IMARK Group’s mission in the electrical, HVACR, plumbing and irrigation industries is to increase the profitability of their member distributors. Currently, they have about 2,500 member companies in the U.S. and Canada with over 5,000 locations generating about $28 billion in collective sales in 2019.
We spoke with Steve Ruane, Vice President of Marketing and Member Services for IMARK Electrical, about the role co-ops and marketing groups play in helping independent distributors compete in today’s fast-changing market.
Distribution Strategy Group: What type of services does IMARK offer its distributor members?
Steve Ruane: For an independent distributor, thebenefits are from having an alliance and being part of a group where their peers and colleagues are fighting the battles and winning many of them every single day. Our primary mission is to engage with the leading manufacturers in our industry on their behalf, and then encourage them to work very closely together. We’re very much driven toward a win-win relationship, and we found that’s a formula for success.
DSG: What’s the value proposition of membership for suppliers?
Ruane: We’re a marketing group. A buying group would be involved in negotiating pricing and getting involved in actual purchases. We do nothing of that sort. We’re basically a platform that is designed to build on the strengths that our member distributors have and provide an ‘un-level’ playing field for our manufacturer partners so they get more access to quality time with those distributors to the extent that the distributors, when using our programs, become a more effective advocate and partner for that manufacturer and the reps.
It’s making sure that these folks are front and center on both sides of the equation. And when that happens, we do generate positive results. There’s a natural symbiotic relationship between, for example, agency reps and the independent distributor. That’s very important and something that we’ve exploited as part of our culture, because there are programs and resources, including training, marketing, promotions and communications tools, that are designed for it and placed in the hands of all of the channel partners.
DSG: We know you’re heavily involved in training. How have restrictions related to COVID-19 affected that and to what degree are you going to go back to how it was when it’s over?
Ruane: Traditionally we have two meetings a year, which are face-to-face. The kinds of people who come to tend to be senior executives and influential purchasing procurement people. To the extent that we do train, it’s based on our IMARK University online platform and primarily consists of content related to products, applications and how to sell. IMARK U is for use exclusively by our supplier partners. At the same time, our members are learning important aspects of products, which makes them more effective with our customers.
2020 was a banner year for online training. We had about 300,000 course sessions completed, so it’s a very popular resource. When we find a successful resource that resonates with our members, that’s something for us to build on.
DSG: With distributors getting pushed from outside forces like Amazon and Home Depot, it feels to me like a natural response for distributors is to collaborate, which is really what your organization offers. Are you seeing a higher level of interest in joining your organization, or are you thinking about how you change your value proposition in light of this outside pressure?
Ruane: Not really. I think the pandemic has pointed out the resilience of electrical wholesale distributors. One could expect that there would have been a lot more people just raising the white flag in 2020 and cashing out or selling. And we saw very, very little of that. I think that not enough credit is given to the relationship between the local independent electrical distributor and contractors and installers. There is a lot of value there.
I think people tend to underestimate the complexities of servicing the construction market. It is a very challenging animal and our members manage it very, very well. And to some extent, it is a barrier to entry and it buys time for people to make the kind of investments in ecommerce and other outside-the-box alternatives that they might not have considered 5-10 years ago.
DSG: Disruptors like Amazon don’t make sales calls in a real sense. How do distributors leverage their assets to add more value with every phone call and every visit to a job site or to a customer in ways that disruptors can’t?
Ruane: We’re seeing a convergence between sales and marketing, where a sales rep needs to be an effective marketer. They need to be able to be skilled in reaching people in a variety of different ways and to deliver relevant information that helps them sell. We’re creating a section of our website called digital selling assets, which will be a repository for content from our manufacturers. It may include information on products, videos, links to a product website, maybe apps and configurators, things that a member sales or marketing person could download, and then pass along to customers, and particularly as they understand the needs of that particular customer and matching up that information with that customer.
DSG: A lot of the industry focus has been on how to get revenue to go through the shopping cart, or to get customers to view product information online. Is there more in the digital realm than just putting stuff in the shopping cart?
Ruane: Based on the complexity of what people are trying to buy, they will use the web store to look at various aspects of the relationship: pricing, stock availability and more. And then frankly, 9 times out of 10, they’ll pick up the phone or email their customer service rep or inside salesperson and get the ball rolling on the order. To me, that does not diminish in any way, shape or form an ecommerce store, but it does provide the distributor with the opportunity to provide in-depth, relevant information about the product. And of course that builds and reinforces the reputation of the distributor as the go-to authority.
I think a lot of our members are getting very good at that and using social media to tie it all together. I’ve been very impressed to see the work that has been done by small, medium and large companies to upgrade their ability to serve customers using these new tools. And I think once they get into it and begin to have dialogues with their customers, on what’s important to them, it becomes more beneficial and more rewarding for the people putting these tools in place.
DSG: How are your members using social media?
Ruane: I see it used for new products, sales, promotions, events, polls, things of that nature. Anything that they think is going to be important to their customer. I think it’s a great tool to extract feedback from customers and, over time, will become a very important way of communicating and sharing useful information in a very cost-effective way.
DSG: What are your thoughts around texting promotions to customers?
Ruane: I think ultimately it’s important to get a handle on the way your customers want to receive information. I think you can get a pretty quick idea based on the response to a campaign, regardless of the platform, as to whether it’s resonating. And of course, any communications that are done should have measurement techniques in place so you can finetune it. There definitely can be spam-like trends that apply to texting. And there are places where opt-in is required as opposed to opt-out. I’ve seen a number of companies in HVAC use texting very successfully.
DSG: How are your members investing in value-added services? Do you have examples of distributors who are helping customers with core business processes, whether it’s product development, energy audits or consultation work?
Ruane: I know of a member who is committed to have 20% of their revenues generated by services provided within five years and working every year to get to that point. I would say that they’re an exception, rather than the rule. I think the companies that will turn out to be the market-share gainers will be distributors who have an in-depth understanding of their customer to the point where they can walk in and have a financial discussion about the things that they do.
DSG: There’s going to be some level of consolidation of companies that are unable to scale and compete with the Amazons and Home Depots. Is there a way that IMARK can harness the power of all the members to help them compete?
Ruane: The leadership of IMARK Electrical came to the conclusion that it was very important for our members to be proficient in serving customers using a web store with attributes and high-quality data. The problem for a lot of the members was that they’re good at buying and selling. They’re great at customer service. Technology and ecommerce was not a particular strong suit. So we pulled together a group of people for a “futures committee” and we developed a roadmap with specific milestones, which reflected the attributes of a distributor who was market leading in terms of ecommerce, capabilities, competencies and resources. And the members had two and a half years to achieve these criteria. And when they did, they earned a five-figure payout from IMARK. You can’t protect your ability to buy if you don’t protect your ability to sell.
We shared practical and vetted resources and put a deadline on members who were interested in moving forward, because what we see is that inertia is the strongest force on the planet. We focused on ecommerce as most distribution leaders know in their heart of hearts that if they’re going to be in this business long term, they’re going to need to serve customers the way they want to be served with these resources. So that was a very successful example of how we harnessed the power of the membership, not only to define attributes of a market-leading ecommerce capability, but also to put a deadline and investment in rewarding those people who did move forward.
Our job at IMARK is to help drive part of the industry. I think it’s a great industry and I’m very optimistic about the future. I think when you read about what people are doing or you’re talking to them, they’ve got this drive to keep at it and not get complacent, and we look forward to doing what we can do to support independent distributors thrive and grow.