What if you had a blank sheet of paper and the chance to create your outside sales structure from scratch? Pipe dream, right? Distributors of all types and sizes have adapted their sales organizations since the onset of the COVID-19 pandemic, in an effort to cut sales expense and adapt to the new ways customers want to buy, virtually and otherwise. But it’s challenging to change the outside sales model.
One distributor has had the opportunity to plan its outside sales model, and there are some interesting lessons for every type and size of distributor for what hybrid digital-inside-outside models can look like when traditional constraints are removed.
What’s interesting about Port Washington, New York-based industrial and material handling distributor Global Industrial’s sales transformation is that they are coming at it from a nearly opposite direction than most other distributors. Historically, Global Industrial’s sales model was heavily inside sales based. Now it’s a few years into building out a direct sales channel to reach and serve a broader customer base.
Global Industrial held its annual customer event in mid-June in New Orleans, where the company’s executives were candid with MDM CEO Tom Gale in a progress update on its strategy with multi-year transformation efforts across sales structure, digital and analytics.
Gale had a one-on-one conversation with Claudia Hughes, the company’s senior vice president and chief sales officer, about Global Industrial’s sales model and how the company’s go-to-market strategy is developing.
Their conversation is below. If you haven’t yet, check out Gale’s July 5 recap of Global Industrial’s event and his conversation there with CEO Barry Litwin. Much of what they talked about was also within the theme of MDM’s upcoming SHIFT | The Future of Distribution event, to be held Sept. 25-27 in Broomfield, Colorado, which you can learn all about here.
Tom Gale: Global Industrial’s sales structure seems to have been in a state of transformation ever since Barry Litwin joined as CEO in early 2019. Can you outline what the company’s sales force structure looks like at this point in terms of inside vs. outside?
Claudia Hughes: The majority of our sales team is inside-based, but we’ve moved away from that mentality of branches because COVID hit and suddenly people could work anywhere, which I think is wonderful. We have five official sales offices around the country. But now it allows us to open up our candidate pool. We’ve aligned them to regions. So now if we find somebody that’s in North Carolina, we can assign them to the southeast region since we’ve all accomplished working remotely. About 200 account managers service our higher potential customers — the customers that have higher potential to spend. Another thing we did in that group was to create strategic account manager positions and assigned our top customers to those groups. So they have a much smaller customer base, and we’ve verticalized them. They are assigned to a specific industry. We have people assigned to retail manufacturing; we have a full team dedicated to the public sector and that’s where I really see us expanding.
Our plan for inside sales over the next few years is to continue to add a significant amount of resources so that more customers get touched. As we look at our segmentation data and customers that have a high propensity to spend we will match them up with an account manager and have a smaller account basis so that they can have more interaction with those customers.
As far as the outside sales team, we are also adding in that area. I think when I started (in January 2021), we only had a handful of territory sales managers. They’re assigned to pockets of geography where we have a high concentration of high-potential customers. But there were really big gaps across the country. So we added two people in Florida this year. We keep looking at the hot markets and high potential. We plan to expand that team.
Gale: With that shift to empowering inside sales, what does that look like from a customer segmentation standpoint?
Hughes: Our predominant sales model is inside sales supporting the customers one-on-one, and then the territory sales managers are the eyes and ears, the feet on the street. So it’s kind of a reverse model. I came from an industry where it was all outside sales and small inside sales. I think that Global Industrial is ahead of the game with the inside sales model, vs. a lot of the competitors are having to flip their model and learning how to go from all these feet on the street to more inside sales. I think that we’re ahead there.
Our future vision is that we will have sales organizations that are aligned by vertical. So we’re just entering into the healthcare vertical. We’ve brought on a national account director to prospect new national account GPO contracts so that we can open ourselves up to that member base. We will have a dedicated sales team of healthcare sales representatives and a dedicated sales manager. So that structure is going to continue to evolve. We have that for the public sector. We have that for healthcare and will have it for future verticals.
Another big change we made in the past year was a focus on new business development. When I started with the company, account managers were assigned to existing customers. And the term I used was that we just mined the same customers for new sales. Where’s the influx of new customers introducing new companies to Global Industrial? So a big strategy of ours is getting affiliated with GPOs and cooperatives. I had a lot of experience in it. We were able to jumpstart that new business development. We’ve also added dedicated leadership to that, where they’re bringing in new customers, and then we can pass them back into the account manager position.
Gale: My recollection was that the old Global/Systemax was heavily focused on inside sales. So when the pandemic hit, was it really that much of an impact in terms of how the reps were interfacing with customers?
Hughes: I think that they actually ended up becoming more face-to-face with customers. They previously were the old-school inside sales where you went to an office, you put on a headset, and you called all day long. Now, all of a sudden, you’re at home. It’s more of a challenge for leadership who is used to leading people by standing over them all day. Now I’m looking at metrics to manage a remote team. I think for the sellers, they were saying, ‘I can do my same job.’ They also really like the remote work because most of them say, ‘I can start at 6:30 in the morning instead of sitting in traffic.’ This is an early-day industry. Your appointments are at 8 a.m. — that’s when these people are working. They’re early. So the reps love that aspect of it.
But I think it now put them in touch with Zoom. Reps never used to see their customers. All of a sudden, the pandemic hit and now they actually see their customers. I’m a big proponent of keeping an inside sales model, but I want them to go visit their customers. Customers do not want to see reps — we know all the research that talks about how much they want a one-third in person, one-third remote, one-third self-service. They want self-service options. They want a rep but they don’t need to see a rep every week. So my message to my sales team is ‘Go see your biggest customers. They want to see you, like, twice a year. Make sure you’re in sync with what their projects are, that we do have the feet on the street for daily needs or big projects they need assistance with.’ So they’re embracing that and are like, ‘Wow. We never knew that we could do that.’ But their predominant role is you service customers and you grow sales via phone, email, text, the web — however customers want to interact today.
Gale: Once people started working from home, how did you keep the sales team engaged, motivated and forward-facing?
Hughes: It’s really the technology. Essentially within 24 hours of the pandemic hitting, everyone had a laptop, a headset and they were connected into the system and having those daily or twice-daily check-ins with the team. Some manage it better than others. As offices reopened, there was a contingent of people that said, ‘I like to go to the office. That’s how I get in my mindset.’ It’s the minority, very few. We still have a flexible work policy. So it’s two days per week in the office. If they want to go in every day, they’re welcome. We have this rotation where it’s typically Tuesdays and Wednesdays that most reps and their managers are there. I do believe that they need to have that camaraderie. Especially new reps — they learn from their peers. It’s an industry with tens of thousands, hundreds of thousands of products. I don’t expect them to be product experts. That’s not what their job is. Their job as a salesperson is to really uncover needs and uncover opportunities within their customer base.
We’re really trying to focus them on those selling skills and upskilling them — going from taking orders from the same customers from the stuff that the customers always buys from us, to asking them questions about new things or what the customer is doing in the future. A lot of that can be done virtually. My entire career, I led remote teams. It wasn’t until a position I had prior to joining here that I actually reported to an office. So they’ve all embraced it. There’s a mindset of, ‘Hey, we really like this and I want to continue to be able to earn this right to stay remote,’ to keep producing and be open to all of the training to participate in it. We’re really part of the norm. We’ve scaled that back now that basically everyone is acclimated to working remotely and the activity is there. We now do check-ins two to three times a week with the team and then we get to see them twice a week in person.
Gale: Looking at customer shifts or changes in the past 1-2 years — everyone is now adapted to the pandemic environment, but we’re now going into a whole other VUCA (Volatility, Uncertainty, Chaos and Ambiguity) environment. What sense are you getting in terms of customers and what they’re looking for? Any shifts there?
Hughes: The conversations that we had at our trade show were really still around the uncertainty with the supply chain. There’s just always a new challenge, right? Some of the freight costs are coming down, but now the fuel prices are going up. There’s a container shortage. They’re not coming over from China or they’re not getting back fast enough. So they really had a lot of discussions around continued rising prices and what we can do as distributors. That’s very important to them.
Customers don’t all want white-glove service. Your biggest customers want to know that when they call with something, that — whether it’s your rep or your customer success support team — they can just resolve it for them and make it a smooth transaction. And that’s what most of these customers were raving about, was that smooth experience that they got from Global Industrial. They understand these inflationary times and the uncertainty of the supply chain. I think that the only big thing that has changed is that frequency of if and when customers really need to see a person. But I think our customers are very pleased that we do have feet on the street. Another thing that was very important to them is the subject matter experts that we have on staff. We just had a customer here praising that our reps are not there to sell them something — they’re there to help them with the application. We’re going to be able to actually answer their question.
Gale: So is that specialized knowledge and solution proposition the differentiation play against competitors like Grainger or Uline or Amazon, etc.?
Hughes: You know, I look at it as, customers want choices, right? I always say to my team, ‘We’re not going to displace Grainger. Grainger is in every customer. We can be in every customer, too. There’s plenty of share to go around. I think we go that extra mile because we’re still that size that can do that. We had some customers ask us specific things today about doing custom products specifically. We can do that. And then we would lock that customer in even deeper.
That kind of extra mile, we call it the extra chip in the cookie. That customization is a big differentiator. Everyone has salespeople. I think our focus, though, is on how we get our salespeople more technologically advanced so that information is at the ready, at their fingertips to make the customer experience better with our product knowledge so that our team can serve our customers better.
