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Times & Trends: Nicely Niched

Jan. 13, 2016
In the not-too-distant future, many reps will need to decide what they want to be when they grow up. For many of them, developing a more precisely targeted market focus may be the key to survival.

The rep world is seeing a ton of change these days. There’s always been the constant uncertainty of 30-day contracts, and the distributor and manufacturer mergers and acquisitions can wreak havoc on business relationships carefully nurtured over the years.

Succession planning issues are still common, too. Like many small businesses, some family-owned reps wrestle with the transition of their companies to the next generation. With savvy management of their territories and profits, some reps will survive but others will have to shut their doors or merge with other reps.

There’s also the challenge for smaller reps of competing with larger agents who represent a package of product lines from one of the billion-dollar electrical conglomerates and have tied their business fortunes to their relationships with those companies.

To compete against these larger reps, more smaller firms will need to get really, really good in tight product niches. It’s a trend that attendees of next month’s NEMRA Conference in Dallas will learn more about when the latest “Rep of the Future” research from Farmington Consulting Group is presented.

I think this trend is very healthy. It brings new blood into the rep world, as entrepreneurially minded industry veterans from reps, distributors and manufacturers follow their dreams of running their own businesses and form new rep agencies.

This month’s cover story on EDGReps, Mesa, Ariz. (“Honing an Edge in LEDs,” page 14), profiles one of these new-generation reps. Nicole Bagozzi, her husband Ben, and Curtis Moldenhauer learned the rep business from one of the old-school masters, Bud Ruzycki, who started up EDG in 1984. They have taken the basics of customer service that they learned from Bud and applied it to a package of traditional electrical product lines and a basket of lines in the fast-changing LED market.

EDG’s story and the approach Nicole and her team use to service lighting customers in Arizona and southern Nevada got me thinking about other product niches where a blend of product knowledge, customer training and old-fashioned customer service and relationship building could work or is already common. The first market that came to mind is the electric utility industry, where smaller rep firms, often members of Electrical Equipment Representative’s Association (EERA), Kansas City, Mo., call on publicly owned power companies and smaller rural electric cooperatives.

The rep’s role in the utility and lighting markets are similar. They are selling a technical product in a space that’s changing fast because of technological shifts (solid-state lamps in the lighting industry and the smart grid, renewables and distributed generation in the utility market). The customers in these markets still appreciate good old-fashioned face-to-face selling and relationship building, and they value the help they get from reps in navigating these new technologies. Other niches where you see reps use a similar business model are the OEM and factory automation markets.

Are there other segments out there for niche-minded reps? The solar, wind, data center or electric vehicle industries may one day grow big enough to require technically proficient local reps selling a package complementary products, as they do in the lighting, utility, OEM and factory automation markets.

To niche their way to success in the future, reps must offer their local market’s best package of technical expertise and  dependable service  in their chosen product area and provide their vendors with the best growth opportunities.