Merit Direct CEO Forum Midwest October 20 th, 2010 Terry Jukes, President, B2B DMI LLC T. Jukes

Our world now Slow/No growth – the new abnormal Increased price competition from the desperate ones Shrinking margins, little ability to raise price Stretched employees Demanding customers T. Jukes

When the going gets tough… Do more of what you know will produce Re-focus on business basics - RFMCP Stick to the knitting Do more with same/less Remain calm and persistent Dont buy the swamp water aka new technologies. Avoid big risks T. Jukes

10 things to do now Re-focus on product innovation – >50% of revenue from proprietary products Contract manufacturing Customization/Personalization Re-assemble/re-package Re-position products for applications – New products >20% of revenue – Balance consumables with capital purchases – New, Exclusive, Guaranteed – Beware Amazon/marketplace model T. Jukes

10 things to do now Focus on service innovation – Repair? Warranty? Resale? – JIT supply programs – On-site inventory control/mgmt – Custom web sites for larger customers – Tech support, assign account rep – Training, product information/video – Specialized packaging Move from selling products to providing the lowest cost total solution for your customer. T. Jukes

10 things to do now Sell more to the customers you have – Communicate more - RFMPC s, custom web sites, telesales Additional mail frequency – Understand and build relationship Study order distribution by catalog, order channel, customer type, order size, product ordered, new vs. repeat customers, etc. Be part of their supply/service chain Assign sales reps Consultative sell on inbound Customer audits/surveys – Find new customer problems to solve. T. Jukes

10 things to do now Turn inbound from order taking to order making. – Opportunity to increase 15-20% with little incremental expense – Track AOV, MOV, UPO, LPO, call time, close rate by rep. Conduct weekly coaching. Reward performance. – Product/application training and exams – Inbound = R+D T. Jukes

10 things to do now Set productivity improvement expectations – 5% a year from vendors New, exclusive products Reduced total costs of supply – 5% a year from employees Re-engineer processes Reward employee initiatives and responsibility Be an owner T. Jukes

10 things to do now Integrate and improve your online/offline data/business intelligence. Integrate web data into customer response analysis All customer activity triggers a one to one marketing response. i.e. Order, ship and deliver confo s; abandon shopping cart s; lengthy product page views, etc. T. Jukes

10 things to do now Give marginal performers a chance to be successful somewhere else What is your opportunity cost of keeping a marginal inbound or outbound rep? What is the cost of keeping any marginal employee? T. Jukes

10 things to do now Systematize all proven processes. – Avoid lapse in corporate memory and re- inventing the wheel when turnover occurs. – Eliminates/reduces person days spend on reporting and analysis. – Ensures common, timely and communicated information. – Establishes common language and understanding/know how T. Jukes

10 things to do now Hunt for bargains, be shoportunistic. Opportunistic acquisition of failing competitor or customer list. Excess inventory from manufacturer or competitor. Special risk free, trial offer from a supplier T. Jukes

10 things to do now Plan for 10% more and staff for 10% less. – Remain lean and mean and flexible – Be able to withstand business shocks and other diversions. Winter storms, terrorist attack, vendor bankruptcy, stock market crash, etc. – Utilize outsourcing to remain flexible and increase payroll productivity. – Consider offshore solutions – Mexico, Bulgaria, Philippines. T. Jukes

Merit Direct CEO Forum Midwest October 20 th, 2010 Terry Jukes, President, B2B DMI LLC T. Jukes