Branded Matters

Are Sales Reps in Danger of Becoming Extinct?

I might be in a small minority of opinions on this subject -for now- but I firmly believe that the proliferation of computer screens is going to require a new type of sales rep for the future. A rep that is as versatile on a keyboard or with video technology as they are face-to-face. A rep who tactfully and respectfully knows how to engage a buyers attention and prove value through the interwebz as well as in person.

Computer screens are the new electronic gatekeepers. Buyers decide, within a few mouse clicks, whether or not you are worth their time. Add to this the attention deficit and the sales rep as a stand-alone entity is in danger of extinction.

Now, one could sell me on the idea that the more high tech we become the more important face-to-face becomes, the challenge is: getting there. Face-to-face is only achievable if the buyer allows you into their presence and today's buyers are making their decisions (increasingly) through their computer and mobile screens.

Consultative sales reps do their best work face-to-face, the problem is, many buyers have practically made up their mind before a consultative rep ever even shows up for an appointment. The purpose of the appointment is, more often than not, validating a decision that has already been made.

The good news is that it doesn't have to be an either/or proposition (sales reps only vs technology only), as long as reps continue to combine their offline skills while developing their online skills, they can not only survive, but thrive.

What do you think? Are sales reps in danger of becoming extinct?

Promotional Products, Reflections on the State of the Industry 2010

The Advertising Specialty Institue recently released its annual State of the Industry Report (subscription required) for the $15.9 billion dollar promotional products industry. Like many in our industry, I eagerly await each issue it truly is the closest (and most affordable) option to hiring a consultant to help guide your business. Following are a few of my key take-aways from this year's issue:

• distributor revenues fell in the market last year by 19.5%
• during 2009, the industry as a whole, gave back all of its revenue gains of the past five years
• the top end-users of promotional products? healthcare, financial, insurance, education and associations (healthcare, education and financial combined, comprise 37% of overall ad specialty revenues)
• the average number of orders distributors fulfilled (1,210) fell to 2006 levels in 2009
• 84% of sales in the U.S. (in general) are a result of word-of-mouth advertising
• for the 5th year in a row, distributors said that referrals were their #1 source for new business
• the average distributor competed in 68 RFPs during the year
• the top two ways distributors increased business with existing clients: 1) ask about upcoming events 2) referrals to other departments
• the number of new clients served in 2009 for distributors in the $250,000 to $1 million range: 64
• the percentage of orders that suppliers say need to be turned around in five days or less: 35%
• more distributors agree that their clients shop for promotional products primarily based on price (58% agree)
• in the U.S., the majority of distributors cite 'websites selling promotional products' as the #1 competitor
• the top 40 distributors represent 21.8% of overall industry revenues (2009 total industry revenues: $15.9 billion)
• out of the 40 top distributors, only four recorded an increase of sales in 2009
• 63% of distributors are optimistic that they will increase their profitability in 2010

2009, for many of us, was an extremely difficult year. For me, the recession proved that, as an industry, we have a two-fold problem:

1. being reactive to the point of sales (business development) paralysis
2. being reconciled to allow the market to define our products (and their potential) for us

Both eminate from either a latent understanding of sales or a purely passive approach to the business. In my own world, I realized that the fastest way to lose your business is to allow your pipeline to go dry (we talked about it all the time in the years prior to 2009, but once we actually saw it happen before our very eyes, we - I - finally understood).

The promotional products industry feels almost entirely reactionary, in large part due to the aggressive "rush" nature of many of our best projects (according to suppliers, "rush" orders comprise 36% of total industry orders). But it seems that those who exerienced the strongest growth (or the least amount of loss) in the industry built some form of infrastructure (or maybe it was just attitude!) that resisted passivity and refused to accept "reactionism only" as a standard form of business practice. Once these companies adopted this attitude, the market, left largely ignored by any real aggressive business development, was wide open for (primarily) those with some type of eCommerce model (more on this in my next post). Add to this the declining average order amount and you've successfully shaken the system free from mere opportunists and channeled it so that other solution providers could fill in the gaps.

The promotional products business is, if nothing else, predictable inconstancy but (note to self) it doesn't always have to be this way. There is a difference between deciding that things will never change (thus resigning oneself to mediocrity) and understanding that the market has changed but we must continue to adapt to survive.

In my next post, I'll write about some of the changes in promotional products as it relates to eCommerce (I've written about this before). For now, I'd love to hear your feedback on the State of the Industry, please drop me a note!

Many of the above points were taken directly from the SOI issue, credit goes to the editorial team at ASI (Andy Cohen, Betsy Cummings, Shane Dale, Alex Palmer and Dave Vagnoni; research by Larry Basinait). Also, a hearty congrats to the entire editorial team at ASI for both an outstanding issue (probably the best issue ever published) but also to winning 14 ASBPE Awards (American Society of Business Publication Editors) - well deserved!

Promotional Products: Purveyor or Advisor?

Promotional product professionals primarily fall into two categories:

1. Promotional Product Purveyors (order takers)
2. Promotional Product Advisors (opportunity makers)

I purposely avoid the word "consultant" because it is ubiquitous in the business world and has become cliched. An advisor is one who is an expert in a particular field; (I have often used the phrase "trusted advisor" to describe this person, but the two words are, in most cases, redundant).

The recession we are experiencing is, no doubt, significant to many industries and the promotional products business is hardly immune, (to say the least). It probably goes without saying but a recession is a purifying flame: order takers (purveyors) will not survive, order makers (advisors) will not merely survive, they will thrive:

• Promotional products advisors always live with "ROI" and "bottom line" as the subtle force behind all of their activities, it is the baseline from where their selling actions occur.
• An advisor doesn't wait for calls from their clients. (An advisor didn't wait for requests during the Christmas season, they presented solutions for business gift giving long before the client even thought about it).
• In the 3rd QTR of 2008, while the purveyors were still selling for fall golf tournaments and tradeshows, advisors were presenting ideas 3-4 months in advance; more importantly, they were presenting ideas that would achieve highly effective results for their clients.
• Advisors are already reviewing their client list and potential event triggers for the 2nd and 3rd QTR.
• While purveyors are hoping their clients will still be buying this year, promotional products advisors are accepting no alternatives. If their clients halt spending or cut budgets, advisors are not easily shaken: their prospecting efforts are so extreme compared to the purveyors, they don't have time to fear, they not only live and breath as reliable consultants to their clients, they (as professional salespeople) never have a dried up pipeline.
• Purveyors claim no one is buying right now. Advisors, the experts in the field of brand management products, realize there are always businesses that thrive in a recession and more importantly, rebuff refusals from clients: with a product that boasts an 84% ROI, they sell confidently to all.

Don't get me wrong: I'll take your order from our catalog or website, but the relationship is merely an open door to a more consultative opportunity (even your request might prompt me to recommend a better idea for your project). The bottom line is, in a recession, purveyors will become marginalized while advisors will remain as the dependable, reliable partners their clients have learned to respect.

In case of any armchair grammarian outbursts: advisor and adviser are both acceptable in the U.S. and Great Britain. (Just had to get that out of the way to avoid one more email in my inbox). :-)

What is the newest, coolest promotional product for a tradeshow?

I was asked this question during a luncheon today. This might surprise you: it's not about the latest and hottest product, it's about putting your message in a place where your client will be when they need your services the most.

David Blaise has a very popular Promotional Products training kit for our industry (I'm a seventeen year veteran in this business and I found it immensely helpful). One of the questions he asks is, "Where is the end-user most likely to be when he/she is in most need of my client’s products and services?".

If you are giving away promotional products at a tradeshow, you must make sure your products don't become part of a loot bag that merely gets distributed to the kids when your audience gets home. Ask yourself, "where will my audience be when they need my services the most?" and then provide a promotional product right in the middle of that piece of real estate. For some it's a car, for some it's the fridge, for others (like us), it's the desktop, but whatever we give away must be a trigger of some sort. This means that sometimes it might be a boring product. It might feel good at the show to have all that attention by handing out a new whiz-bang product but it's only helpful if that attention results in (ultimately) accomplishing your objectives (which for many is the purchasing of your products and/or services).

The question is not, "what is hot", the question is, "what will work"?

The Permanence of Promotional Products

"How Walt Disney Would Market in 2009?", an article in BusinessWeek, really got my attention, particularly this quote:

"When you leave Disneyland you stroll down a Main Street populated with dolls, and shirts, and hats, and media that all are linked to the wonderful experiences you just had. In today's fragmented world, executives must reinforce key messages by having multiple, consistent, coordinated touch points for the same idea." (emphasis mine)

If you are out there marketing to other businesses it is imperative that you remember how cluttered the landscape is when it comes to gaining mindshare with your clients. In a recent study by ASI, they found that 84% of people remember advertisers on products they receive. When promotional products are used in any campaign, in particular, a multi-part campaign, the magnitude of that impact is huge.

Permanence is not a word we use frequently in this world because everything is transient, from our news to our entertainment. The permanent part of promotional products is what is left behind: the message. When 84% of your audience remembers who you are then you must consider promotional products in any marketing or advertising campaign, to ignore that type of a return on your investment would be foolish.

The Long Tail of the Promotional Products Industry

Each year, the Promotional Products Association releases a report that breaks down sales by both product category and program category in the 19 billion dollar promotional products industry. Having read Chris Anderson's book the Long Tail, I altered my perspective a bit by applying the principles of the Long Tail to our industry in modifying the look of the report (no change to the data).

For those unfamiliar with the long tail, it is best summed up in the subheading of the original 2004 article in Wired magazine: "Forget squeezing millions from a few megahits at the top of the charts. The future of entertainment is in the millions of niche markets at the shallow end of the bitstream." In the promotional products industry, the mega-hits are primarily apparel and writing instruments (see chart at left).

These mega-hits are often sold to companies for employee relations and events. (Another chart at the bottom of this post describes the rest of the program categories, how companies are using promotional products).

One of the things I enjoy the most about the industry is its diversity: you can become an expert in a single solitary field (corporate awards, for example) or offer your clients a wider variety of branded products. One of the inherent challenges is, because of this wide variety, it is easy to get either compartmentalized by a client ("we buy all ours hats from Joe") or stifled by one's own narrow mindset ("I could never sell awards"). It is important to review these categories that represent the long tail of the industry. It is no secret that entire business empires have been built on a single one of these categories, such as food gifts.

In some industries, if you survive the recession, it will be because you've adopted a process of firing yourself, regularly, long ago. You forced yourself to constantly think and act anew to achieve different results. This is not done by abandoning the past but building on it. This winnowing process is a way of life for most small businesses (for entrepreneurs, change is an effervescent tonic). Given the turbulent economic condition, many companies are either in the process of reinventing themselves, rediscovering their roots, or, better yet, both. For our business, we are retreating to a "back-to-basics" approach embracing both old and news ways of selling. Through the 2001 recession we emerged as a stronger company and though we forged ahead with new business opportunities we were building upon what we already knew. We developed more sophisticated technologies and improved our offering to our clients, we also acknowledged our core business and got back to basics. Out of the ashes of that recession arose an environment with more possibilities (and affordability) ever imagined. One can hope, on the other side of this recession, we will discover even greater opportunities but we will not discover these by abandoning what we built our business on: we will, rather, become much better for having been willing to redefine ourselves.

More information:

• The Long Tail: the original 2004 Wired article
• The Long Tail: Wikipedia's description 
• The Long Tail: the book, now in an updated and expanded paperback
• PPAI's full 2007 report (pdf)

Promotional Products and eCommerce: Incompatible?

The promotional products industry has been in a state of flux as it relates to eCommerce. It is now eight years past the dot-com bust and out of the ashes, many industries have developed profitable ways to sell via the web. The world of advertising specialties seems to have made smaller inroads compared to others.

I was reminded of an interesting figure that deserves more exploration (because it could spell opportunity for some of us) and that is the 2007 Estimate of Promotional Products Sales, an annual report developed by the Promotional Products Association International (PPAI). Highlighted in this report is the fact that only 15% of all promotional products sales are conducted online via either a company store or a web portal. 

This is contributive of several factors:

1.  every order in the promotional products business is a custom order 
2. the majority of on-going clients, (those with significant budgets), require a B2B client relationship that requires consultation
   
3. the complexity of the industry, combined with the multitude of products, makes most online tools still somewhat cost prohibitive (if not in actual dollars, at least in time - one in the same, I would argue) 

The critical question: is it possible for a small to medium sized distributor to develop a successful business selling promotional products online?

Possibly.

The industry still reacts to online selling, reluctantly. We have memories of spectacular failures like StarBelly still lingering in our minds, but as I see it there are now at least four ways to develop a successful solution selling via the web:

1. Company Stores: online, private-label stores
2. Mammoth Stores: one-stop shop solutions like 4Imprint
3. Niche Stores: setting up a green, eco-friendly store featuring environmentally friendly products, for example
4. Proprietary Procurement Systems: like what Boundless Network employs 

Company Stores: The demand and subsequent growth in this area is exponential. I don't merely say this because I have a stake in this part of the business, but even anecdotal evidence suggests demand is on the rise. My friend Mitch and I lead classes on Company Stores at the ASI Show!, for next year's classes we are facing record numbers and this is a fee-based class. The hurdles to a successful company store program are many. Some (not all) involve inventory and therefore warehousing and distribution. It is the most labor-intensive option regarding eCommerce for the promotional products industry.

Mammoth Stores: The one-stop shop for promotional products has come and gone with many companies. A successful model is 4imprint (formerly Nelson Marketing). This type of store makes perfect sense for 4imprint who has years of successful experience as a direct mail promotional products company. What they created online was already being done offline via catalogs and fliers. Their preexisting infrastructure surely made for a smoother transition into the dot-com world. For the rest of us, we have little time to invest in a long shot. At Robyn, we are currently working toward more and more eCommerce solutions that are either directed at niche markets or are designed to enhance our product offering online to existing clients. A "mammoth store" is not only cost prohibitive, a healthy return on the investment of energy of our capable staff would have to be measured in (perhaps) years and still yet, a long shot.

Niche Stores: Niche stores probably represent the easiest entry into the promotional products market. Setting up a store of environmentally friendly products or targeting a specific industry might just be the way to success. There is still a dilemma, Chris Miller of SellPromos.com nails the problem still facing these start-ups in his post "Going e-commerce? Not so fast ... "

Proprietary Procurement Systems: Boundless Network has one, so does Club Colors. They are proprietary therefore I do not know the details but I do know that for years in this industry larger distributors have developed back-end systems to provide a simpler, more cost-effective method for purchasing, a solution pleasing to both the accounting and purchasing departments of many clients. Perhaps these back-end systems may not qualify entirely as eCommerce but most of these solutions probably provide a front-end, shopping cart style entry point for the buyer, (the engine of which generally involves SAP) and which constitute a computer-based system of purchasing.

The core problem with eCommerce solutions in the promotional products industry is one of complexity: every order is a custom order. Take your simple pencil. Pretty easy, right? There are more options for an imprinted pencil than most care to think about but distributors and their clients must consider every step, carefully. And this is one of the simpler products to produce. In an industry with over 500,000 products, this problem is intensified by the variety of items as well as the multitude of manufacturers that produce these products.

Suppliers are having some success with websites but a few have noted that when eCommerce became at the first more affordable to build, their advertising expenses didn't decrease, they actually increased. Since many distributors are still heavily reliant upon catalogs, suppliers still had to produce catalogs and yet also provide a robust web-based solution as well: eCommerce didn't replace the catalogs, it just gave distributors one more method of acquiring information about the product. By now, perhaps the demand for printed catalogs has decreased but I would be surprised if it is dramatic. Most companies that develop an online tool or eCommerce portal do so because they save time (money) by implementing technology to handle the lion share of the work (or a portion thereof). When the airlines industry made it easier to book and check in your flight through a web site, it no longer required a full-time person to handle that part of the transaction for the customer. Technology actually put tasks, formerly performed by the employee, now in the hands of the client (and we liked it)!  In the promotional products industry, one could argue that eCommerce could replace salespeople, but as noted earlier, many clients require ongoing consultation, something a website would not be able to handle.

There are some strides being taken in this industry, such as ASI's Content Bridge which allows you integrate their database of products, educational content and editorials, making the possibility of eCommerce development more efficient. Even outside the industry, simple shopping cart solutions are available as well, some of them surprisingly affordable and still robust (Mashable highlights 35+ of these shopping cart solutions here). 

Promotional products are primarily a relationship driven business. Clients require advice for effective promotions, no different than the services provided by an ad agency. Ecommerce, in context of this relationship, is not only compatible but further enhances solutions to the client significantly. Promotional products and eCommerce need not be mutually exclusive, they can compliment each other but the verdict is still out on whether a promotional products company can thrive by selling through the web alone.

_{(I wrote this post to hopefully begin a dialogue with others in the industry interested in sharing successful solutions. If you are in the promotional products industry and are doing eCommerce effectively - or in another industry and have met with similar challenges - I would love to hear from you. Email Me or drop a note in the comments section below. Together, perhaps we can discover multiple options for successful eCommerce development).}

Promotional Products: Do Outsiders Own the Keys to the Kingdom?

Each year, the Advertising Specialty Institute publishes a "State of the Industry" report through its flagship publication, the Counselor magazine. The Counselor is highly respected by industry professionals and widely read by both distributors and suppliers, it is considered the information source for the 19.6 billion dollar promotional products industry.

The chart below is culled from a listing of the Top 40 Promotional Products Distributors featured in both the 2000 State of the Industry report and the 2008 State of the Industry report (for brevity's sake, "State of the Industry" will be referred to as SOTI for the rest of this post). Comparing this list side-by-side highlights one obvious fact and one surprising shift occurring in the promotional products industry.

First, the year 2000 was (arguably) the year the dot-com bubble burst. In fact, in the 2000 SOTI report, the key question asked of every Top 40 distributor was: "Do you see dot-com firms as a positive or a negative for the industry?" These were the days of multi-million dollar investments into technology that, today, costs mere thousands (if not hundreds) of dollars. (Who could forget outrageous deals like Starbelly?)

Second, you will notice the arrival of newcomers on the 2008 SOTI report. These companies have steadily built a strong presence in the industry compared to several years ago. For the most part, these newcomers provide promotional products as a value-added extension to an already successful business model. Uniform companies, trophy companies, print companies and more are now offering advertising specialties as an additional offering in their branded products portfolio. The highlights in the 2008 column below reflect the vendors whose revenue does not come solely through the traditional promotional products industry or primarily through a traditional promotional products distributor model:

Top 20 in 2000	Top 20 in 2008
CYRK	BDA
HA-LO	Corporate Express
Aspen Marketing Group	Proforma
American Identity	Staples/American Identity
Corporate Express	Group II Communications
Geiger	Geiger
4Imprint	Cintas
Bensussen-Deutsch & Associates	National Pen Corp
Boise Marketing Services	4Imprint
Summit Marketing Group	HALO/Lee Wayne
Case-Dunlap	Adventures in Advertising
Brown & Bigelow	Tic Toc
Vernon	Workflow One
JII/Sales Promotion Associates	Banyan Incentives
Wood Associates	American Solutions for Business
Jack Nadel	Summit Marketing Group
Kaeser & Blair, Inc.	Kaeser & Blair
Newton Manufacturing Co.	Myron
Group II Communications	Corporate Edge/Inner Workings
AdGap Group	MidWest Trophy Co.

So what does this list really prove? It proves a fundamental shift has been happening with our buyers' purchasing habits which possibly serves as a wake-up call.

Consider the acquisition of Corporate Edge, (a promotional products distributor), by Inner Workings, (a print company), the acquisition is a microcosm of what is going on the industry, so is the dramatic case of WorkflowOne. WorkflowOne is a print company whose entry into the market was no subtle affair: Dan Welborne, vice president of the promotional division stated in the 2007 SOTI report, “Promotional products is the number-one initiative in the company. And that’s pretty big for a billion-dollar company to pick a space that we’ve been doing $35 million in and say that is our number-one initiative." Another example: when Staples, (the B2C office supplies giant), recently announced the acquisition of Corporate Express, (the B2B office supplies giant), this further proved that big companies are putting big money into streamlining their product offerings. Staples had already acquired industry purebred American Identity in 2007. The battle for buyers' mindshare is being fought as much on the acquisitions front as it is with competing distributors on the streets of our local cities.

On one hand, the key to these mega-companies and their assimilation into the industry through astounding growth can easily be attributed to market demand. The melding together of branded products and the confluence of industries is a simple response to the market: buyers want simplified systems and fewer vendors. They have become fiercely jealous of their time and will not extend it to just anyone, which makes entertaining multiple vendors the very last option on a very long list. Does this mean that fragmentation enjoyed by traditionalists in the industry might be coming to an end?

A frightening aspect to consider with some of these mergers is that by considering promotional products a mere portfolio builder some of these companies can possibly further relegate branded products to commodity level purchases. This is dangerous because customized branded products that generate revenue, increase goodwill (and more) cannot possibly be equated to copy paper and uniforms.

On the other hand, because of the nature of a highly customized industry and many unique traits (as easily dissimilar as similar) with other industries, the growth of professional specialists within the industry could skyrocket. We are one of those companies who, although considerably smaller than the ones on the list, have been able to make a unique product offering with all types of branded products. This doesn't mean it is easy. It is actually quite difficult. The barriers some buyers have erected between branded mediums are every bit as strong as the barriers salespeople have erected to keep from crossing over into new territory!

One would argue (I certainly would) that branded products are branded products. Midwest Trophy was always in the branded products business; they just happen to be, primarily, a trophy manufacturer. BDA is a promotional products company who happened to carve a very successful niche in sports marketing (whose growth also seems to be fundamentally organic). For some of these companies, absorbing additional types of promotional products makes good sense. It will be fascinating to glimpse in several years how these changes have affected a highly customized business. How, for example, some of these companies can withstand the structural changes necessary to build a complex but effective sales and support environment for promotional products or how they can achieve symmetry with different types of branded products in the minds of their buyers. One thing is certain: much remains to be seen how this will affect our industry, long term, but until then, there remains an incredibly bright spot for both niche distributors and small distributors (more on this in the next post).

_{This is the first post in a series aimed at discussing (and discovering) critical keys to building a successful promotional products business and a healthy industry. The series, in its entirety, can be found here - Promotional Products: Keys to a Branded World.}

_{Update (11/5): I just received my Nov. issue of the Counselor and read an excellent article by Betsy Cummings, A Whole New Game, Nov. 2008, 125-127 (subscription required) that sheds even more light on the competition traditional distributors are facing from yet another type of competitor: online sellers of promotional products.}