ADDING VALUE - BRINGING VALUE A Presentation from RD and D Sales Engineering

Why we're here Responding to concerns about reps value We know this is a broad policy issue and not aimed at us personally. This has been and will be a long standing issue between reps and factory direct. Your concerns about the reps value are understandable, but we think misplaced.

The pressure is on * Everyone wants to add value * Everyone wants to reduce cost * Everyone wants to become more effective, efficient and profitable

Responding to the current challenge * We have to take requests to deal direct or take house accounts seriously * You have to act in the best interest of your company * Giving in to the request to go direct or take house accounts is not in the best interest of your company, nor the customers!

What we all have to do * Provide a better product * Bring more value for less cost * Solve problems, present solutions Communicate how what we offer solves the customer’s problem * Put the most competent, best motivated salespeople on their account

Serving the customer at their locations * A cost of doing business, not an option * How to pay for it is an option -- payroll or outsource, i.e. using reps.

Why you made your decision to use Manufactures Reps * Better market penetration * Solutions selling through product synergies * Predetermined sales cost that goes up and down with sales * More “feet on the street” * No cost until there is a sale

Should outsiders second-guess your decision? * You chose reps as your solution to cost- effectiveness * We are not an added cost, but an alternate method of field sales compensation * You chose reps to field more and better salespeople, and serve your customers better, at less expense

Dollars and sense reasons for outsourcing field sales * You pay only for results, not for effort * Your costs are predictable, and go up and down with sales * You have no sales expenses during the long nurturing process * You save on overhead - offices, automobiles, computers, benefits

More dollars and sense * You eliminate the “soft costs” of administration and managing people * You avoid legal exposures and expenses of compliance with local laws and regulations * You have to train only on product * You get more feet on the street * You get more skills and experience

Your advantages continue * You get a more stable sales force, who are not looking for promotion to another territory or the home office * You get better market intelligence through our multiple exposures * You get better penetration with people and departments that a single-product sales force might not be calling on

And that’s not all! * You offer the customer a systems solution, based on our knowledge of the other products they need * You get more product exposures, through more people presenting your line

What the customer loses if you go direct or don’t use Reps

The customer forfeits * The efficiency and time savings of a multiple-line call * The established stable relationship with someone who already knows both corporate cultures - yours and theirs * The rep’s ability to bridge inter-departmental communications gaps

More customer benefits * Our long-term commitment to the territory and to them, based on all the products we offer * Our ability to be more objective in advocating for them to you * Our consultative approach and systems solutions

They misunderstand the rep’s function * We are NOT a channel intermediary adding cost without value, we are YOUR sales force, simply paid on a different basis * We do not take possession, nor mark up price * We are not a barrier to communication, we are a facilitator of communication, reaching higher and wider in both companies

Continued * We are not a distributor and unlike a distributor we have no competitive lines!

Have EDI and the Internet obsoleted us? * On the contrary, they add to our value, handling routine so we are more productive * EDI facilitates tracking, re-orders for current products, but NOT technology introduction * It can’t train customer personnel, help negotiate contracts, analyze alternate solutions, nor deal with exceptions

Quote Follow up Your volume of quotes is high. Your volume of quotes is high. We have put in place a quote follow up system that works! While doing follow up it allows us to look at new opportunities and revisit lost business.

Taking a House account “You don’t need a rep, the customer knows us and we are getting all their business!” “You don’t need a rep, the customer knows us and we are getting all their business!”

Think again! With out the Reps day to day interface, your business there will become a memory.

Paying the Rep for business that comes to the factory with out the Reps help It Happens ! It Happens ! This is a win / win. It helps off set the business that was a bad cost of sales and lost orders. This is a win / win. It helps off set the business that was a bad cost of sales and lost orders. It is seed money to pay for the pioneering efforts for your company. It is seed money to pay for the pioneering efforts for your company.

Cutting Commissions * You works on a profit level of 40% average. When you lower your profit by 2% or 3% it’s just that. * When ask the rep to split it you’re asking the rep to give up 2.5 % or 3% it is really 50% to 75%!

Will eliminating the rep eliminate the rep’s commission? * You’ll have added cost, not less cost, because of higher overhead factors and the need to take on “soft costs” we now assume * You chose the rep route for economic reasons - and you know the economics of your company better than the customer does

Will using direct employees give you more control? * The important thing is results, not control * Today’s focus on core competencies leads to outsourcing Our customers outsource many functions for best results -- why shouldn’t you? Our customers outsource many functions for best results -- why shouldn’t you? * Most direct sales people are not paid straight commission. Lose a order and it probably won’t effect their income. * If a rep doesn’t get the order he doesn’t get paid!

Would direct salesperson have more product knowledge? * Products don’t exist in a vacuum -- the multiple line rep focuses on the product being designed at the customer. * Reps relate the specific need to the factory and as a TEAM brings a solutions approach involving related products.

This is not about US * This is about the value YOU provide, with our involvement, to our mutual customer

You made a good decision to control costs. You are very profitable and bring value to the customer by using Reps.

Don’t Fix What’s Not Don’t Fix What’s Not Broken! Broken!