commonsku Hits $1 Billion in Network Volume!

Welcome to Skucast, the podcast for entrepreneurs in the promotional products industry. Skucast shines a light on our industry's best work, features maverick personalities, and discusses what's really involved in running a modern promotional products business. SkewCast is the official podcast of CommonSkew.

I think we're potentially on the verge of what I would describe as a step function change. When you look at these big leaps that have happened in the past, I think back to—

That's the voice of Kathryn Graham, co-founder and CEO of CommonSkew. And today, We, and when I say we, I don't mean we as in Commscue, but we as in the community, have reached a monumental milestone, hitting $1 billion in network volume sales. Many of you know the story. Commscue was founded by Mark and Catherine in 2011 and was built with a mission to connect the promotional products industry with world-class business management software, a passion that was born out of their experience scaling their former distributorship, Bright Sleeve. Since that time, the Common Skew Network grew from about a handful of progressive entrepreneurs to some of the largest distributors in the industry, including many on the top 40 list of distributors. Today, I sit down with Mark and Catherine as we explore what this means to our industry as a whole, as well as to the Common Skew community and what it signals that's happening in the market. We talk about the future client, the modern business, and the entrepreneur of tomorrow. 2 quick notes about 2 events. The first one is called Skewmunity Meetups. We're taking live interviews featuring insightful talks by the most streetwise entrepreneurs and mashing those up with a community hang and microlearning lab. Our next meetup is next Wednesday, April 21st, on the subject of marketing, and I'll be interviewing Kelly Berndt with INM Marketing Group. Bring your team. You can register at commonskew.com/skewmunitymeetups. And the second event I want to mention, it was just announced and it's in partnership with our friends at Gemline. Together, we're hosting an exclusive conversation with Brian Pappe, founder of Mere, on how to build a brand with purpose on April 29th from 12 to 1 PM ET. Brian represents a new era of entrepreneurs, those who want to build not just great businesses, but great businesses who invest in great communities and a greater world. When Brian founded Mere, he knew he wanted to build more than another drinkware company. Today, Mere has given over a million toward clean water,, a healthy environment, and stronger community initiatives. Join us as we chat with Brian about what it takes to build a brand with purpose. Every attendee will receive a How to Build a Brand with Purpose guide, and 100 lucky attendees will be selected to receive a personalized mirror vacuum insulated camp cup, courtesy of Gemline. You can learn more and register at commonscue.com/gemlinewebinar. And now here's my conversation with Catherine and more.

Catherine and Mark, $1 billion in sales. Anytime I see a number like that, I'm curious what that signals in the market and what's happening in the industry as a whole and what's happening to distributors and suppliers specifically in their own businesses. Catherine, what do you think this new mile marker signals in the market and what's happening?

I think to me, it's a recognition on the part of distributors in the industry that technology has become kind of a core foundational part of the ability for a distributor to succeed kind of in this business. And obviously that's been massively accelerated over this past year as there's been such disruption around working remote and needing to have access to information in the cloud, the rapid acceleration in adoption of e-commerce and kind of all the underlying trends that are going on from that perspective, that I think it's, it's really kind of reached a turning point within the industry, just of the recognition that we can't keep doing things the way that we always have done, that if we're going to be able to to take advantage of all these changes that this past year has wrought, that technology plays a critical role in that going forward. So to me, it's a reflection of that belief.

Mark? Reflecting back to almost 10 years ago when we launched Commonsku, at the time, to consider this question about the state of the market, Bobbi, is that at the time there was, uh, I think there was a lot of reluctance to change systems. There was a lot of, a lot of reluctance to embrace technology because of the, of the threat I think it represented with change. And sure, we were a new platform in the industry, so there's— I think there's that too. But what we've seen over the last just handful of years is how the customer has almost completely changed from what the kind of customer that we, uh, that we saw in 2001— or sorry, 2011, I should say. Uh, and, and, and I think that that supports what Catherine was saying, that this is really— sure, that this is a great mile marker and a great milestone for Commskew, and we're all very, very proud of the team and our all of our distributor colleagues in the industry, but I think that this is really exciting for the future of the promotional products industry and medium. Now this is showing this accelerated, this accelerated embrace of technology, which means that our industry is going to show up more efficiently, is going to show up more creatively, and it's just going to show up better as it pertains to addressing the needs of end clients and also addressing the needs of the distributor-supplier partnership. And when all of that is dramatically improved and the inefficiencies and the busywork is taken out of that, that, that's incredible for our industry and incredible for the future of our industry.

What I hope is also indicative of is a new focus on, or a new perspective on, people's valuing How do people value their time? And if you look at the, I think historically, this is an industry that has no barriers to entry in terms of capital investment or any of that upfront. And so when a lot of people get going initially with setting up a distributorship that they just do duct tape and Band-Aids in terms of whatever it takes to get things off the ground, to get orders out the door, to be able to make to make that kind of hustle happen. And then they just start to kind of grow on top of that and don't look at the underlying infrastructure and what the overall cost is of having people continue to operate with duct tape and Band-Aids. And I think this viewpoint of, oh, well, you know, just if I have to rekey this from one system to another, like, that's no problem, it's only my time, without recognizing that that time could be far better spent on being able to come up with amazing solutions for a client or more value-add thoughts that they could bring to the table to a client relationship. And so what I hope this milestone kind of signals is that people are starting to recognize that technology can play such a key role in being able to free up their time, that there is a huge opportunity cost of them spending time on, as Mark said, the busywork of all the admin kind of behind the scenes that having a fully integrated connected workflow solves for you.

I think it's another interesting observation is that, and this is a general comment, that 10 years ago when we were starting this, there were a number of pockets of the industry that viewed technology as a threat to the sales profession. And what do I mean by threat? So I talked about the threat of change and the fear of change. So that's one way. I think another threat is this, this, uh, um, concept of a CRM represents extra work, extra busy work, so to speak, for the salesperson, that they now have to go and do additional work. So that, that, that was certainly a strike against technology. And I think the third thing is that a lot of salespeople, um, would have seen technology at the time as a potential threat to supplanting the relationships that they had with their customers. And that has completely evolved in such a way where the majority of our— I think a lot more people in the industry, and certainly those that are on the Commscue platform, see technology as an enabler of all of those things, particularly the relationships, because that's what this business is really built upon. Right? And it's not replacing the salesperson. It's not replacing that human interaction. If anything, it's augmenting the ability for the salesperson to build enduring, long-lasting, efficient relationships with their customers. 10 years ago, that thinking was, I would say, more in the minority in this industry. And that's very, very exciting, not only for our prospects as a company, but I think for All of the distributors and suppliers in this industry that now have seen how technology has enhanced those relationships, particularly in the last 12 months. You think about without technology, what ability would you have had to nurture and develop relationships with your customers? You would have been in a lot of trouble without technology, not just CommsCube, but to think about all the great technology that is available for for, for distributors.

What do you think this means for the future of our business now that we have more and more folks who have focused on reducing the complexity around their operations? What do you think it signals, particularly given this past year where branded merchandise has received this elevated opinion about what it can do for brands? What do you think this signals going forward?

I think what you end up with is you have an industry that has, uh, invested in itself. It's invested in its foundational layer to allow it to show up in a more efficient, more productive, more profitable, and more creative way.

I, I think we're potentially on the verge of, um, what I would describe as a step function change. When you look at these big leaps that have happened in the past, I think back to when Mark first started Rightsly back in 2001, or 2000, whatever the date was, that there were times he would be driving around, going and picking up blank shirts and driving them to the screen printer or picking them up from the screen printer and driving them to the client to make sure they got there because you didn't have kind of the transparency and visibility that you have now. In terms of just ease of access to courier information, like tracking IDs. And you think about that kind of step function change that happened, you know, in those days when all of a sudden that information was so much easier to access and was visible to all and could be shared with the client. And so all of a sudden you had, okay, the confidence that the package was delivered. And I think that that same kind of step function is potentially changing now with connected workflow. And you think about a lot of the challenges this industry has had around whether it's confidence in an order going out or having to call 10 times to follow up on where an order is at because there isn't this visibility and trust in what's happening during the course of production. And all of a sudden, when you have visibility into what's going on and you can let go of the fact that you don't have to call 10 times, you can just see what's happening, that the amount of time that frees up to spend somewhere else and what it is that that enables you to bring in terms of, you know, A, again, value to the client, but also B, in terms of being able to expand the pie as far as the, what other kind of solutions can you bring to the client? What other problems can you solve that takes budget potentially from somewhere else or invents budget where it didn't exist before? That all those things are only possible because of the fact that you've got your time freed up to be able to focus on that. So if you look at whether it's stuff like, like the basic things like shipping, or whether it's like being able to send, you know, artwork as a digital file instead of camera ready, like all the way that, you know, things have, have had these kind of step function changes over the years that I think that there's possible for this one to be the biggest one of all.

And as we, as we move into this next phase of technology adoption, I think that's a really good point, particularly because the client, the client has changed and they're demanding more and more from their distributor partners. They're demanding they know more about The client, they're demanding a higher return on their investment with what they do. And their perception of what we do has grown even more. You could look at, like you were talking about in our distributor days, that you could argue that 70, 80% of your energy was spent around operational inefficiencies within the business. And I look at the team that we had of 20 to 30, and I look at how many folks we had in our order processing department, so to speak. It now feels very archaic looking back, particularly over this past year where we saw on the sales side the digital engagement grow exponentially. So you had this operational inefficiencies over here that many people have worked really hard to fix, and then you had this sales accelerant going on with digital. And so over the past, it really feels like now that I look back what was only 3 or 4 years ago, feels like 20 years ago looking back on some of those operational tasks and some of those operational inefficiencies.

Well, you also have this forcing function that the client is bringing to the table, you know, where they want more transparency. They're used to getting an immediate confirmation from Amazon that my order is shipped and being able to know exactly where it is along the trajectory and, you know, which, you know, which shipping warehouse is it checked into next. And, and, you know, why, why should they not be able to have that kind of visibility into their own orders? So, I think that the, just this overall kind of expectation that the client is forcing upon us, that, you know, connected workflow is enabling in terms of how it is that we work with our suppliers, that, you know, all of these things kind of open up such an interesting opportunity for those in the industry who are willing to embrace it.

Yeah.

Speak to me as a business owner moving forward, because I agree with you. I think this is probably the biggest leap our industry could make. And is making for the future. But what do you think, as a leader, the 2 or 3 things I should be focusing on in the next 12 months to 3 years in our business to take advantage and capitalize on this opportunity, this very unique opportunity?

Mark? So we are just emerging from this very unusual year where most of the world has been locked down, people working from home, budgets have been constrained for promotional products. And we are at a point right now, given the state of vaccinations, where the world is opening up. And let's hope, fingers crossed, that by the end of this year, 2021, that we'll be more or less back to normal. So that's an optimistic prediction. With that, we are going to see, I think, with with certainty an absolutely unbelievable spike in demand that our industry has ever seen. I don't think we've ever seen anything like this, or I don't think that what will happen in the next 6 to 12 months is absolutely unprecedented in our industry. And so if your ship is not in order, from the ability to deal with this fire hose of demand, if your systems are not in place, if you don't have an efficient way to process orders and to interact with suppliers and to interact as a team and to interact with this, as you say, Bobby, a new end client that is now coming in. So think of this end client. They come in, they're picky, they have high expectations. They're now digitally native. Our end clients have also had their butts kicked in the last 12 months in terms of adoption of technology and how their organizations have evolved. And they've got money to spend. And our, and our medium has been validated this past year with all of these incredible success stories that have been shared about the respectability of promotional products. So to me, I feel this is a once-in-a-generation demand opportunity that we're going to experience. And if you're not ready for that and not ready to interact in this promotional products industry 2.0 environment, then I think that those are the people who are going to be truly left behind. They're not going to be able to keep up. And I think that that's a good thing in terms of the demand issue, but we're going to see a lot of supply chain challenges. And I think those that are locked in with good technology infrastructures are the ones that are going to take the lion's share of those sales and the lion's share of that growth as our industry continues to expand. So, my advice after all of that is have your ship in order, hang on, and good luck to you.

Catherine, how about you?

I think, yeah, we've spoken about this before, but I think the, you know, this notion of the clients toolkit that they've historically used having been completely upended this year. And to me, just the opportunity that comes with that is so enormous that you have this blank slate ahead of you as clients are trying to figure out how to use budgets, how to achieve their objectives, and that, that represents just this wide open opportunity for salespeople to go in and be having these kinds of conversations with their clients, to be reorienting how they think about product and to be bringing all these amazing solutions forward. There's been so much learning over this past year, whether it's dropshipping to 500 addresses of totally custom amazing kits or utilizing shops or various ways in which people have engaged with clients in a totally different way that I think it's just this incredible opportunity. So go out and get it, it's my advice.

One of the things I would encourage, and I'm speaking to distributors who have already focused on their operational efficiency. So they've already gotten to a point, many of these are common SKU customers who have already, you know, really put in the energy and time around operational efficiencies. I think moving forward that they really need to focus on the sales process and reevaluate the sales process moving forward. That's the thing I think that is going to make the difference between whether I incrementally grow with the business that's coming with this spike that we potentially could see and whether I grow exponentially beyond that. I think it's going to have a lot to do with the sales process. Um, again, I think folks have elevated their businesses by focusing on their operations, and now I think really doubling down on their sales process and making sure— what we saw over this past year was these incredible efficiencies around the selling process because of digital. We were reluctant to embrace those before the pandemic. Now we were forced to embrace digital efficiencies with the sales process. Now we go look forward and say, What parts of the sales process did that replace that are far more efficient moving forward? And what now do we need to do to empower our sales team to be more consultative? And I think once we do that, because a market that's already ready to buy and ready to buy in a more sophisticated way that meets a sophisticated sales force, it's just going to grow beyond their wildest imaginations.

That's what I think. I think what's, what's super exciting about that, when I look at the, you know, the fact that Commons Key distributors grow, you know, on average 20%, and we'll set, you know, this past year aside given that experience was wildly different on both sides of the equation. But if that has been, you know, the historical experience, and then if you layer in improvements in sales process and all these other kind of efficiencies that Connect Workflow brings to the table on top of all that, that what does that then translate into in terms of the potential for these companies to grow in addition to that. I think that is incredibly exciting.

I think, Catherine, what you mentioned there, it's, it's, it's almost the climate that we had when we launched Common Skew Sessions and we did our 4-city tour, and it was in 2019, and the state of the market was incredibly buoyant. Uh, the industry was growing, everyone was in a good, good state of mind, and we were coming in and advising on sales tactics in a market, in a bull market, when things were going really, really well. And right, it's interesting to reflect that we may not be in that bull market right now, but it's one that we anticipate in the next 3 to 6 to 9 months.

I think the difference back then too was that we were trying to capture more of what was already a bull market. And the difference moving forward is going to be, again, meeting this sophisticated buyer with higher expectations, with a sophisticated sales force, it's just going to exponentially grow our businesses. Mark, you had a question you were going to ask.

Well, I wanted to get Catherine's perspective on the— what this billion-dollar milestone represents for the supplier. We've talked a lot about the distributor-end-client partnership and how technology, uh, really brings that relationship to the next level and the distributor's ability to grow sales, but I'm, I'm, I know that you spend a lot of time thinking about the supply chain partners that are providing these products, and they're the ones that are interacting day to day with distributors. What does this milestone mean for our supplier partners?

You know, going back to, you know, just this, this notion of, of connected workflow, that the more The more volume that we can get going through in a touchless, integrated, seamlessly connected way, then the more suppliers have time to be able to spend time working strategically with their distributor partners. And that's a huge part of the vision of what it is that we're trying to accomplish is to make it as easy as possible to do business so that suppliers and distributors can work more strategically and allow them to spend that time on those value-add components. So, the more that is going through kind of a connected channel, I think the more that realizes upon that vision.

What are your thoughts on that? Well, I agree with Katherine that I think that we've spent a lot of time speaking about how the distributor is able to wring out inefficiencies in their systems. We spend a lot of time about that. So, salesperson is able to go and interact with an end client more efficiently. Because of technology, and as a result, that it's going to free them up to be more creative and strategic. And so the industry narrative is, is overwhelmingly on the distributor-to-end-client side, and very little time and attention is actually spent about the supplier's day-to-day reality. I think a lot of suppliers probably have just thrown up their hands and said, well, we receiving incomplete and inefficient purchase orders from 7,500 different ways is just the reality for us. And, and I think the reality is that that's changing. And to Catherine's point, when we talk about $1 billion of network sales and you think about the volume of purchase orders that represents, That now represents a tremendous opportunity for suppliers to be, to wring out operational efficiencies on their end, which is great for their bottom lines, but it also means that staff that were at one point dealing with suppliers and their incomplete purchase orders are now able to be redeployed into higher value-added tasks. That make dealing with that supplier that much more efficient. I'll give an interesting example. We had a distributor partner of ours make a comment about a supplier that they had not done business with on common SKU for some time. I don't know if we're really sure what the reason was, but they hadn't done business with this particular supplier in a while. As soon as electronic purchase orders were made available with this particular supplier, The experience of working with that supplier and that distributor, or from the distributor's perspective, was completely changed. And they looked at that supplier through a completely different lens. And now this business relationship that had been dormant for quite some time had now been completely rejuvenated and reanimated. And, and why was that? It was the the ability to submit a purchase order electronically and not have to call and follow up with that supplier. And then the supplier also making sure that they got the particular product out on time because they weren't having to deal— like, the supplier has all sorts of issues they're dealing with on their end. Maybe the purchase orders in the past have been incomplete. So I just think about that as a really interesting example because our supplier partners are truly the, the, the, the foundation of this industry. And without them, we wouldn't have an industry. And so I think to think about their experience from an operational efficiency standpoint, I think it's very, very exciting as more technology, not just common SKU, but more technology continues to streamline that experience.

I think back to the very first meeting that took place at PPAI, you know, many years ago between a bunch of us technology nerds that became kind of the precursor of what the vision of promo standards, you know, was. That, you know, one of the— I remember clear as day having a debate with one of the CTOs of a larger supplier who was saying, well, you know, distributors can send us an order on the back of a cocktail napkin and we have to take it. I was like, why? Why? Why do you have to take it? Like, why is that even possible?

Isn't that like mailing in camera-ready art?

That's exactly it. I thought, this is so crazy. You know, in a situation where there should be this incredible democratization of software, where even the smallest distributor should be able to have access to software that enables them to be able to interact in a way that's digital with the suppliers. So, I think that, you know, when I mentioned before about this step function change, that I think that's kind of one of the biggest changes within this is that software used to be something that you had to spend a huge amount of money on, that it was super clunky and difficult to implement and ugly to look at. And so therefore it was only accessible to very large companies. And that's just no longer the case. And the advent of software as a service has completely changed that landscape. And so what that then brings to an industry that is comprised of a very wide range of sizes of businesses, that to be able to have a large proportion of the industry operating in a way that is far more integrated and efficient, I think that just improves the industry as a whole.

I'm also not so sure those big ERP investments really did any of those big companies any favors when you think about the huge amount of time to implement, the continued nightmares, and the massive cost. So, I know, I know that maybe we're a little bit biased, but I'm not entirely sure that the age of big company ERP systems are necessarily anything to celebrate. I don't think they've done our industry many favors.

I want to ask one last question before I get to that. I want to mention this one thing. I think we have another, we have a little window here of of maybe 3 to 4 months. When you look at what happened with the jobs growth report over first quarter and you saw this spike in jobs, you saw this spike in hospitality, you can see what's coming. There's this imminent profusion of business probably coming. And I think we as business owners, entrepreneurs have the last of a small window here to make sure we do have our ops efficiencies taking in order. And our sales efficiencies in order. I think this is an interesting little window that we have that once we can tweak some of those things finally, then we can get ready for this next phase as we go further. Let me ask one last question to you both and we can close on this. You are speaking to business owners and entrepreneurs just like you. Many of those are involved not just as dear members of the community that we love and the industry at large, but folks also look to you guys as As founders of two successful businesses in the industry, and I know you're Canadian, you don't like to talk about these things, but I'm going to ask it anyways. How did you feel, Catherine, start with you, uh, about hitting this $1 billion milestone when you look back at you joining, uh, Right Sleeve when Mark was still hustling around blank shirts in the back of his vehicle?

It wasn't that bad.

It wasn't that bad. That was fortunately a short-lived window, at least before we were—

It was the back of my parents' vehicle. The back of my parents' minivan. It was a great start.

It was wood panels too. This is very encouraging as we look at your journey. What are your thoughts personally? Because a lot of folks— I'm asking the question a lot of folks want to know.

How do you guys feel about this? I feel like we're just getting started.

I knew you would answer that way.

Giddy up, let's go.

Mark, how about you?

I, I mean, I, I think that we just, we just spend a lot of time with our heads down, really focused on building a great product and a great customer experience and a great company to work at. And that requires a lot of focus, like head-down time. And, and sometimes it's kind of nice to look up and go Wow, like, look, look at what we've all accomplished together. And so there's, there's no question that I share Catherine's sentiments that this is— it feels like we're just getting started on, on this incredibly exciting and long path that we're on. Um, but this is also an industry that likes to measure itself with various milestones, and we looked at this and said Wow, this is, this is something that very few people have achieved in, in this space. So to some extent, that's validation. And, um, we're, we're incredibly proud of the team that has helped drive this growth, and we're also incredibly proud of the distributor partners that we have that we have on the platform that continue to push us, and that they're the ones that really need to, really need to be celebrated here.

I totally agree.

Totally, totally agree. And, and this is— sure, you know, we started this, and but this is so much bigger than Catherine and myself. I mean, I remember exactly where we were when we started this business. It was just the two of us, uh, and it was, it was just us then, but it's far surpassed us now. And that is really, really exciting as we continue to go down this path.

I mean, we've had the incredible privilege of being able to have a bird's eye view into the companies in the community that have experienced this incredible growth. And there's just so many stories of people kind of going through these journeys of business growth that we've been able to watch. And I mean, that's what gets us up in the morning. That's one of my favorite parts of the day is when I get to talk to, you know, our distributors and hear what's going on, you know, in their businesses and experience kind of the ups and downs. And that to me is kind of what ultimately drives, you know, all of this. A number is a number, but at the end of the day, it's the people behind it that matter.

Yeah, I agree 100%. And I wasn't planning on sharing this, but I shared it in the manager's meeting this morning. I was sat in a meeting yesterday with Whitestone Branding and their team, and we talked about some of the challenges and the growth and opportunity they have ahead. And I, and I reflected with the managers meeting this morning how exciting it is to be a part of someone's growth journey like that and to sit and witness that. And while at the same time helping is such a return on investment emotionally and intrinsically that you could just never achieve with just pure dollars. Mark and Catherine, thank you guys. And I'll talk to you again when we hit the next billion-dollar mark. You bet.

Let's do it. Thanks, Bobby. Thanks so much for tuning in to this episode of SkuCast. Be sure to keep up with our latest content by subscribing to SkuCast on iTunes or to our blog at community.comandsku.com. Until next time, friends, thanks so much for listening.