Three years ago, Gary Seidel, vice-president of Utility Chemical Co. in Paterson, N.J., decided to expand his family's business west of the Mississippi.
"The ideal situation would have been to hire two super salespeople and give them each a mobile home, a map of the United States, and a list of the largest retailers in the country," says Seidel, whose company manufactures swimming pool chemicals and accessories and institutional cleaners.
Since that route was too expensive, "we had to find a low-cost way of opening up these new markets," Seidel remembers.
He resisted hiring a firm to match his company with sales representatives in his targeted expansion area. Instead, Seidel began to search through trade journals and catalogs sent out to mass merchandisers, his prime market. He hit it rich when he found an article in the Discount Merchandiser magazine that listed representatives and distributors with contacts in the appropriate outlets. From that list, Seidel contacted a salesman who would end up being one of his top representatives in the state of Arizona.
"The magazine had an ad for a new cosmetic line by a major cosmetics company," recalls Seidel. "They printed a list of all their distributors and reps in 50 states, with addresses and phone numbers in the ad."
Seidel reasoned that it wouldn't be hard for a rep who's selling cosmetics in a drug or department store or a supermarket to walk a few aisles further and place swimming pool chemicals on a shelf. So he sent a form letter to each rep on the list, saying why he felt it would be profitable and convenient for the salespeople to represent his product. The total expense for typing the letter and for postage was about $150.
About four days later, Seidel got a telephone call from Shelly Klein, an independent rep working out of Phoenix. Seidel asked about his background, the lines that he represented, and the stores he sold to.
"I was impressed by his accounts and the stores he was selling to," recalls Seidel. "They were the same markets we were after. And the size of Klein's organization was also right. He had about 10 people -- two or three assistants, a secretary, and service personnel -- working for him. At least twice a month, he was able to service customers to make sure displays were attractive and shelves well stocked."
Just as the rep needed to sell himself to Seidel, Seidel knew he had to convince Klein that taking on his company's line of swimming pool chemicals would be profitable to him.
During their initial conversation, Seidel explained to Klein that Utility Chemical prefers to work with reps without contracts. "If you find you can't sell our line, it's not worth your time or ours to keep you on," Seidel said. "And if you are selling it, you won't want to leave, and we won't want you to leave." Seidel also explained the company's commission structure: Utility has two price sheets; the higher offers customers discounts and free merchandise, the lower doesn't. The company pays a 7.5% commission for sales on the higher price sheet, and a 5% commission for the other. The rep decides which sheet he'll show customers.
Seidel also told Klein that the company had done preliminary work in the Arizona market, sending out detailed proposals to outlets there. The proposals described the company's background and prices and told why the products were profitable and desirable. "If you can do preliminary footwork in the market area before contacting the rep, you'll be ahead of the game," says Seidel.
The information, and the fact that Utility Chemical had been in business since the 1920s and had some of the top mass merchandisers and chain stores as customers, apparently impressed Klein. Seidel followed up the phone call with samples and literature. Within a few weeks, Klein had made appointments with six buyers, distributors, vice-presidents, and merchandise managers.
Seidel flew to Arizona to accompany Klein to the initial interviews."I wanted to acquaint him with our products, so the trip was a kind of training program," Seidel explains. "I wanted to be there in case a prospect asked the rep a question he couldn't answer and I wanted the potential customers to feel they'd always get support from the factory. Having a factory rep at these initial interviews lent credibility to the product as well as to the rep."
Five of the six people Seidel and Klein saw in those two days became customers, and Klein has lined up business with two distributors. Between March and December of last year, Klein had brought in $600,000 worth of new business.
"Arizona has been our most lucrative new market west of the Mississippi," says Seidel. "We followed similar procedures -- beginning with contacts we made through trade journal information -- to build up our second and third most profitable western markets in California and Texas.
"Once you've established a relationship with a rep," adds Seidel, "it's important to maintain constant contact. The more follow-up you have, the better selling job the rep will do for you." For example, Seidel regularly sends his reps industry surveys and profitability studies and keeps them up-to-date about customer services the company offers -- anything that might help them do a more effective selling job.