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GEA Case Study#1_V1.1


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GEA Case Study#1_V1.1

  1. 1. 626 Brass Castle Road, Belvidere, NJ 07823-2725 M: (908) 296-1156 P: (908) 453-4065 Active Member-Institute of Business Forecasting & Planning (IBF), St John’s University, NY Active Member-International Association of Broadcasting Manufacturers (IABM) Page1 …..helping under-performing companies …..become strong, growing companies AT A GLANCE: WHO: Seasoned US-based TV equipment manufacturer with international customer base WHAT: Flat revenue growth due to reseller apathy HOW: Uncovered damaging and ineffectual reseller communications and restructured network from the ground up. This is an actual case study of how GEA & Associates identified and corrected a problem in a vendor company’s reseller distribution program, which resulted in improved reseller relations, and subsequent increases in revenues for the company1 . THE COMPANY: Company A has been manufacturing professional TV products for over 20 years, with revenues holding in the mid-$20M range without measurable growth. An established company, not a start-up, they had been operating under the same procedures developed many years ago. THE PROBLEM: Revenue growth was flat. Senior management suspected a major part of the problem was a serious disconnect between the Company and its resellers. Historically, reseller sales had comprised about 85% of the company’s total revenues, the remainder being direct sales. GEA was engaged to identify the issues contributing to lagging sales and to recommend solutions. THE SITUATION: GEA immediately initiated meetings with several members of the support staff and their supervisor to learn what procedures were used to communicate with resellers, and also to uncover their efforts to keep them engaged. They all agreed that resellers were crucial to the Company’s success, but they feared interest in the company’s products was waning despite the new product literature, and price lists, special promotions, and press releases that were distributed, both electronically and via postal and delivery services. At the conclusion of the first session, each member of the staff was instructed to bring a printout of the official reseller lists to the next meeting. It was discovered that each had a 1 In the interest of protecting the subject company, all company names and city locations are fictional, but the case is 100% authentic. CASE STUDY Company A
  2. 2. 626 Brass Castle Road, Belvidere, NJ 07823-2725 M: (908) 296-1156 P: (908) 453-4065 Active Member-Institute of Business Forecasting & Planning (IBF), St John’s University, NY Active Member-International Association of Broadcasting Manufacturers (IABM) Page2 different list comprised of 30-35 company names with little commonality. There was no single official reseller list, and therefore most of their efforts were wasted on contacts that were not, in fact, at all interested in the Company’s products or communications. THE SOLUTION: We then set out to determine who the real official resellers were. By definition an official reseller was an agency with whom Company A had a reseller contract, and that contract had two signatures on it; the reseller’s signature, and the Company signature. When the Company database was accessed, only 9 contracts appeared, and NONE of them had dual signatures. There were, officially, NO authorized Company A resellers. Confidential Reseller Trade Discounted Price Lists were being sent to agencies around the world that had no reseller agreement. This called for a complete revamping of the total reseller program. GEA immediately: A. Determined what senior management wanted to include in the reseller program, i.e., pricing and discounts, territories, collateral support, advertising co-op programs, trade show support, training, forecasting of future orders, etc. B. Drafted new domestic and international reseller agreements. C. Determined who the company wanted to sign as an official reseller. D. After conferencing with Company A’s Accounts Receivable department, contacted each reseller that was not going to be signed and notified them that we would cease doing business with them in the next 30 days (a grace period). E. Contacted each reseller that we did intend to franchise, and explained the new reseller program to answer any questions, and to get their commitment to the new program. F. Completed and mailed new reseller agreements. G. Upon receipt of the executed agreements, created ONE official reseller distribution list. Only the supervisor was authorized to make changes to the list. Only resellers on this list were allowed to receive confidential reseller information and place orders at the reseller trade discounted prices. H. Created a procedure for franchising new resellers who wished to be franchised. RESULTS: 1. With an official list, we immediately eliminated the “guesswork” which had been prevalent within the order department. The order department began to function much more smoothly, efficiently and productively. 2. All resellers knew who the other resellers were, who they may be competing with on any given order. And more importantly, who was not franchised, and who they would not be competing with. Reseller relationships with Company A dramatically improved. Consequently, reseller interest in Company A’s products increased as well. They became enthusiastic! 3. Within six months the reseller sales increased approximately 12%, a net increase of approximately $ 2.4 million.
  3. 3. 626 Brass Castle Road, Belvidere, NJ 07823-2725 M: (908) 296-1156 P: (908) 453-4065 Active Member-Institute of Business Forecasting & Planning (IBF), St John’s University, NY Active Member-International Association of Broadcasting Manufacturers (IABM) Page3 LOOKING FORWARD: Company A’s Sales Management has enthusiastically continued with the revised reseller program, and has enjoyed both increasing reseller sales for the past 4 years, and continued reseller loyalty. Reseller sales once again have grown to a level in excess of 85% of total company revenues. Since all resellers are known and recognized within the reseller network, the inter relationship and cooperation between individual resellers is at an all-time high. Everyone wins! ABOUT GEA & ASSOCIATES: GEA is a highly respected consulting firm, working directly with manufacturers/vendors in the Broadcast and Media Technology (B&MT) industry, to improve their profitability through increasing sales and decreasing selling costs. The emphasis is on streamlining sales operations and procedures, revitalizing under-performing reseller sales channels, uncovering high sales opportunity countries, eliminating wasteful non-producing regions, forecasting and planning monthly/quarterly and annual sales, and organizing territories and assigning sales targets and quotas. To support this work GEA produces periodic research Newsletters and Quarterly Industry Economic Reports to highlight geographic regions/countries that are revenue targets for increasing sales. We also do in-depth studies of CapEx and OPEX financing availability, to assure that the dedicated sales efforts expended produce actual orders and revenues.