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“We have a passion for serving our customers with the highest level of integrity, and we are committed to the development of our associates” — a core value of Ferguson. Ferguson is the largest wholesale distributor of residential and commercial plumbing supplies and pipe, valves and fittings in the U.S. The company is also a major distributor of HVAC equipment, fire protection systems, waterworks and industrial products and services. It was established in 1953 by three men and a modest starting capital of $165,000. They started with two locations in Colmar Manor, Md., a suburb of Washington, and Birmingham, Ala., for the purpose of servicing smaller plumbing contractors. From these modest beginnings, the company now has 1,400 locations from coast to coast, as well as the Caribbean, Puerto Rico and Mexico.
The upward trajectory of the company, with more than 27,000 associates, is based upon a cultural belief that success can be realized by providing world-class customer service demonstrated every day through expansive product selection backed by knowledgeable associates. This simple approach has catapulted the company to end the 2019 fiscal year with sales of $18.4 billion, and having grown 6.2 percent on an organic basis, with an additional 4.2 percent coming from acquisitions.
Accompanying this growth is a dedication to developing excellence in the PHCP and PVF community — from developing the best talent team, providing customers with solutions to disruption in their business, and investing and giving back within the channel and the communities it serves. We sat down with key members at Ferguson to spotlight their investments and philanthropy, as well as how their approach is adaptable by other companies within the channel.
From the Top Down
“Ferguson is a company that has proven it can adapt to the times. The company’s rich history and second-to-none customer service make it an industry leader, but its associates make Ferguson the company it is today.” — A Ferguson core value.
Kevin Murphy has spent the majority of his career in the PHCP and waterworks industries. As Ferguson’s CEO, he guides the organization on its value of investing in associate knowledge, opportunity and growth to move the company forward.
This includes the organization’s omnichannel approach — from cultivating additional sales opportunities via an e-commerce platform, investing in disruption via Ferguson Ventures (the company’s corporate venture capital and strategic partnering arm focused on innovation and disruption), and giving back to the communities in which it does business through Ferguson Cares, the philanthropic arm of the company.
“The history of Ferguson has been about bringing in talented people into this industry and making sure they have the opportunity to grow their career and sphere of influence,” Murphy explains. “That is what drives performance. Our associates care deeply about making their customers’ businesses more successful. As long as you care about your associates, they’ll take care of your customers. That’s essentially the rule we try to live by every day.”
Fostering and encouraging personal growth and success is vital to associate enrichment, and ultimately helping them advance to the next level. “At Ferguson, if you don’t teach, mentor, train and help individuals inside your branch, inside your functional department, then you can’t move on to the next role,” he says.
One of Ferguson’s and the industry’s biggest challenges is the “aging out of the trade profession and the construction workforce,” Murphy notes. Its customer base in almost every line of business is searching for the skilled workers who will help build up their companies. “When we look at our challenges, we need our customers to be able to grow their business so that we can, in fact, grow our business,” Murphy explains.
Helping customers grow their businesses helps the United States expand and rebuild its infrastructure. “We work together with a variety of organizations across the country, from the Policy Advisory Board, the Harvard Center for Joint Housing Studies, the American Supply Association, the National Association of Wholesalers and SkillsUSA — and each is vitally important to keep moving forward,” he notes.
Another challenge is understanding customers’ pain points and finding innovative methods to address them. This is easily translatable into the company’s e-commerce platform, its venture capital arm as well as the hiring and training of its talent.
“If you look at how your personal life has changed in terms of how you access information, how you can place an order, and have that delivered to your doorstep within 24 hours — all of those things translate into a B2B expectation,” Murphy explains. “Making sure you fulfill that B2B expectation is changing by the day. What is a best-in-class omnichannel approach? How does a person access information digitally? How do we make the brick-and-mortar store experience just as seamless? The approach changes depending on what that customer’s expectations are.”
Shining a spotlight on the industry has been a challenge — and at times the consensus is that it’s the best-kept secret. Bringing the industry and organization to life in terms of attracting talent is where Jeff Whipple, vice president of talent at Ferguson, is in charge.
Whipple notes that since Ferguson is such a large company, comparisons to other large businesses — such as food and soft drink distributors — are inevitable. “People know about those industries. We try and build a broader awareness by communicating what our industry offers and why Ferguson is unique. We lead with our strong culture and commitment to our customers — that is what motivates us,” he says.
Tapping into what drives an individual — what they bring to a group and what they are expecting in return — helps company managers explain how those desires can be fulfilled at a position within the wholesale distribution firm. “If you can link how an individual can bring his or her skill sets and unique talents to the team, to our culture, to the customers, and then translate that to how those skills align to our business goals and objectives, you hit a home run,” Whipple says.
An important part of attracting talent is Ferguson’s training program Started 52 years ago and recently named the College of Ferguson, the program consists of a five-month rigorous on-site and hands-on learning program that “covers everything from our culture, mission and values, our customers, and then dives into our product training systems,” he says.
On average, the college will have 300 to 600 people each year enrolled in the program, where they spend their time working in the warehouse, at the counter as well as inside sales. “It’s a tremendous investment, probably the most investment we make in our talent because many of them become future leaders in the organization,” Whipple explains.
Many of the trainees hear about the college from friends and neighbors of existing trainees. “We know word of mouth and the ability to recruit friends, family and peers from college and other jobs is a very powerful tool,” he says. “It helps with retention, but it really drives engagement within the organization. Engagement then links to productivity. Productivity means happy customers. With that, you then have a successful, thriving business and culture.”
The training program posts a success rate of 92 percent — those who start the program and are still with the company after three years. “You see people move from inside sales to outside sales, inside sales to branch, branch to showroom, showroom into corporate.,” Whipple explains. “Many of the top leaders across Ferguson have 30 plus years tenure, who started as a trainee in the program.”
He adds: ”We’ve always believed that the ability to have a long-term career is really one of the most attractive features for future associates. The College of Ferguson is at the heart of that.”
For additional training opportunities, the distributor continually invests in its learning content so associates can keep up to date and, in turn, support the customer. ““Everything we do is to help our associates align to our business needs and to help satisfy our customers. That’s job one,” he notes. “We’re placing more resources on developing those learning assets around product knowledge. It’s micro-learning, interactive technology, a heavier use of video and shorter content assets to help make sure that our associates can get the learning they need when they need it, where they need it, and as quick as possible.”
Innovation and Disruption
Ferguson’s priorities are to deliver innovative solutions to help their customers run a better business and be well positioned for the future. Ferguson Ventures was created to help address and solve its customer and industry challenges by investing in and partnering with companies and startups to accelerate the use of emerging technologies. To defend against disruption, Ferguson Ventures gathered best practices from other industries, and established two innovation labs. The purpose of the labs is to explore industry-changing innovations and oversee pilot programs.
“We continuously seek to understand our customers’ pain points — the disruption they see incoming or already encounter in their business,” says Blake Luse, director of Ferguson Ventures. “How can we make them more successful? We looked at innovation and disruption in the industry, the need for productivity, the labor shortage, as well as areas of disruption for Ferguson and the vertical integration of the industry.”
From there, they gather ideas on what needs to change — and how it can help today, tomorrow and years down the line.
Ferguson Ventures has entrepreneurs knocking on its door to discuss emerging technologies and potential disruptors. Many times, its associates out in the field who hear from their customers of challenges — “If I only had this …” — and the innovation lab goes to work on finding a solution. “We talk to about 40 start-up founders each month,” Luse notes. “We ask founders about their team, the problem they are solving, the size of the market they are going after, and trends in both the industry and technology. We focus on understand if they have product market fit based on their traction and feedback from customers.
If the solution is a viable fit — either a commercial opportunity for the business or an investment opportunity — it proceeds forward. “We’ll write up an investment memo and present it to our investment committee,” he says. “After due diligence and the investment closes, it moves to our portfolio development team. This is powerful because the value from a strategic investor comes after the investment is made. We believe it’s a competitive advantage that once we make the investment, we’ll bring that startup founder into town and move forward with a roadmap to create value together.”
To date, the company has seven investments including Payzer, a software product that helps specialty trade contractors grow and manage their businesses.
To spotlight the industry, Ferguson Ventures partnered with the College of William and Mary and ran an innovation challenge where 25 students were placed into teams and given a challenge on how to help contractors maximize the billable work hours of their workforce. The teams were partnered with a Ferguson mentor for 10 weeks to work on the project. The teams then pitched their solutions in front of a panel of judges — from Kevin Murphy to other leaders across both Ferguson and William & Mary. The winning team received a monetary prize — but the best part is four of the participants interned for Ferguson.
“The bigger picture is that the university and students now have first-hand knowledge of and an introduction to our industry,“ Luse says. “They may never have looked at the construction and wholesale industry before; now they see the company, the industry, and how solving a problem and challenge can be universal. They see a viable industry.”
‘Faster than a Phone Call’
“Our ferguson.com customer is just as important to us as the customer that visits our branch. We want to provide them with a great customer experience regardless of how they chose to do business with us,” says Chip Devine, senior vice president of e-business and omnichannel. “We are an online relationship — a digital extension of the branch and the relationship we have built with our customer.” The e-business and omnichannel digital experience make up 20 percent of the company’s revenue.
Ferguson.com is not a separate business; instead, it was designed to help meet the needs of Ferguson’s customers by providing a 24/7 relationship. The digital experience spans across customer types from the contractor to commercial, industrial and the residential builder. Each online experience is tailored to that particular customer.
“We have built a website that delivers a better, more personalized experience, from the way we arrange products by job versus individual product to the online quote center where a customer can build out a quote that has their unique cost and pricing that they can then deliver to their customer,” Devine explains. “Having an organized order is part of the buying experience. Ferguson.com allows customers to build their order online and pick up the items at a store, which has been a value add for them.”
The slogan for Ferguson.com is “Faster than a phone call,” — it’s all about helping customers be more productive. The ability to check product availability and pricing online instantaneously and at any hour, as well as download product specifications and owner’s manuals at the click of a mouse saves time and money. These self-serve tools add efficiency and save time for customers, which, in turn, makes them more efficient within their own businesses.
Earlier this year, Ferguson.com launched a mobile app, which has all the tools from the website available in the palm of your hand. With more than a million products available on the platform, across all the industries, the app adds just another way to make ordering easy. Contractors can use the mobile app to scan barcodes of products that they have on their trucks and drop orders into their online account. “This brings that seamless, frictionless relationship that we can now deliver 24/7; these capabilities add more value to their business every day,” Devine says.
Ferguson.com serves as the primary website for e-business at Ferguson. Other brands/services that are within its realm are companies acquired through acquisition include; Build.com, Supply.com, PowerEquipmentDirect.com and SignatureHardware.com. The biggest reason for the acquisitions was to expand what Ferguson values most — the talent of its people,” he says. It also allows the distributor to move into different categories and services.
“Bringing our digital assets, physical assets and most importantly, our expertise, we are building an omnichannel experience for our customers,” say Devine.
Making an Impact by Giving Back
Ferguson’s commitment to building long-lasting and purposeful relationships and partnerships extends into the communities in which it has a presence.” Purpose-driven and never done, we push each other to be our best selves and the best company for our associates, partners and customers,” its website notes. This is accomplished through is philanthropic arm, Ferguson Cares.
The company started its philanthropy in 1953 and is a “core of who we are and what we do,” Denise Vaughn, vice president of communications and sustainability says. About six years ago, Melissa Hazelwood joined the team and focused her efforts around evolving the program with branding that established the Ferguson Cares brand.
“Ferguson is passionate about our people who, in turn, are passionate about their job,” Vaughn notes. “But it extends beyond just serving our customers; our team gives the same level of passion to serving our communities. Our team rallies behind what Ferguson Cares does.”
Hazelwood explains: “We want to create meaningful change in the community and be authentic to our business. We’re addressing hunger, housing and disaster relief, the skilled trades and clean water and sanitation.”
Almost 2 million Americans lack access to clean water and sanitation; a staggering statistic in the 21st century. Ferguson Cares is helping to change that by working with a grassroots organization called DIGDEEP, both hoping to fix the problem here in the United States.
Tackling the challenge of the skilled trades shortage, Ferguson Cares has done a tremendous amount of research into nonprofits that run like a business. “We partner with those that are really making a difference, as we know they are committed,” Vaughn says. This includes the mikeroweWORKS Foundation, launched in 2008 as a national PR campaign for skilled labor — to challenge the stigmas and stereotypes that discourage individuals from pursuing a lucrative and fulfilling career in the skilled trades.
Another organization is SkillsUSA, which is focused around the entire student experience, from hands-on technical skills to the softer, workplace skills. “They’ve developed a bold, well-rounded curriculum to really develop professionals to enter the trade space,” Vaughn says. SkillsUSA is known for is National Skills and Leadership Competition, which creates an energy level and focus within the trades industry.
Ferguson Cares is preparing to launch its own marketing and PR campaign aimed at high schools to connect with parents and guidance counselors. “It’s about elevating and raising the awareness to the opportunity for many rich careers earlier with students,” she says. The company also tackles hunger in the United States and disaster relief by partnering with the American Red Cross.
When one talks about how cohesive a team can be, an amazing example is the personal disaster relief fund that associates voluntarily contribute to. It’s called the Ferguson Family Fund.
“It is a hardship fund that is funded by associates, for associates; so, all of us can donate to it,” Vaughn says. “When folks find themselves in difficult times, they apply for grants, which are administered through an outside community foundation. Many of our recipients are now donors to the program. It’s pretty remarkable.”
There are many additional ways the Ferguson Cares program contributes, and it all comes down to taking care of people — be it family, customers or bringing up the next generation to fill in the bullpen.
What we have learned along the way is that Ferguson is made up of individuals joined together to make a difference — from customer expectation to satisfaction, to family and community. By joining together, change can happen — one step at a time.