BREAKING NEWS
Strata-gee.com heard this week from multiple sources that Core Brands had completed the analysis phase of its sales force consolidation, and was now executing the termination of the losing reps – and the reassigning of brands to the winning reps. Core Brands, a division of Nortek, Inc., had announced the downsizing process in a conference call with their entire sale representative network on April 19th – laying out a process for which the desired result was to create a smaller network of fewer authorized sales representative companies presenting most, if not all, of the company’s ten brands.
But there is some question as to how successful the process was, given continuing multi-rep territories…
The sales force restructuring process was not a surprise and many had been anticipating the company making just such a move in the wake of the overall consolidation taking place within the company for more than a year now. Still, many reps were dreading the potential outcome and questioning the wisdom of terminating – in some cases – long-term reps only to reassign their lines to other reps who are either unfamiliar with that line – or maybe had even been a previous competitor to that line.
But even aside from that issue, the idea of consolidating ten brands to one rep firm, as we noted in our previous post, presents unique challenges and we were skeptical as to whether the company could completely address the multitude of issues the concept caused. From the calls we’ve received from the field, the controversy of this plan has not been completely addressed.
Frothing in the marketplace…
Much like when the company originally consolidated Niles, Xantech, and Elan back in 2011 into the AVC Group – including merging three rep sales forces into one – there is a lot of frothing taking place in the marketplace. Inevitably, no matter what process Core Brands pursued, there were going to be winners and losers.
Once again, for many reps, this is their worst nightmare realized – losing one or more lines that they (in some cases) pioneered and built in their marketplaces…only to lose them now. Of course, on the other side of the equation, there are many firms happily being authorized to represent one or more new brands – filling out their bags and giving them a little more leverage with their dealer base.
Fraught with challenges…
The process was fraught with challenges. On paper, it makes sense to have one fully empowered representative to sell and support ten brands. But it takes a pretty major firm to be able to support that many lines. In many cases, rep firms pitching the company had to agree to add staff and facilities in order to be able to take on such a task.
And then there is what the company euphemistically calls the “conflict of interest” issue – better known to reps as line conflicts. Many of the various Core Brand reps had filled in their assortments with lines competitive to the Core Brands lines they weren’t representing. In some cases, these were strong lines offering big commission checks – and, perhaps meaningfully, less reliance on only one supplier.
You’re dead…
This reality was not lost on many of the reps that, as one told me, to align his company almost exclusively around one vendor (Core Brands) but still have only a 30-day contract, meant living constantly on the edge of destruction. Run afoul of this one supplier – and you’re not just hurt financially – you’re dead.
As the notifications went out to the field this week, we heard from both sides – the losers licking their wounds, and the winners. However, the winners were surprisingly circumspect. We saw no overt examples of “spiking the ball.”
Steady as she goes…
We contacted the company to get a response and spoke once again with Senior Vice President of Marketing Paul Starkey who confidently told us that the process has concluded roughly in line with their expectations.
“We have formally informed both the reps that are continuing with us, and those that are leaving us, what we are doing by territory,” Starkey told us. “And the effective date of this is July 1.”
From the feedback we’d received, it sounded as though there was total turmoil in the field. Although this portrayal mostly came from the sales representative community. The response from dealers we spoke with was much more muted – sort of a “Let’s wait and see” mentality.
Keeping our eyes on the goal…
We wanted to see if Core Brands was aware of the turmoil we were hearing about.
“I just want to remind you of what our strategy or goal was,” Starkey said. “What we were finding at the marketing level and the business level, we were saying we wanted to give our dealers more choices and a much easier environment to make those choices between our brands. [After all of our internal realignment to make this happen] we get to the last two feet of the support structure and we had rep firms at odds with that very notion. So this is all about giving the dealers more choices, easier choices to make.”
Starkey told us that with ten brands under one roof, the lines had become unwieldy for their sales and support structure and perhaps most importantly – their dealers.
“So we’re trying to raise the level of customer service by simplifying the number of people they have to work with – simplifying the policies, the programs, the pricing and everything behind that,” Starkey added.
In a word – no…
So was the company successful in their goal of consolidating their multiple rep firms to just one rep firm per territory? In a word, no. But they did succeed in significantly refining their organization. At the beginning of the process, Core Brands was represented by a total of 44 rep firms (our previous report said 39, “I ran out of fingers and toes,” Starkey joked).
Now, at the conclusion of a process that Starkey admitted was a little more “intense” than he had originally expected, the company has fewer than 28 representative firms across the brands.
“We knew we wouldn’t get to 1 rep firm in every territory,” Starkey told us. “[But] in no territory do we have more than two rep firms.” Previously, they had several territories with three (or even more) rep firms.
Creating more cooperation…
Starkey says that the company – even in territories where there is more than one rep firm – was able to create “more cooperative rep situations.” This is perhaps an allusion to the fact that the old structure contained reps in certain territories that were in competitive conflict with each other.
“In virtually all the cases where we have two [rep firms in one territory] today, we’ve removed any conflicts, any concerns we that we have that we couldn’t execute the main strategy, which is giving the dealers more choices, easier choices to make without a conflict of interest,” Starkey emphasized.
Core Brands has more than half of its rep territories with only 1 unified company representing all ten lines according to Starkey. In some cases the situation worked itself out with firms merging or working together strategically for seamless representation.
Any worry about blow back?…
But, we asked, inevitably some of your choices will rub a dealer or group of dealers the wrong way. Was Core Brands concerned about any “blow back?” While acknowledging some concern, Starkey isn’t too worried.
“We’d be a little bit naive to think that 100 percent of the dealers will be happy 100 percent of the time,” Starkey said. However, he remains convinced that the newly streamlined organization will be viewed as a big plus as the dealers come to recognize that the new structure makes their lives much easier.
A letter to dealers notifying them of the final decisions will go out late today or early tomorrow.
FOR MORE INFORMATION
Strata-gee.com has copious coverage of both Core Brands and its parent company Nortek available at your fingertips – literally. Simple click on “Core Brands” or “Nortek” in the Tag Cloud in the sidebar on the right-hand side of the website and you’ll be able to access all of our existing coverage.
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