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Industrial furnace and process heating componentsIndustrial marketing success storyKoch Group is a 40+ year old industrial marketing consulting firm providing a broad gamut of industrial marketing assistance activities to small and mid-sized manufacturers. We have over 30 years of specialized expertise in manufacturers' agent identification, screening and contracting. Koch Group consultants performed a sales analysis, identified qualified national manufacturers' agents, and set up a national agent network in 15 territories over 3 years. Client sales have increased by millions of dollars and so has their profit margin! SITUATIONLocation: Northeast A large international manufacturer of components for industrial furnaces and heating devices approached Koch Group. This company had served the U.S. market through a stocking distributor network supported by factory technicians. Their products often required a high level of technical knowledge to correctly specify and order. The distributors were primarily processing repeat orders for customers that had been developed by the company’s efforts, not the distributors effort. The manufacturer had negotiated pricing with the end-user that guaranteed the distributor a minimum profit margin of 30%. In most cases, the distributor's profit margin was 2-3 times higher than the manufacturer's even though most of the distributors neither stocked, nor proactively served, the target customer base. The manufacturer believed its customers were not getting the technical assistance or attention that was merited by their sales volume. Additionally, the company believed it was missing out on system upgrades, new projects at existing accounts, and opportunities to develop new business from other potential accounts.
ACTIONKoch Group began the project by defining the market size, and company penetration, by state. Koch Group worked with the client to define the major markets currently served by 6-digit SIC code. The client then eliminated some SIC codes that were of limited interest or value to their business. Koch Group used the remaining SIC codes, and an agreed upon size selection criteria developed with management’s input, to determine nationally where potential accounts were concentrated by 6-digit SIC code and state. Koch Group’s analysis indicated that the largest concentration of market potential covered 9 states in the Midwest and the Northeast, with those states in the Midwest having the greatest potential. Koch Group consultants began a process to identify, screen, schedule, interview in the territory, and contract with manufacturers’ agents, and sometimes distributors, in over 15 Manufacturers' Agents National Association (MANA) territories across the U.S. over a three-year period. We initially identified general application high performing agents, but found we needed to identify agents that had high heat experience or had customers that matched our client’s ideal customer base. During the course of the project, Koch Group consultants initially identified over 25,000 potential agencies for this client, but eventually targeted about 450 for the 15 territories to pursue. We contacted potential agents via personalized letters, phone calls, and other more direct means to determine the proper agent-principal “fit”. Koch Group ultimately screened ~500 interested and/or responding agencies and obtained detailed information for each agency including the number of outside agents, their geographic coverage, details on their inside support, the agency history, agency gross sales, the principals and the types of products they represented, key accounts sold to and called on, educational and sales background of agents, and pertinent information. We entered the obtained information into electronic agency profile formats, evaluated the potential agency fit, and prioritized agencies of interest. We submitted the developed agency profiles and rankings to our client for review, discussion, and selection of those agencies considered to be the best candidates for interview. We selected and scheduled for interview 8 agencies in each of the 15 MANA territories filled. Koch Group consultants scripted and choreographed the agency interview presentation, set up the interview room with appropriate samples and props, and rehearsed and prepared our client for each interview session. Koch Group personnel assisted the client in interviewing 8 pre-qualified agencies in 1, 14-hour day in each territory. We developed a post interview agency evaluation spreadsheet to assist our client in making their final selection. We contact all sales agencies interviewed to inform them of the client’s decision.
RESULTSThe client now has established a national network of high performing manufacturers’ agents in 15 MANA territories. In all territories in which an agent has worked more than 6 months, incremental business has increased. In a number of territories the agents have already generated millions of dollars in incremental sales! The client is very excited and pleased about their new national distribution network. Next: Product Identification Products >> If you would like more information about our industrial marketing services for manufacturers and industrial service providers, please use our contact form or email us at info@kochgroup.com.
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