Insights into the forces shaping our industry.
The electrical industry is changing rapidly; new technologies, new channel partners, new competitors. The impacts of rapid change are pervasive throughout all functions within any business in this industry. Training, hiring, establishing budgets or quotas, travel, vendor reviews, etc. are all experiencing unprecedented new complexities. The adherence to established business processes is simply no longer a competitive strategy. Alternative energies, electronic controls systems, LED lighting, energy-reduction incentives, smart grid, cloud computing, bring your own device and sophisticated CRM systems that can track POS information or social media information are changing business every day. So how does a business owner or manager manage in this environment?
It is unreasonable to assume your sales leader is fully aware of nascent channel opportunities. In the past several years, we’ve seen the emergence of lighting integrators; franchised specialty distributors, internal ESCO’s, solar specialists and the emergence of a large growth movement to direct end-user engagement. The legacy industry channel model of Rep, Distributor, Contractor and Specifier holds only for new construction markets. In less than 5 years, the industry has seen the rise of many B2B models that eschew those traditional relationships. The decision for a CEO now appears to be, do we engage those potential new customers, or do we tie our future to the traditional model and be bound by the vagaries of the construction market? As construction returns, it could be considered safe to ignore the B2B markets, as long as construction continues to grow. But if your business plan is to grow your company profitably, it’s time to seriously look at alternative approaches to selling and marketing your products.
Let’s start with a few examples of ‘new channels”:
- Johnson Controls has their own internal ESCO; as does Eaton, as does Schneider. What is the possibility of an alliance partner with any of these companies for products they don’t directly manufacturer?
- Honeywell has launched a line of lighting products, targeted at the industrial market.
- Orion ‘licenses’ contractors to function as their direct sales organization, and in return Orion helps train and establish a training showroom in the contractors’ business.
- Solar equipment manufacturers (panels, racking systems, inverters, cable assemblies) have a fully-emerged base of VAR’s who generally are solar contractor/installers and designers.
- LED and control system companies have identified HVAC, ESCO, CEDIA firms and Lighting maintenance firms as willing partners to identify joint opportunities for targeted large end-user retrofit applications.
In each case, a pure legacy industry ‘guy’ would either not be aware of these relationships or dismiss their performance since their current sales organization works with channel partners to target all of these same markets; every day. Nothing could be further from the truth. Channel partners in this industry have been doing the same thing for decades: they sell new construction equipment to contractors and MRO equipment to industrial or commercial customers. In short, they sell what their customers ask for. The emergent channels are exactly opposite of the traditional selling model: their model is a pure system solution based upon an ROI style of selling. That is foreign to traditional manufacturers and distributors.
How does a legacy company get there? It starts in the CEO’s office with leadership. But from that point on, it’s all about talent; attracting people who understand how to sell in a total cost of ownership environment; with training and technical aptitude and marketing support from the company. When you are an industry leader such as Schneider or Eaton, you do not casually create an internal ESCO organization and charge them with the task to identify end-user, direct sales opportunities; while you are also playing golf with Graybar.
Leadership is all about managing expectations. Establishing a new course of action that could entail significant channel backlash requires careful analysis and a careful plan of attack. Setting reasonable goals across the enterprise and managing every employee’s expectations that the new plan will be purely accretive to the overall company’s sales and profits, takes leadership.
Consider the depth of support within an organization required to succeed in a divergent channel strategy: training, vendor relationships, hiring, marketing, customer service and quotations, etc. all have to be aligned and in agreement with the strategy. And your current sales team also has to be supportive of the new team who will occasionally conflict with traditional channel partnerships.
Managing expectations simply means getting out ahead of the issues and clearly communicating the message so that everyone understands the direction and potential benefits and pitfalls of the move. Our philosophy is to manage expectations and mitigate emotions throughout hiring processes that are almost never easy. In short, it’s all about leadership… tell people what to expect and then deliver.