thinks they are bad at math because he gave me a different lens to look at that through.
Excel did not come easy to me. I had to learn it. Now that I know it, it’s the program I use the most in the Office suite. Which 25 years ago I would have never believed that was the case.
What’s the status quo when it comes to automation on the sales side of business (websites, apps, CRMs) and where are we heading in the distribution industry?
There’s a trend right now called retail-pocalypse. There was a bunch of information this past week in the newspapers, well, the websites now, about how there’s a record number of retail square footage being shut down this year. I think it’s naïve to think that’s not coming to distribution. I hear distributors say, ‘well I’m not going to build a website because I can’t be Amazon.’ And my friend Johnathan Bein, over at Real Results Marketing (a firm I started by the way) — this is his quote — ‘Just because you can’t be Macy’s, doesn’t mean you don’t need a store if you’re a retailer.’ And it’s absolutely foolish not to be investing heavily in a great website now, even if you don’t think you’re going to sell a lot through it.
People make the mistake of measuring the website’s benefit base on how much they sell through it, but a lot of times people will use the website as their replacement for a paper catalog. And they’re calling in the order, or sending it in by email. Or talking to their account manager. But having that real-time view of what inventory you have to sell, with detailed information about it, is invaluable to every customer and every one of your sales people. So you have to have that now. 20 years ago, you had to invest heavily in paper and books, well now you’ve got to have that website. And don’t measure it based on how much you sell through it. Measure it based on how much you or your customers use it.
In the face of online sales, website upgrades, and now these apps, how can wholesale distributor employers empower their sales reps to perform or keep performing? On the flip side, how can sales reps surpass these obstacles that may encroach on their commissions?
Well first of all, if you put the sales reps in opposition to the website, your website will probably fail. You’ve got to put it in the sales reps’ interest for the website to succeed. And you’ve got to put it in their interest in the long term. So, when in doubt, pay it out when it comes to commissions. If you have a salesforce, they’re fundamental to promoting your website. You need to make the website another tool for the account managers to use to get sales, not an enemy they have to fight that’s internal.
Look, I don’t think the equation for outside account manager excellence has changed that much. You need really knowledgeable account managers, they need to understand the products that you sell, understand your customers’ businesses, and sell in a consultative way that makes the customer more successful. If they are just order-takers, they are absolutely a risk, because it’s more efficient to take orders online. People point to millennials, but it’s just a sophistication of technology and people getting used to it.
Each generation is becoming more comfortable at buying online vs. buying in person. And that’s not going to stop. Whoever’s behind millennials is going to be even more adept and used to buying online than millennials are. That’s just a function of the technology curve. So if your account managers are just order-takers, then they’re going to go away, or perhaps find other work. But if they really understand the customers’ businesses and goals and they can help the distributor develop new services that are valuable to the customer, then those account managers are going to be around for a long time.
I have to say, it’s a little refreshing hearing about technology and millennials in the same sentence without us getting blamed for something.
I’ll tell you, I love millennials. It’s my favorite generation since the greatest generation. I’ve got two sons who are millennials, and my wife and I talk about this all the time. Their awareness of what’s going on in the world and the level of sophistication they bring to it, their social responsibility, is so far beyond what my generation experienced.
And by the way, people have been bashing the latest generation since the Greeks. You can find quotes from Socrates or Plato, writers from 5,000 years ago on how the next generation is lazy and they’re taking the world to hell in a handbasket. I get so tired of hearing it. And when I hear people complain — in fact I was on a conference call and somebody was bashing millennials in a question, and my answer was, ‘if you’re bashing millennials, that says a lot more about the person bashing than it does about the millennials.’ I don’t have any negative stereotypes about your generation. Every generation has its things. Just because there’s a tiny percentage of morons swallowing Tide pods, that’s not an indictment of a generation. I mean, we did our stupid things too.
Marketing and sales are so intertwined, focusing on the same goals, yet they pursue those goals from different approaches. What is one piece of advice you can give to distributors on how they can align or improve their operations between their sales department and marketing department? Can you give us a teaser for your “10 Commandments of Distributor Marketing in the Age of Amazon Business” session at our upcoming Marketing & Sales Optimization Focus Conference in Miami? I.e. what’s one of the 10 (if you are open to sharing)?
If you have a chance to look at that 10 Commandments for Distributor Marketing document that I sent out, one of the things I say in that is, when sales and marketing argue in a company, sales wins — whether or not they’re right or wrong. And frankly, they’re usually right, because they are closer to the customer.
The reality is the sales people have a scoreboard that everybody in the company sees, and if they don’t win the game often enough, they lose their jobs. Marketing people don’t have that kind of pressure, for the most part. So if you don’t have that kind of pressure, then quit complaining about people who do, because you don’t know what it’s like to be in their shoes. The marketing department needs to support the sales department first and foremost, and then do a bunch of other stuff too. Not that the sales department is always right, or that every salesperson is always right, but since sales people are closer to the customer, they tend to understand them better than people in the marketing department do. That’s the painful, true fact. So listen first, and listen carefully. If you’re going to disagree, make sure you know what you’re talking about first.
In a nutshell, if there’s conflict between marketing and sales departments in a company, the marketing department’s going to lose, most of the time. So, let’s talk about what makes these two work together, because if there’s conflict your company is going to lose.
HARDI (Heating, Air-conditioning and Refrigeration Distributors International) is the single voice of wholesale distribution within the HVACR industry.
HARDI members market, distribute, and support heating, air-conditioning, and refrigeration equipment, parts and supplies. HARDI Distributor members serve installation and service/replacement contractors in residential and commercial markets, as well as commercial/industrial and institutional maintenance staffs. HARDI proudly represents more than 480 distributor members representing more than 5,000 branch locations, and close to 500 suppliers, manufacturer representatives and service vendors.
For more information, visit www.hardinet.org.