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With more than three decades in business — and having become one of the largest HVACR rep firms in the Western U.S. — The Jones Company leadership decided it was time to make a very significant change in their business model. No longer believing that “bigger is better,” The Jones Company is now saying “eight is enough.” In short, they have chosen to limit the number of manufacturers they represent to eight — and to fill those eight slots with American manufacturers.
They believe the strategy will allow them to provide even stronger customer service and grow their organization. In fact, despite the fact that they cut the number of lines they represented, they have added sales people in Northern and Southern California, opening a new warehouse and hiring an additional delivery person. They also believe they will be able to better represent each of their manufacturers — living by their motto “We market products with you.”
President Bob Jones recently talked with me about these changes, and why he feels so strongly about the new direction of The Jones Company.
MJM: What was the impetus behind this decision?
Jones: We actually made a similar decision a few years ago, but over time, we started adding back more lines and it kind of got away from us again. We originally got the idea from a course we took through MANA, and it really made sense. It’s hard and it takes discipline, because the lines we cut accounted for 35% of our income. But once we got over the nervousness of what we had done, we realized how much more efficient it made us.
We recently reviewed that plan, and decided it was time to re-implement it — and stick with it this time. Part of our motivation for doing that came from feedback we got from wholesalers. We went around and talked with many of them, and one of their biggest complaints was that reps are juggling so many lines, they aren’t able to have expertise in each product. And on top of that, they’re often too busy to be able to help wholesalers out at the counter day, open house, sales calls and more. What people often forget is that it’s not just selling all those lines — it’s all the paperwork, reports and other time-consuming activities that you have to do for each manufacturer. All of that takes time.
We’ve also noticed that sometimes reps will see another line and take it on — even to just keep others from getting it. They may not ever go out and work the line or help the wholesalers try to make sales calls because they’ve got too many others to satisfy. So unfortunately, that means that sometimes lines are on paper alone; they’re not really being worked.
MJM: Talk about the process you went through?
Jones: First, we had to decide on the right number. At the time, we had 14 lines, and we chose to go with eight, to capitalize on the old TV show, “Eight is Enough.” Among the lines we went with, we were already in the top three of their representatives.
We had an internal debate to some extent on selecting those eight lines. Each of our sales people had favorites. MANA has suggested guidelines we use that allow you to do this in a fairly smooth way. One of the steps was determining how much time our employees spent on each line per month. Then we put a financial amount on that, based on what they were earning in commissions. We also looked at the income we were making on each line to determine a profitability index. And then tried to judge lost opportunity; for example, if someone is spending two hours on a line that’s not as profitable, what can they do to be more productive with other lines? Then we asked for everyone’s opinion of what they thought about each line, in a number of ways. How does the line interact with the other lines we have? Some didn’t. Others did. We were looking for complimentary sales. We even found one line that was causing more grief for customers than it was worth because of shipping issues.
MJM: What’s been the reaction you’ve gotten so far?
Jones: We’ve had nothing but great comments. We train our people well so that they become the experts on these product lines. And they’ve embraced it. They take their training and roles very seriously. On top of that, the wholesalers have really bought into it.
Our manufacturers have asked what they could do to help us. They knew this move meant that our current income had been cut back in an effort to better support them, and they wanted to support us. Executives with most of the lines we dropped really wanted to talk about it at length. It was really nice to have such a response.
With this new business plan in place, we can’t take a line on now without first dropping one. We probably are offered two new lines a week. It makes us take a really strong look at any opportunities we have, the potential available, and what we would be losing if we did. There is a lot to weigh, and determine value and worth. It costs a lot of money to bring on a new line — we estimate between $5,000 and $10,000.
MJM: Give us a look inside your current operations?
Jones: We have offices in Northern California, Southern California and Phoenix. There are three people in our shipping department in Northern California. When it comes to sales, we have two people in Southern California, one in Arizona and two in Northern California. We also handle Nevada and Hawaii.
Each of those has a warehouse with it and a couple of delivery trucks. Our warehouses allow us to serve our customers better and provide better coverage for our manufacturers. We typically can provide same-day shipping and stock the products our customers want within a day’s delivery.
We specialize in HVAC items for distribution, and function both on a consignment and a buy-sell basis. The lines we represent are:
• Advanced Distributor Products
• Carson • Cerro
• Dust-Free • Eubank
• Lenox • Irwin/hilmor
• Solaronics • Weitron.
I’ve been in the industry over 50 years. I spent the first 20 years with a manufacturer in Southern California. Then in 1980, I moved to Northern California and started a rep firm. We have grown tremendously since then. Our focus has always been on ethical business. I feel extremely strong about not pirating someone else’s line, something that has unfortunately become more common with increased competition.
My son, Greg, joined the company roughly 25 years ago. He graduated from UC-Davis with a degree in genetic engineering. Soon afterwards, he decided that wasn’t really his calling, and I’m glad he did. He is incredibly smart and a huge reason for so much of our success. Both of us have received CPMR accreditation from the three-year professional program offered by MANA.
MJM: What are some of the changes you’re seeing in today’s market?
Jones: I’d have to say the biggest change in our industry is consolidation. Some of the wholesalers are enormous; they’re turned into a financial company more than a distribution company. It’s really difficult for anyone to start up a new wholesaling firm — there are so many more government rules, plus you’re competing against so many others that have significant financial backing.
MJM: What do you believe sets you apart in your territory?
Jones: It’s basically one word — service. Wholesalers are looking for a partner to help them become and stay successful. That’s our focus. We work closely with our wholesalers, which allows us to know in advance what their needs and plans are so that we can best service them. We’ve been working with them on 2015 plans and know what direction they’re going; we share that information with our manufacturers so they’ll also be able to plan appropriately.
The other thing that I believe is important it that if we have bad news, we tell them up front. Most people don’t like unpleasant surprises, so I’d rather they know and then let’s work around it and solve it!