Today’s distributors fight a war on three fronts. First, there’s competition for labor. It’s tough to find good people to work at a counter or in a warehouse. Once hired, how do you retain them?
Second, the products distributors sell are increasingly complex and the technology underpinning the sales branch and its delivery arm, such as ordering systems and GPS, make for a steeper learning curve.
Third, the “Amazon Effect” – a presumption there will be more (and immediate) information about a product, its price and delivery options – shapes customer expectations.
A distributor has to fight back, or it will be, at best, rolled up by a competitor. Even then, there’s no guarantee a competitor won’t purchase the distributor for pennies on the dollar, instead of the kind of valuation a distributor could fetch. If a distributor’s relationship-based sales team trickles away through retirement and disenchantment, that too means a lower valuation.
“Company culture absolutely effects what a company is worth,” says Eli Boufis, managing partner for Driehaus Private Equity. “A culture of learning breeds confidence, satisfaction and sales.”
Training staff well builds culture and improves results. Discounting the importance of learning brings a casualty some managers may not immediately see: The customer who gets easy questions answered, but can’t get a solution for a tough-to-find problem. That customer, usually a knowledgeable contractor, walks away without complaining, never to return.
For example, a master plumber can be largely self-sufficient. But when they truly need help, the savvy distributor will be there with a solution. That kind of distributor has built a relationship causing contractors to return and place orders worth hundreds of thousands of dollars and more. So, it’s incredibly valuable to put an employee behind your counter who’s fired up about your products, feels confident to serve up solutions and has an opportunity to learn each day.
How do you attract and keep a fired-up employee? According to Amy Black, executive vice president, education and training for the American Supply Association’s Education Foundation (ASA), a not-for-profit national organization serving wholesale distributors and their suppliers in the PHCP industries, the “important thing is engagement and ingraining a culture of learning.”
A culture of learning is a first defense for distributors struggling to recruit and retain workers, says Black. When a business owner builds an educational track for employees, Black sees those workers eager about the future, engaged to learn and determined to be experts and problem-solvers.
There are forward-thinking wholesalers and distributors already betting on Black’s calculation. Matt Kelley and Matt Battaglia are two such people. Kelley, manager of Internal Training for Anaheim, Calif.-based Geary Pacific Corporation, belonged to an industry purchasing cooperative that offered online learning to its members. Success with the coop’s online product courses developed by manufacturers led Kelley to invest in a learning management system exclusively for Geary Pacific. Kelley’s LMS has 272 users who take, on average, nearly 12 courses from a catalogue of more than 200 ranging from tutorials on new products to handling customers.
“Part of our value proposition is having the subject matter expertise to deliver whatever customers ask for,” adds Kelley. “A year ago, we expanded our employee learning beyond product knowledge to include training on our processes, everything from customer service training and computer systems to coaching our sales people on how to approach customers.”
Geary Pacific is a wholesale distribution business with 25 locations across six states serving HVAC contractors. While Kelley hasn’t had his LMS running long enough to compare year-over-year results, he says, “We know if our folks are informed about products, it equals better customer service; we’ve already seen successful sales performance.”
John Leh, CEO and lead analyst for Talented Learning, LLC, an advisory and research firm focused on training and development, has spent 25 years as both a sales manager and a researcher. He’s advised hundreds of companies over the years on how to create a culture of learning.
“From a training perspective, if you help distributors with the belly-to-belly sales, they will get more volume and a broader kind of sale because of what they learned about the products and service,” Leh says. “They’re also less inclined to go elsewhere.”
By having a more structured training regimen, Geary Pacific says it has found turnover decreased and employees happier. Kelley measures that with a system of performance reviews wherein he asks employees to: give feedback on their performance; tell him what Geary Pacific is doing well, and outline short- and long-term goals. What he’s heard, especially among the company’s 20-somethings, is that employees want to learn more about the industry and grow with the company.
The move from sharing an LMS with a cooperative to implementing something uniquely his own has helped Kelley formalize a training program, and improve his reporting. According to Kelley, having his own system means Geary Pacific can create career paths tailored to a variety of disciplines.
“If an employee wants to grow with our company and has, for example, more of a sales mentality, then we can put them on a track for sales management,” says Kelley.
Kelley sees his job as transforming training from a cost center to a strategic asset. His learning culture is underpinned by technology that helps him identify employee goals, catalogue his investment in learning and measure the outcome.
“We want them to understand how to prepare for jobs of increasing responsibility,” adds Kelley. “Our learning platform defines those tiers, assigns training and records progress.”
Leh believes it is easier today to gauge the effectiveness of training by using training technology and CRMs to extract data, and make a correlation between the people a company certifies on certain products and how much these same employees (or branches) sell.
“Start with a business goal in mind, such as selling more of one product line. Put together an A-B group of trainees,” advises Leh, “and look at the 90- and 180-day course completions or certifications and compare whether your test group is racking up more sales.”
In January 2018, Matt Battaglia, manager of corporate training & development for Turtle & Hughes in Linden, N.J., put in place technology to standardize the culture of learning for his company’s 800 employees. Turtle & Hughes describes itself as one of the nation’s largest independent electrical and industrial distributors. Battaglia says the company has a history of training its employees, but managers felt learning was inconsistent across branches. In 2017, the management team solicited feedback from the field and gave workers a consistent experience, across each location and product line by means of a companywide learning management platform.
“We’re an entrepreneurial company at our core but recognize the need for standardization. A common theme I’ve heard is, ‘If we know the material, we will sell it,’ but different branches don’t receive the same training,” adds Battaglia. “This platform provides everyone in the company, from New Jersey to California, the same information.”
Since implementing a new, standard culture for learning, Battaglia says he has the structure in place to work with his sales team to see how delivering a consistent approach to learning impacts sales. Linking the effectiveness of training to sales, according to Battaglia, is still in the early stages. Equally important to Turtle & Hughes is addressing the cost of turnover, which the Society for Human Resource Management tags at 60 to 100 percent of an employee’s annual salary.
Battaglia says his executives support a culture of learning as a way to transfer knowledge from the firm’s veterans to the new-hires, so Turtle & Hughes can inoculate itself from the cost of turnover. Training magazine pegs the average, annual cost of training for small companies (i.e., under 1,000 workers) at $1,886 per employee; Battaglia says Turtle & Hughes spends less than that per worker. Neither Battaglia nor Kelley see building that culture as a cost, instead it’s paying rewards in terms of retention and service.
Geary Pacific and Turtle & Hughes are leading what the ASA’s Amy Black considers a shift in the amount of “true buy-in for developing career tracks.” Investing in a culture of learning leads to a strong, practical, self-motivating and self-organizing team that pays dividends.
“The labor issue has really lit a fire under the industry,” remarks Black. “We weren’t having these conversations even five years ago, but the best companies train and train comprehensively.”
Douglas Gastich is president of BlueVolt, a learning solutions company delivering training to employees, suppliers and customers. Gastich has nearly 20 years of experience developing and consulting on training technology, educational media and business programs. He holds a bachelor’s degree in computer science and fine arts from Boston College. He can be reached at douglas.gastich@Bluevolt.com.