How Are Lighting Reps Weathering the Storm?

Industry sales veteran Marty Glantz sits down with reps around North America to discuss how the struggling economy has affected their livelihoods.

By Marty Glantz
We’re very aware of how the factories and showrooms are doing in these trying times, but have you ever thought about the folks in the middle? I’m talking about the independent lighting reps.

These are commissioned people with no fixed income who pay all their own expenses and operating costs and can be dismissed by any factory at any time with just 30 days’ notice!  In today’s business climate, there are many mergers, buy-outs, and closures on all sides of the fence that spell reduced income for the average rep agency.  I polled prominent reps from all areas of this great land in order to take the pulse and consensus of our rep force.

There’s no question that there’s a “new normal” for all of us – but especially the people in the middle! They are the ones who introduce us to new product, teach us about the new technologies, hang and display the product in our showrooms, handle our problems, take our inventories, educate our staff, take care of returns and defectives, and help us in all areas of our business. In many cases, they become our personal friends, who share in our happiness and sorrows, console us in times of need, and laugh with us in times of joy. Like the U.S Postal Service’s creed, “Neither snow nor rain nor heat nor gloom of night…” halt the lighting reps from completing their appointed rounds.

I asked lighting reps to reflect on the following: How do you feel about the industry today and where do you think it is heading? What are your plans for the future? What have you done to make your business work in this market? How have you changed to survive? What advice do you have for the rest of us?

Without further ado, here are the candid opinions of some of our friends in the middle: the lighting reps.

“Business is very competitive by nature, and now, in our current recession, there is no light at the end of the tunnel, or so one would believe. However, that optimism in our workplace is our competitive advantage. We are in wave mode, meaning that, like most companies these days, there are ups and downs, and we will not take anything for granted. As a result we have based our company’s policy on a simple premise that optimistic, engaged employees – including upper management – are more productive and hence can help our company grow.

“We conduct our practice in a manner that pushes three important facets: service, service, and service. When business is up, some sales personnel tend to visit their customers more often as opposed to when business is slow. This is not how one should truly conduct their practice. On the contrary, when business is slow we make sure that our people are there so the customers remember that we were always there for them, again pushing the idea that optimism in business will always net higher rewards.

“We are very fortunate to have amazing suppliers who are extremely helpful with their marketing, innovation, and schooling. In order to have a successful well-rounded business as a rep, it requires more than just a charming smile: you really need to believe in the product you are selling! You need to trust the suppliers, their quality, and that they respect their employees including the reps. If you are not optimistic about the product you are carrying and the manufacturer, then the sales will just not develop.

“To my colleagues trying to survive in these hard times, I say ‘Hang in there!’ We have had some very good years in the recent past, and they will be back. Visit your customers on a regular basis, try to be different, and do a little extra – as the saying goes ‘A little inspiration goes a long way.’ Always get back to your customers, whether it be for a damaged shade, a loose bolt, or a big order. Keep the customers optimistic about the products and new lines, and you will see your sales rise like never before.

“I would like to further mention the idea of helping your customers revamp their showrooms. It’s time to get rid of a dusty box in the corner! Move a couple of the older fixtures around in the showroom to freshen up the space. When one redesigns a space – i.e. a kitchen, office or showroom – you can transform it into a totally new opportunity. Minimum changes like this at little or no cost can completely revamp a business.

“In the end we must always remember, optimism will be our lifeblood. If the customers do not have faith in the reps, then the reps lose faith in the suppliers and so on. Business will pick up again in all aspects, and if we can help it along by making small or even large changes then all the better!

“I would like to wish all my colleagues and friends in the lighting business the best of luck. We are a large family and will be there for each other.
? Michel Kadoche

Mika Sales & Marketing
Ontario, Canada

“I have been in the industry for 26 years, and what a changing environment it’s been to deal with over that time. When I started, orders were mailed in and appointments were over lunch or very relaxed. Our customers were loyal and fair. Today, however, times have changed. The Internet has certainly put a new twist on our future. Our commissions have dwindled as a result and our expenses have increased. We now are forced to carry liability insurance, gas is at an all-time high, and the increase in responsibility for display merchandising, reporting, etc. have forced all of us (the ones who will survive) to increase our staff.

“My agency was started by my Dad and we represented the best lines. After he retired, I took on the challenge, and bought the business from him. This industry has been good to me, but I feel like it is deteriorating due to vendor decisions (going to China) and the lack of loyalty and fairness on the part of the distributor.  In many cases, our distributors seem to go “wherever the wind blows.” Vendors are giving product away to get a space on the ceiling and have reduced our industry to a commodity.  It’s not about what makes the showroom a beautiful visual for the consumer, rather it’s about what is the cheapest and most profitable for the distributor.

“The way that my agency has survived is by hard work, and long-standing relationships.  We go over and beyond for our dealers and vendors. We hang product, help merchandise, drive to and from distributors to deliver product that we find from one and take to another due to back order situations. We attend events on behalf of our vendors/distributors (sometimes late into the evening) and support our distributors with product training.  On top of that we keep close tabs on our reporting and goals.

“There is an enormous amount of pressure when you only have a 30-day contract.  To think that you have spent many years helping to grow a line and nurture it to the point of millions of dollars’ worth of business, and it can all be taken away in 30 days.  We have no security.  I’m sure that some reps can’t handle the unknowing and have made the decision to leave the industry for that reason.

“I love most of my customers, and I love most of my vendors – but when you take a distributor (let’s say an Internet customer)  from zero to several hundred thousands of dollars in business and they can convince the vendor to reduce your commission or drop you completely because your product mix changes or because they can get an extra 5-10 percent on the inside, is that right?  No, it’s not right that the vendors have so much more involvement in our decision on who we sell and why. I also think that the trust factor has changed – and not for the better.  I have had one of my largest customers taken from me.  How secure can I feel representing that vendor after that? I have sub reps that work for me (four in total) and administrators in the office.  I have the responsibility to make this work, and I take that loss. Do I think that is fair?  No.

“Moving forward, I will continue a path of providing the best service possible for both the customer and the vendor.  At the end of the day, I am going nowhere!  I love what I do and I love 99 percent of the people I deal with.  I guess you could say that I am lucky.

“I believe that in order to survive, we all have to embrace technology (use it as an asset and not an enemy) and work hard to provide our customers and vendors with what they require and what we have the capacity to give.”
? Anonymous, East Coast

“I, personally, do not think our industry has ever seen darker days with a very few exceptions. I think that the building industry has been devastated by actions taken by the U.S. Congress and unless there is major change, the confidence that is necessary for the private investor to part with their money to build will stay muffled. It is private money – not government money – that will fire the next round of development. It is very important that we get the residential industry going again because it’s all tied to that; until residential comes back, commercial will stay weak.

“I am currently living on about 25 percent of the revenue I was generating in 2007. Without divulging any actual numbers I will say that the majority of the difference is due quite simply to the amount of opportunity. This lack of opportunity is manifested by different things. One of the major problems we are experiencing here is the inability of the building professional to man a job – even if he got one. When the building business died back in 2006, the layoffs began. Companies started working their employees 32 hours a week, then 24 hours, and then 20 hours. The long and short of it was that there was no money to be made so people left the industry.

“I’m sure you’ve heard the story about the poor farmer who won five million dollars in the lottery. He was being interviewed by the local newspaper and was asked, “Now that you have all this money, what’re you going to do?” The farmer said, “Oh, I don’t know. I guess I’ll just keep on farming ’til it’s gone.” This could be the life story of a lighting rep! I really want to believe that people holding the vast majority of the wealth in the U.S. will start to invest again. I know that the demand is there and I am absolutely sure it will come back, but not to the extreme level we were seeing immediately before the crash.

“My plan is to stay in the industry that I love. I have a lot to offer. I have an enormous backlog of information and experience to share with my customers. We are all aware that our best friends almost always come from within the industry. My customers are my best friends; they are the people I hang out with all the time and celebrate holidays with. I attend the graduations and weddings of their children as well as cry with them when they lose family members or go through sad times. We are all one big family.

“My advice to anyone wanting to become a rep is to work hard, conduct yourself as a gentleman or lady should and study, study, study – at least scan all of the trade magazines. Think of yourself as an asset. Do not ever think that the only way you can get the order is to cut the price. Be a part of the value of any sale that you are a part of; teach somebody something every time you turn around and keep your eyes and ears open to find those things that you do not yet know.”
? Anonymous, West Coast

“My business partners and I have each been in the industry for 32+ years, and we have never worked harder. To make the same revenue dollar, we have to sell double or triple the number of basic decorative fixtures – usually at a lower commission percentage. That is our new reality, and only the strong will continue to survive. For distributors, manufacturers, and reps, surviving should mean more than having deep pockets. Everyone should be developing strategies to diversify their marketing efforts with new products and technologies to new customer channels.

“In 2013, we will add another customer support associate and an inside sales associate to handle increasing demands for service. It seems that every single opportunity or problem gets magnified in this difficult business climate, and we want to be there for our customers. We will continue to develop and market strategies – including the latest energy technologies – targeting end-users through our manufacturers and distributors.

“As for where the industry is headed, we think production builders will continue to dominate new home construction, favoring manufacturers and distributors with strong builder programs and products. I think the U.S. will continue its Asian dependence for lighting, from basic residential fixtures to the latest in LED components and systems. The ‘strong’ – those evolving toward new technologies and pursuing new channels through which to market lighting and lighting services – can move from surviving to thriving. Those who continue to wait for things to ‘come back’ will suffer.

“My advice to other reps is to differentiate. In general, pursue anyone who influences the purchase of lighting. One specific area of opportunity is to pursue energy retrofits and/or upgrades in small to medium commercial and institutional facilities that are 5,000 square feet or more. Basically, you must evolve, embrace energy and new technology, and become the go-to source.”
?  Greg Hull
H&H Prescott
Alabama

 

“I started my agency in 1987 and, over the years, have worked for some great companies and some not-so-great concerns. The name of my company – SAIL – really means ‘Service Always in Lighting.’I have tried to always provide great service, quick communication, extreme visibility, and honesty.

“Over the years, the business has changed. I find that the majority of my competitors have been greedy and insecure and would do anything to hurt me and my business. During the good years, their way of conducting business worked. Now that the business has taken a major downturn, they are the first victims. I have always tried to be honest and sell relationships first. I realized a long time ago, that I cannot sell everyone – and I did not want to anyway.

“As the economy changed and technology became what it is, I changed, too. I have always maintained an office/warehouse and always had great personnel. Unlike other reps, I only represented six lines, not 12 or more. I always tried to stay below the radar and did not socialize with my fellow competitors. As a result, we continue to grow our business in this poor economy. We still offer extreme visibility, we have not become an email rep, and we still sell relationships and quality lines. My warehouse operation has exploded, as we stock six different companies for our accounts. Because our customers have reduced their inventory, we are very important to them since we stock product. Our warehouse has always been a service center and not a profit center.

“I am a giver, not a taker, and have worked very hard to be where I am. My only failure is that I have not slowed down; however, I do have a great wife and family and do vacation often because I have a great support team. Yes, there are fewer showrooms and fewer reps, but there are still great opportunities to grow. For the past two years I have been recognized as the Agency of the Year by Lighting One and take this honor very seriously. I’m kind of old-fashioned in that I tell the truth and am confident with my actions. My business has been growing rapidly in these tough times and I still have the passion to be successful and continue my work. My kids are successful in their own right and have no ambition to join my company, so life moves forward.”

? Bob Stolzberg     Stolzberg Associates
St. Louis

“I started in business in 1976 and, with the economy on the downslide and taking two-and-a-half years of losses, came to the decision it was time to move on last year. There are so many factors – not just the couple of years of losses – that nailed down my decision to sell out and move overseas for greener pastures.

“Primary in my decision is the consolidation of the industry, with multi-nationals buying U.S. companies. Most being European, they had no clue how the independent rep has worked and developed their customer base throughout the years. They came in and started dictating how we will run our businesses. Their directives would have alienated many of our customers and destroyed the relationships that were developed over many years in ‘partnership’ with our customer base. It was their assumption that we worked for the factory, thereby assuming they could dictate our every move, expect sale call reporting, tell us when to see certain customers etc. The independent rep does in fact work for both the factory and the customer, providing the ‘glue’ in the three-way partnership. Win, Win, Win is always the key phrase used. Forgotten or simply disregarded was the fact that ‘independent’ implies just that! Our job was to provide growing sales with no financial liability to the factories other than the commissions promised as provided within the contracts. They did not pay expenses of any kind – not Social Security, health insurance, car and gas allowances, hotel stays, etc. If the factory was dissatisfied with sales performance, thirty days’ notice is all they need to have the rep agency terminated. As an independent agent, we understood the ground rules and invested our time and money to the cause of growing first the factory’s business, then the customer’s, and finally if succeeding  in both, growing our own. That was the win, win, win I just spoke of. That changed with industry consolidation. New contracts that were all one-sided to the factory’s benefit suddenly appeared and decisions we made at the factory level that would have dictated terms to the customer, thereby alienating the independent reps, since we were the ‘messengers.’ Commissions were cut, yet our expenses continued to grow; this was not a formula for success.

“Forgotten, or never understood, is the fact, in the USA, it is still primarily a business based on relationships and trust. Very few will change suppliers because of a couple percentage point differences in price as long as the relationship is established. All of that thinking has gone out the window, so more and more independent rep agencies are calling it quits. Let the factories hire their own factory reps that they can totally control. In time, they will find they get lower-quality representation because it won’t take long for the retail customers to figure out they are only interested in increasing their numbers, sometimes to the detriment of the very customer base they claim to serve.

“I have always maintained that a factory needs to have a national plan. With the right independent agencies in place, they do not need to hire regional sales managers trying to tell an independent how to run his business. They always have their 30-day termination option and independents are well aware of that so the rep juggles time to be most effective (and fair) to all of the companies they represent. Most regional sales managers (not all) don’t really understand the independent agent and thereby, many times hurts business rather than enhancing the sales with their dictates.

“I’ve seen the whole sequence in my 35 years as an independent agent. First, nearly all of production being made in the USA has shifted to Taiwan, then China. Now the major European players are coming in and expecting to do business in the USA as it is done it Europe. It just doesn’t work. Americans are a different breed of customer and one size does not fit all.

“I saw the writing on the wall and decided to make the move to the Far East where business, especially homebuilding, is doing very well. I am consulting with Taiwanese/Chinese companies on product selection and trends (in the U.S.) and advising accordingly. No longer do I have to put in 14-hour days, which is typical for the successful American independent rep. Stress levels are down dramatically, although I do miss working with a few manufacturers that have not ‘sold out’ and maintain their integrity as lighting leaders in the U.S. market as well as worldwide. I have not worked with many U.S. companies, as they already have their own local people in place. The bottom line is that I’m very happy with my decision and my new life and language!
? Steve Vieira
formerly of Steve Vieira & Associates Sales
Atlanta

“The role of the sales rep has changed a great deal. With eroding commissions, many have taken on more lines and often offer less results. Larger manufacturers have recognized the advantage of “captive” reps to ensure their products get enough attention and ensure territory coverage.
This effect has seemed to divide today’s independent reps into two categories: ‘hard sellers’ and ‘sales supporters.’

“Hard sellers seem to focus on product placement; sales supporters are more involved in customers’ logistics, providing merchandising assistance and sales training (not PK training but offering insights on how to “talk” lighting in a language that consumers can understand).     “Overlapping distribution channels have also had an impact on reps.  Internet sales and big box divisions don’t use traditional reps, taking a large segment of the business out of play.  Sales managers who come to town with factory programs have also eroded the reps’ effectiveness, often relegating them to a position of logistic support.

“It is tough out there for a lot of old school reps whose worth is only based on the products in their bag.  It is time that sales reps need to think about themselves as their customers do – and that is as a value-added service.  Assistance in logistics, sales approaches and promotions, and helping customers understand competitive factors and how to overcome them are key.  A little re-training may be required, but if an old dog can still learn some new tricks, there can be success.”
? Anonymous, West Coast

As you can see, the position of the lighting reps is not as simple as you thought. They are a very necessary link in the chain of our industry’s operation. When I recently made a presentation to a showroom owner on some custom product, he asked what we were giving away.  I asked if it was okay if we made a profit on our sales.  The response was that it was okay as long as we don’t retire on this order.

I explained, “You want free display product, you want ad mats and ad dollars, you want our magazine ads 800 phone number to bring leads right to your phone, you want a free display piece with one or two stock pieces, you want one year’s dating, a liberal return policy at the end of that year, and probably a little extension on the dating, plus you want a “spiff” for your showroom personnel.  You also want our rep to come in and merchandise a vignette with woodwork and wallpaper and hang the display pieces – and you want our rep to educate your showroom personnel on the product and how to sell it.  You want our rep to maintain the inventory and handle the returns.  The last time I did this for you, you sold competitive merchandise to the prospects our company and our rep sent in.  You sold off most of the display, did not replace it, and did not let our rep re-hang it.  My only question is, ‘Do you really believe the factory or the rep can make a living like this?’”  There was a long, thoughtful silence.  The customer finally responded by saying, “I never really looked at it like that.”

 We are still a relatively small industry.  Personal relationships are still very, very important for us to function.  We need all of the pieces of the puzzle, and we need to take care of each other.