Episode 100: The Customer of Tomorrow, the Distributor of Tomorrow: A Celebration Forward

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. Skucast is the official podcast of Common Skew.

I think the expectations have changed as far as how they are looking at, you know, measuring ROI on outcome of producing product, what the expectations are around what the end user who is receiving it, they are kind of giving it to, is ultimately going to feel about that. An increasing desire for usefulness, an increasing desire for beauty, and also far— I think we're going to see far more more pressure on sustainability.

What does the customer of tomorrow look like? What do they expect? What does the progressive sales force look like? The industry is changing, and there's an energy and vitality right now. And if we capitalize on the market forces that are reshaping the way clients think and the way we as value creators and as a supply chain interact with those customers, a future of exponential growth belongs to us, you and I. As David Cancel said in his book Hypergrowth, Helping is the new selling. Customer experience is the new marketing. We're celebrating the 100th episode of SkuCast, and to do so, we're exploring what it takes to thrive in the future. This episode is brought to you by Commonsku, the platform that powers your connected workflow, enabling you to process more orders and dramatically grow your sales. Begin your free trial now at commonsku.com. And registration is open for our brand new multi-city event called Commonsku Sessions, the promotional product industry's one-day conference for distributors who want to ignite their sales growth. Led by notable industry leaders and featuring some of the most successful sales pros in each market, Commonsku Sessions will be visiting Dallas, Chicago, Los Angeles, and New York. You can learn more at commonskusesessions.com. And now to our episode where I'm joined by Commonsku's Chief Platform Officer, Mark Graham, and to kickstart our conversation, Commonsku CEO, Kathryn Graham. What are the most important market forces that are changing the way we do business today, Kathryn?

I think speed and technology are really the key pieces around this, and those are being driven by, changing buyer expectations and how it is that they want to engage kind of with a distributor in the current age and the tools they want to use to do that, the speed with which they're looking for responses. And I think all of those things are really starting to shape kind of the way the distributor needs to respond within the current market. And those that are adapting successfully to those changes are the ones that are winning right now.

How do you think the modern customer has changed? And as importantly, how do you see the modern customer changing for tomorrow?

I think that these indicators that we've been seeing as far as the desire for interacting more digitally, the speed, all those pieces, I view those as actually just accelerating dramatically over the next while. You look at how it is that chatbots, as an example, text, Messenger, like all the ways in which the modern buyer is now wanting to engage kind of in real time, that a lot of businesses are not set up to be able to handle that. And I think continuing to think about how it is that we adapt the structure of our teams, how it is that we service kind of those customers in order to be able to be adaptive like that is critical. And the same goes all the way up the supply chain ultimately, as far as how it is that distributors are going to be looking to engage with suppliers and what expectations they're going to have around responsiveness to this. So it's not just the customer that's driving this. It's kind of every step of the way, all the way up the supply chain. Marc?

I think that you've seen the modern customer over the last couple of years apply pressure to distributors in an e-commerce-driven way. So we all hear how the modern customer wants the Amazon experience. They want to be able to interact with a website. They do not want to interact with a person because people get in the way of an efficient transaction. And I think there's no question that a lot of, quote unquote, modern customers have moved online to that transaction e-commerce-based experience. What I think is really interesting is that I think that there's another huge segment of a modern customer that also wants to engage in an efficient way. They want to remove friction from the process, but they also highly value the creative input and strategic input of a distributor partner. So they value that relationship. And I think that what's so exciting is this, this marriage of this desire on the modern customer's part to have an efficient, friction-free digital experience because that's what Amazon's taught them. But they also are looking for something a little bit more, something that humans can provide. And I think the distributor of, uh, certainly today and tomorrow is the one that embraces and can accommodate that modern customer expectation.

Yeah, I think the buyer of tomorrow too wants— we all know the business is complex. The buyer doesn't know this, But the buyer wants the complexity of these systems to be silent so that the experience and the joy and the fun in purchasing is apparent.

Yeah.

Whereas now and in years past, the system has sort of become a frustrating process for the buyer as well as the distributor because it's too apparent, it's too vivid. It's like it's always there, whether it takes 20 emails to transact an order or whether there's some something sort of in the billing process that's getting clogged, whatever it might be, because the complexity of the business, I think they're just going to continue to want the systems to be silent.

And I think we're going to see an increasing lack of patience with solutions that do not function that way. And I think that to build upon that, that the other area where I think we're going to see a lack of patience is around the outcome that the customer wants to achieve. And before, it used to be, all right, I need to tick a box by ordering a bunch of pens to give away at the trade show booth or something like that. And it was simply a part of the checklist where As the, I think the expectations have changed as far as how they are looking at, you know, measuring ROI on outcome of producing product, um, what the expectations are around what the end user who is receiving it, they are kind of giving it to, um, is ultimately gonna feel about that and an increasing desire for usefulness. Um, an increasing desire for beauty and also, um, far, I think, I think we're gonna see far more pressure on sustainability, you know, as we're seeing with, be it that, you know, the Fast Company article as an example around that. But I think that that general desire of that next generation around taking more consideration for the planet and impact and all of those things that I think that those forces are just going to accelerate as well.

Yeah, and the sustainability beyond environment, as you suggested there, is about ROI and it's just ROI, but it's about purposeful promotions, less tolerance for campaigns and programs that go nowhere, tightening those expectations.

Bobby, you've talked a lot about the respectability of swag in our industry has never been higher. And I think that's mostly a blessing. It's a little bit of a curse, which I'll get into in just a second, but I think it's a real blessing because to touch upon what Catherine was saying, I think that you've got buyers that are A, way more educated because people are talking about promotional products and swag in mainstream media, like the Fast Company article is a good example, but they're also seeing great examples of promotional products on Instagram, on Pinterest, on blogs, people that are writing about this great stuff. And so the modern customer is sitting there going, promotional products have never been as cool as they are right now. Look at this that I saw online. So when a mark— when, if they're a marketing buyer, they then go to their distributor. They're not going to the distributor as much with, hey, sorry, I forgot to order some stuff for a trade show. Can you just get me whatever for $1,000? Increasingly, that market marketing person is going, I now know and I'm inspired by this medium. What can you, uh, distributor partner produce? And I think that that's where it's a bit of a curse for some of these distributors that are used to a more order-taking environment, or they just fire up a search on their favorite product search engine and they throw out 3 products that the customer is just going to buy. I think now the expectation of that modern buyer is You show up and we'll pay you good money, but you better show up with some great distinguished ideas. Yeah, because that's in keeping with my understanding of this medium based on what I'm seeing on the internet. So that's amazing. And the modern distributor that understands that is going to win. The one that isn't, I think, will lose.

Yes. And their personal predilections, their, their personal— they want this to be highly personalized, more so than in the past. You're seeing buyers who are saying, we love that, that's very inspiring, we love this idea, give us something similar to this, but that will be unique to our identity. And so this is why you're seeing sort of the lines blurred in terms of sourcing and supply chain because of this reach.

I think what excites me the most, you know, about, about all of this is that it raises the bar. And ultimately, when I, when I look at the perception of this industry, when, you know, I first got exposed to it in the late '90s and the, you know, from whether it was crappy PK polos to, you know, like not useful kind of stress toys and all the pieces that wrapped around it that ultimately contributed to the moniker of trinkets and trash. And where that has evolved to, you know, in the past 20 years is really quite remarkable in terms of just the perceptions around that. And I feel as if, you know, the industry is at this magical time period where people have so much more excitement and enthusiasm around what it is that swag can do. And therefore the ability of the salesperson who is good at being being able to create a solution to a problem, to be able to get the customer to think about product in ways they never thought of using it before. And to me, that's truly where the magic happens in terms of being able to expand the pie, you know, in the industry as a whole. And where it's not just a matter of, you know, people trying to steal kind of market share from competitors, is thinking about, you know, how do we steal market share from other mediums? How do we look at, you know, doubling or tripling this pie in a way that creates really amazing outcomes? Where the buyer is starting to question the other mediums where they have traditionally spent money. And we've seen kind of the evolution of a shift from TV spend to digital spend to all of a sudden questioning, you know, is that AdWords post getting the impact that I need? Is it driving the results? Are there different ways of being able to connect with my buyer or whoever the recipient is in a way that drives that emotion that's going to get them excited about working working with you. And I think that that power to be able to connect the dots for the customers has never been stronger than it is now.

When I first started in the industry as a distributor in the early 2000s, it felt to me that you had two types of distributors that were in the market that were servicing, servicing end clients. You had the traditional distributor that was able to go after that, was able to engage in the traditional supply chain that wasn't offering a particularly creative offering, but they were very efficient, and they were very good on price. And then you had this other class of distributor that was a little bit outside of the PPAI, ASI paradigm. They were very creative forward but were not particularly efficient. In fact, they were usually not efficient at all. But the reason they were successful in the market is because they had access to cool ideas and products that were outside of the normal ASI and promotional products supply chain. And so I, I remember always being struck by those two things. And I, I remember when Right Sleeve was first getting a start, I, I danced really between the two because on one hand I, I knew I wanted to have really, really efficient suppliers where I had access to good pricing, but I also wanted to play in this creative space too and engage with creative products, and I found it was really tough to jump back and forth between the two. So the point of this is that I think that that worked 15 or 20 years ago, that, that an end client would choose one type of distributor over the other. I think what's happened now is that the modern customer can expect that efficiency and that beautiful, uh, system, uh, experience. But they also are expecting that highly creative product solution as well. And yeah, but 15, 20 years ago, you wouldn't have had that because it was one or the other. And as I say, I think that's mostly a blessing because there's great tools and there's a great philosophy out there today that allows for distributors to thrive between creativity and operational effectiveness way more than you had back in the day. So that's just an observation as I reflect on my time in this industry.

Maybe we kind of already answered this, but I'm going to ask this in more a way of infrastructure. Like, who is the modern distributor today? And maybe a better way of asking this is, who's the successful distributor tomorrow?

I think if you look at the, the way that the market seems to have fallen into kind of a natural segmentation over the past number of years, you've got the pure online players and who are doing a great job of servicing the need of those who want that that, you know, touchless experience. And I think that that will— that, that side will— there's no question it will continue to grow. You've got the, the side of the market that has chosen to go deep into programs and, you know, inventory and customer stores and company stores and all of those aspects of the more kind of contract-driven side of the business. And I think there will still be room for, for those players, but I think that that side is changing rapidly. And, you know, where that sweet spot is, you know, in the middle are the, you know, agency-oriented distributors that are able to differentiate based on providing a solution and being able to, you know, to marry those aspects of creativity and efficiency and all the things that, that Mark was mentioning previously, but ultimately in a way that has that knowledge of the business challenges the customer is facing and how to leverage product to achieve those outcomes. And the, the ones that are the pure transaction play are, will, will more naturally kind of migrate to, to the online players because it's hard to justify kind of margin when you're not adding value. If the customer can source it on their own and, and you're not the one kind of creating that, um, that creative solution to the problem, or you're not even getting them to connect the dots around how it is that product can, can be that solution, then it becomes awfully tough to compete in that space. So I think that, that, that modern distributor ultimately needs to figure out kind of where they fit within the ecosystem and how is it they can continue to add value in a way that the, that the customer values and is willing to pay for.

The progressive distributor tomorrow is gonna have more touchpoints within their organization with the customer. And I'm thinking of David Cancel's book, Hypergrowth. It's imperative that everyone has some kind of interaction with customers. And I can see the streamlined systems occurring not only in systems in terms of software, but I'm talking about their systems that actually run their business becoming much more lithe and flexible to the point where they have far less overhead now than they used to in terms of personnel, or at least the, the personnel that they do have is mostly customer-touching type. Roles in some capacity or another.

And I think that the, you know, the piece that becomes really interesting around this is, as you said, being able to have the technology solutions kind of be, you know, silent in the background as far as the customer is concerned, because it just needs to be seamless and easy and efficient for them. But ultimately, you know, that same philosophy has to apply all the way up the supply chain. And, you know, we as an industry are horribly behind from an integration and efficiency and being able to make that entire supply chain connectivity work better than it is currently. There is just so much manual touch that's involved at every step along the way that is just, that creates friction that is holding all of us back from being more successful as an industry. And I think that where, to me, the most interesting transformation is going to happen, you know, in the next couple of years is being able to take every bit of friction possible out of that equation. And we call this process-connected workflow in terms of how it is to enable that relationship between supplier and distributor to function seamlessly from ideation all the way through to invoicing and ultimately create that incredibly seamless and friction-free experience for the customer as well.

Yeah, Mark, I have nothing to add to that. We should keep this in.

I just—

so, okay, you know, I, I'll, I'll say what was on my mind, but it was more It was more maybe a little bit more in response to what you guys were talking about just before Catherine delivered that magnum opus was this notion that back in the day, like 20, 30 years ago, back in that sort of generational shift in the industry ago, I think that you had distributorships that were primarily investing in salespeople, and they may not have really been investing in salespeople because they were largely contract 1099 full commission people. But if you just think about the value of that distributorship, it was comprised of having a few salespeople, and if that distributor principal wanted to sell the business, it was ultimately just on the value of those client contracts, if there were any client contracts. And valuations of a distributorship would be fairly, you know, fairly small based on that because there wasn't really much to it other than just this sales organization without any other infrastructure. What I think is interesting now and what I've seen over the last, I think, particularly 10 years is that you're seeing distributor principals build an outsized share of equity in their distributor businesses when they're investing in systems in conjunction with investing in other parts of their business, like salespeople, like, like marketing, whatever the case may be, right? So, so that's, that's, that's interesting to me.

Yeah.

And, and I'm not saying this necessarily an investment in Commonsku specifically, but there's lots of great technology applications that are out there, industry-specific and non-industry-specific. And I think you're seeing the distributors who are commanding the, the greatest amounts of equity value in their business are the that are placing a greater investment in systems than salespeople. And the reason for that is, if you're a buyer and you're looking to buy a distributorship, do you want to buy just a client list and a bunch of 1099 salespeople who could immediately leave the next day unless they are forced to sign a contract? Or do you want to buy a business that has these systems, these silent systems that you're talking about, to the end client But the buyer is buying something that they can, they can generate meaningful cash flow day one of their purchase because they've got systems that tie everything all together. I think that's, I think that's a really interesting phenomenon. And you had this conversation 30 years ago. The only distributors that would have been able to invest in that were the big guys, the ones that had the deep pockets that, that, but the majority of the industry didn't have access to that. I think you're seeing a sea change now. With a greater number of distributors that are starting to make these investments because they're more within reach.

Yeah, such a great point. Go ahead, Kat.

I think what becomes even more kind of interesting in that, as far as the value of the business is concerned, is that within these systems, you have contained the whole stories of the customer. You've got all the rich history of the interactions, and everything that has made that distributor successful with that customer over the years. And ultimately that ability for someone stepping into the business to be able to take that history and build upon it as opposed to having to interpret and recreate. And I think the same goes on the supplier side. They also see the rich history of the interaction of where it is that the, which suppliers they've been successful in working with in terms of who has worked collaboratively with them, who has been able to engage in those projects to help them win the business, who has the history of shipping on time and, you know, the accurate billing and all those pieces. So it begins to be able to paint this picture of what it is that it takes to build a successful business. And all of that kind of history has tremendous value to it.

It's flip-flopped. Instead of the entrepreneur being dependent upon the salesperson, now the salesperson is dependent upon the system that the entrepreneur builds. And so you've never seen the entrepreneur more empowered today than ever before to build a business that lasts, as opposed to a book of business that is fleeting.

I think what you're also seeing, and I can just tell you based on experiences I've had with people that have asked me for my opinions, this specifically on the salesperson side, I have now seen any salesperson that comes to me that's looking for something, and to be clear, we don't find salespeople jobs at Common Skew, but sometimes we're on the receiving end of like, hey, just keep your ear to the ground. What's interesting is that any salesperson I've spoken to in the last, I would say, 5 years has always said the number one priority for them to join a distributor is that they have to have a great modern operational technology infrastructure, right? Okay, not necessarily just Commenscue, but it could be Commenscue plus another, other, uh, group of great, great technology providers. And I think that's really interesting because Had I had that conversation 10 to 15 years ago, and Bobby, I suspect that this would apply to you too, is that the number one criteria for a rep moving would be what's the commission split? The commission split has to be amazing. The technology would be like, I don't know, I use ESP, Sage, they're all the same, like whatever. And you wouldn't have faulted them for that.

The realization has come that without those systems, they can't sell more. And so that ability to bring that efficiency to the sales process and ultimately to free up their time to be able to get out there and bring in new opportunities and close more business and therefore earn more, that becomes a key differentiating point. If you have systems in place that require a huge overhead cost to them in terms of admin and rekeying and all of those things, all of that is friction that is taking away from their time to sell. And same goes in terms of their ability to engage with supplier partners is that without, with that friction there in terms of them spending all their time sorting sourcing and trying to dig through, you know, thousands of options where they don't know all the specifics around product details. And whereas if you can circumvent all of that and be able to, to create a quick and easy way to be able to engage with key supplier partners and get those ideas out faster, they're on to the next sale.

Yeah.

And I mean, obviously this is the entire, you know, vision that we see in terms of where the industry is going around connected workflow and being able to get that friction out of every piece of it, and that that is going to be the absolute key to success for the modern distributor going forward, because we just can't continue to spend all the time that we're spending now on these non-value-add activities. The customer needs us to be focused on understanding their business and providing solutions, not hunting and pecking and rekeying information over and over again.

This gets into who the modern salesperson is today and who the successful salesperson is of tomorrow, and they cannot because of the market demand, because of speed, because of the expectations from the customer on the creative merchandising side, they can no longer tolerate those non-creative, non-proactive activities in their workflow at all. So what else does the salesperson of tomorrow look like to you guys?

I think that's exactly it in terms of just their ability to be responsive and to focus on being strategic. If you take away that ability by hamstringing them with systems that slow them down, they have choice now. There are other companies that they can go to that are going to enable them to sell. And I think that you look at kind of where the, in the industry historically, that solution has come from is to say, well, I'm just going to be a salesperson and I'm going to align myself with an organization that can handle, that can outsource kind of my backend.

Hand to.

And but ultimately, your ability to kind of grow within that is limited to what it is that you individually can sell. Whereas now it's never been easier to build a business and to be able to build that value beyond yourself in terms of the infrastructure and the systems to support that, and the ways to engage kind of with the supply chain to support that, the tools and resources that are available to help you on that journey as far as how to structure your business and structure your team, grow within that, and the community that's available to support that as well. And I think that that creates like a very, very exciting time kind of for the, you know, the entrepreneur coming into this industry, or, or that maybe started in this industry as a, a solo salesperson and then envisions being able to build a business around that. That has never been a better time to, to be that person.

2019 is the 10-year anniversary of the seminal event that basically gave you the confidence convinced to go down the path of launching Common Skew. So, so our listeners know, we intended to actually show up and talk about this a little bit, and then we shifted our focus at the beginning of this conversation and talked about, no, what's going to be most helpful to our customers. So we, we shifted our focus to talk about the modern customer, the modern distributor, modern salesperson. But you guys have had a unique experience building Common Skew, and that seminal event was winning the Dell Award. It was a massive moment, and all this Influence of Ideas, Commonsku the platform, Commonsku the community events, Commonsku as an inspirational resource, was driven largely by this passion to connect these dots, these sort of disparate elements that, that were made no more sense anymore. And in many ways, the podcast— this is our— we're celebrating the 100th podcast episode, and it's a reflection of the changes that have occurred over the past 3 years or so since the podcast started. Because you've both seen this massive response from the market, Put self-interest aside, you have seen this firsthand from distributors that tell you stories and from customers and your own customers about what's happening in the market. What has been the most important shift over the past couple of years?

I think one of the most interesting shifts over the past couple of years has been the changing view that previously the way business was done in this industry, it was viewed as not being broken So, I don't understand what the problem is that, you know, that I have to go and search for information all over the place and I have to rekey information and I've got to do kind of all these things because that's the way it's always been done. And boy, is that an improvement from, you know, when it is that we needed camera-ready artwork and everything took kind of weeks to accomplish. And now we've got the internet, you know, all these amazing things. And so, this kind of perception around things are so much better than they used to be, but this lack of awareness and understanding that things could be so much better than they than they are. And I think that that to me has been the biggest realization over the past couple of years is this recognition that how traditional distributors are doing business now is fundamentally too challenging to continue to do it that way. The admin overhead is too high, the stress is too high, the dropped balls, kind of all of those things that ultimately with the speed that everything is happening at now, that the way in which kind of business has historically been done is not sustainable going forward if all of us are not going to lose our minds. I think the piece kind of that where obviously, you know, Commenscue fits into the equation from the perspective of, you know, the distributor has been to streamline kind of all those pieces of it. But I think that where that next leap kind of, you know, going forward, and we can revisit at the 200th episode of SkewCast, is that the, that ability to be able to see a different future as far as the supplier-distributor supplier interaction happens. And that, you know, the, you know, our deep, deep belief in the impact that connected workflow is going to have kind of on transforming that relationship between supplier and distributor. And to me, kind of that's the next frontier as far as where it is that that perception around things could be better and easier than they are and they should be better and easier than they are. Yeah.

Mark, I think the interesting shift that I've seen since that happened in 2009, that Dell Award, is this amazing influx of younger talent into our industry. I think for many years, the perception of the promotional products industry was that it was an old, old fuddy-duddy club with aging salespeople that were going out and selling the same way. And to be sure, you know, there is some of that that still exists. But I think it's amazing, you know, we see this when we go to big industry trade shows. We see lots of young, vibrant talent that's walking around the aisles. We certainly see it in our— from a 30,000-foot view in our role at Commonsku in terms of all the distributor and supplier partners that are coming on. So many of the people that are getting trained are, are younger or newer to the industry.

Yeah.

And what, what's interesting about that is obviously I think it's a very positive thing because you've got people that are excited about the promise of building a career in this industry. I mean, that, that's a great thing.

Yeah.

We're obviously doing something right. What I think is also really interesting is that the expectations of a younger person coming into the workforce is is that technology will be invisible, that technology will just work, because they have grown up in a Google, Apple, Facebook, cloud-oriented world, an app-driven world. And when they show up at a supplier or distributor that is working with some sort of ancient process that causes all sorts of friction, for them, they feel like a fish out of water. Whereas when they're joining a distributor or supplier that has got modern and engaging tools that are effectively invisible that allow their creativity to thrive, then they feel like totally at home, as though this is the most normal thing for them of all time. So I, I think that that's an interesting shift, and it wasn't that case 10 years ago, and I think it's really accelerated in the last, I'd say, 5 years.

I've never seen the enthusiasm for the business higher than I have now. I have never seen the expectations for the younger entrepreneur or the entrepreneur at heart to build a system that they themselves love to work in. And so that has been a shift as opposed to the system you're stuck with. I've never seen the enthusiasm and the possibility of being able to do that today and shape your tomorrow better than ever before. So it's definitely an exciting time. The most exciting time to be in the business is now.

I think just the, you know, the energy is— I have never felt the degree of energy, kind of, especially when I think about, you know, the walking the show floor at Expo this year. And there's just, there are, there's so many amazing products out there now, so many amazing things that can be done from a creativity perspective. And whether it's packaging, whether it's, you know, how it is that the suppliers are supporting kind of that creative process and how the distributors are taking that and running with it and being able to present the most incredible options to customers, that that energy is palpable as you're walking the show floor. And I think that that is ultimately, you know, what is going to hugely propel this industry going forward and that ability to continue to, to make it an incredibly attractive industry for, for young talent to want to come into. I think that, that we're at a tipping point, you know, on that where the, you know, 10 years ago, people would never even kind of heard, have heard of, it was hard, like it doesn't, you know, exist in a college course or something that you major in promotional products or that you even see that as being something in the marketing mix. And, you know, the work that PPAI is doing around this and, and kind of, you know, others in, in volunteer positions around trying to get into, you know, local colleges and being able to raise the awareness around the industry, that ability for distributors and suppliers to be recruiting kind of talent specifically and painting a vision of how exciting and dynamic this business is, that to me, that is just so exciting in terms of, you know, where ultimately things can Yeah, Mark and Catherine, good to talk to you guys. Bobby, always a pleasure talking to you.

Thank you. Let's reconvene in 100 episodes at number 200.

Sounds great. Thanks, guys.

Thanks so much for tuning in to this episode of SkewCast. Be sure to keep up with our latest content content by subscribing to SKU Cast on iTunes or to our blog at community.commsku.com. Until next time, friends, thanks so much for listening.