Episode 166: The Future of the Industry in a Post-Covid World

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 Commonsku.

Hi friends, I'm Bobby LeHew, the Chief Content Officer at Commonsku. What a truly astonishing time we live in, a time that has yielded challenges like we've never seen before, but also an adversity that has created a unique crucible on which we are refashioning our businesses, our infrastructure, our relationships with the client, in our industry as a whole. Today on the SkewCast, I sit down with Catherine and Mark Graham and we talk about what a momentous time we live in for innovation and what the future will continue to unfold for us as we move forward. We talk about the changes in the buyers' habits and its impact on our industry.

What that translates into is if people are spending less, then they are going to buy things that are more meaningful and that the how they think about the process of kind of consumerism may have changed potentially fundamentally as a result of this. And this is where I think the impact on our industry is particularly acute.

The loss of trade shows and yet the incredible opportunity that has created for both suppliers and distributors.

To me, which one's better? Hands down, the virtual experience was better for me as a, as a distributor. So there's so much that you can get from that. In terms of what the way forward will look like, not only between a supplier and distributor, but think about how the distributor could also present to the end client in that same circumstance.

We talk about how our selling styles are being forced to change.

We're used to using product as a crutch. You know, we go and say, oh, we want to set up a meeting with you and bring in some stuff we're really excited to show you. And every— the entire meeting becomes focused about product. And sure, clients love to touch and feel and they get excited about stuff. And so you feel as if you're getting somewhere and getting closer to a sale because of the fact that they're excited about touching and feeling the product. But you leave that meeting and did you really get any better understanding of what it is that the issues are the client's wrestling with or what business objectives they're trying to achieve?

The increase in fulfillment, kitting, and future pricing challenges and opportunities.

There's been lip service to the agency model, meaning that there's a big part of the industry that claims they're agency, but they really just— their infrastructure for billing is just like a regular distributor. You know, no different than a, than a, than a trunk slammer in that sense. And I know that's harsh, but what we're going to see now is this trend toward actually charging for these services and for these more consultative type selling projects. I think there's a vast opportunity ahead of us in this category, also a vast education opportunity for us in this category.

Plus, we reflect on what will matter most to the customer of the future. We envision the future office, and discuss how complexity is changing collaboration forever between supplier and distributor. And finally, the time wasters we're leaving behind in a post-COVID world and how uncertainty is the one place where this industry thrives. If you're new to the SkewCast, join us for what is always one of the most popular episodes, an honest look at the hard challenges, but a bold look at the way forward. Before we dive in, are you joining us on January 7th to radically infuse your new year with optimism and change? Are you bringing your team to align their minds with visionary people who never accept the status quo? Because SKUCON is the one conference that many have claimed ignites their minds to dream bigger and think bolder. Join Seth Godin, Anne Hanley, Chris Miller from Ben Jerry's, LA fashion designer Mitra Khayyam, and Fast Company's Elizabeth Segran, plus some of the most energetic and emerging voices in our industry today. You can learn more and register at SKUCon.com. SKUCon will be held on January 7th. We hope to see you there. Now here's my conversation with Mark and Kathy.

According to ASI, this year April, May, June were down 45% with PPE sales included. Now some are predicting some rough winds ahead for the remaining Q4 and for Q1 and Q2. Events traditionally surge in our industry in Q4 and Q1, and it might be that we've yet to see the heaviest hit for event marketing yet. There are some sectors that are doing very well outside of PPE. What are you seeing in the market for the near future, Catherine?

I've been having a lot of conversations with distributor owners on this topic and trying to get a sense, you know, A, what Q4 is looking like to them, but also what kind of conversations they are having with their clients around budgets for Q1. And into 2021 in general. And I think the general consensus is that people aren't even thinking that far ahead yet, which is surprising. I mean, it's not surprising, but given the time of year that, you know, usually we're at the end of October, the beginning of November right now, which is usually the depth of the season of planning for the following year. And so the fact that, you know, those budgets aren't finalized, decisions aren't being made, I think is indicative of just the general uncertainty of what is out there. As far as Q4 goes, I think that it's going be very interesting to see with all of the kind of shift towards employee appreciation and holiday parties disappearing and this desire to have some reason to kind of reach out and connect and acknowledge, appreciate, whether it's clients, whether it's employees, that I think that there is the potential to have a really big Q4 if distributors are capitalizing on those ideas and suggesting amazing ideas to clients. So obviously we'll see kind of what pans out, but certainly network wide across the community, we're seeing a very strong uptick over the past couple months in terms of a rebound.

Yeah. Kathryn, you had a presentation at Commonsku Sessions last year when we were on our 4-city tour throughout the US where you were talking about the promotional products industry's opportunity to take market share away from other media and to effectively steal budget from other media, whether it was AdWords or social media ads or newspaper advertising or television advertising, whatever the case may be. And what I think is interesting now is even though that still remains an opportunity, I think what a lot of successful distributors are starting to see is that they're actually taking budget away from things like food and beverage or venues that, using the case of, say, a holiday party, a holiday party cannot actually happen in person now. So the end client literally can't spend the money on the venue or the food and beverage at this point. So that money, interestingly enough, is starting to go back to a promotional products company to do a drop at home or to do something for the employees' kids. And you wouldn't have seen those types of promotions happening in the past. And so I think that that's a really interesting opportunity for the distributors that are asking those questions of their clients. What are the budgets that they literally can't spend money on and how can they shift that into the promotional spend to try something new and different that may in fact be more engaging? I was actually laughing with a distributor just the other day who was talking about how they received this opportunity because a client of theirs had canceled a holiday party. And we were joking, we said, well, this is actually probably better for the employee who dreads going to the holiday party, but now gets this awesome piece of swag that's delivered to their kids at home. It may be an actual true win-win on that spend. So that's exciting.

Yeah, I think it's open season from that perspective, and that's the aspect that I think is most exciting. And if you look at, you know, all of these budgets that are no longer possible to spend, take, you know, trade shows as an example, that if a client had historically spent $50 grand going to a show and the proportion of that spend that was on promo was maybe $5,000, you know, if the distributor's lucky and it's a last-minute request and all those pieces, that all of a sudden that even if they they slash that budget entirely to from $50,000 to $10,000, if the distributor is able to capture that entire $10,000, they've doubled their spend with that client. And what does that spend then look like into the future? Because if they see that the ROI of what they got from spending $10,000 on doing direct mail kits to top prospects to accomplish that same lead gen objective that they were trying to do through a trade show, what do they do next year? And to me, that, that is where we are in an incredible moment in this industry that we have the opportunity to pivot the way clients are thinking and to get them to understand the overall power of this medium and direct future spend to that going forward.

Yeah. And so far, we've been talking about shifting spend or appropriating spend from one category to another, and it all tends to fall in the advertising category. But there are new experiences and new things happening with businesses that they are not even entertaining their promotional products distributor for that we need to ask about and seek what it is that they're doing and what their challenges are and what their objectives are coming in the next 6 months to 9 months. So I think I agree with you. I think it's a rich opportunity. Let's talk a little bit about the long-term future, the long-term future of the customer. What do you think will matter most to the customer of the future, Katherine?

I mean, ultimately, regardless of whether it's in the midst of a pandemic, whether it is after the pandemic, the customer's objective is that they are looking to achieve still exist. And whether that is bringing in new customers, whether that is, you know, in an HR function, ensuring kind of culture and employee, you know, satisfaction and stuff remain intact, that what it is that originally drives the reason for a client to engage with a distributor in the first place, none of that has changed. It's just gotten a lot harder for the client to figure out how to get through to the other side on this one. And so I think that the I think where there is such an opportunity to double down right now for distributor salespeople is showing client that they are a partner in their business and that they are there to have these kinds of higher-level conversations with the client about what the things are that they are struggling with when their traditional kind of toolkit's been completely upended and taken away from them. And so, I don't think that the client of the future necessarily has has changed as much in terms of what it's looking to do. It's more that the means and kind of mechanisms that they need to utilize to get there has changed. And therein lies the opportunity, both in terms of how it is that we seize the moment in terms of where product fits into the equation, but I think also the way in which we do business with the client here, operating in a lot of cases with clients that are working remote, that are juggling family and other kind of pressures, and that is kind of forced upon us the need to be as incredibly efficient and effective as possible to navigate that relationship with the client, to make it as easy as possible for them to do business. So, you know, the adoption that we're seeing around, you know, just overall digital tools, whether that is, you know, things like shops or things like, you know, client portals that people are using within the Commenscue environment, that those types of things I think matter more than ever because time is so fragmented right now.

Yeah, Mark? I think a way of complementing what Katherine just said is I think that this is this once in a lifetime opportunity for our industry and promotional products to upgrade itself in the advertising food chain in the eyes of the client. And with all these budgets that are being slashed, I think that the most effective promotional campaigns are ones that are delivering legitimately true marketing value now more than ever before. And the reason I'm saying that is clients now, like, money is, is precious for, for clients at the moment. So if they're going to be cutting a PO to anyone, like, forget about just promotional products distributors, it could be any provider that they're, they're doing business with. There is an expectation now more than ever that there is going to be an ROI on every cent on that purchase order. In the past, in the go-go times where, you know, people would have said, well, you know, I just need some t-shirts, or I just need some pens, or I just need something just to fill out the rest of our advertising spend where it didn't really matter— those days are totally over. And, and I think that we as an industry have been incredibly successful and versatile in being able to pivot and communicate that value to these, to these end clients. And yes, there are definitely distributors and suppliers who are going to get left behind and are being left behind. They're shutting their doors. They don't know how to navigate in this particular environment. And I feel badly for those, those people. But you think about the people that are being truly successful and you can see the campaigns on social media each and every day that it's really, really exciting because I feel like now the end clients are looking at promotional products in a way they've never looked at them before. And that's because of COVID and the fact that budgets are so tight and this expectation of ROI.

Yeah, and there's this tension between cost and conscientiousness, whereas in the last recession it was almost exclusively about cost. And because the world has been so shaken, there seems to be far more awareness and more of a culture, a business culture in tune with things like advocacy and social issues and transparency in our supply chain. So the impact of all this is going to have a dramatic and lasting effect on future buyers. Cost is certainly a factor, will always be a factor, but I don't think this is the same old cost conversation. On one hand, according to Bain Research, the crisis is making sustainability harder. For example, in the short term, and the long-term effect on buyers' minds and how they will be moving forward is going to make sustainability a priority like we've never seen it before. Things like sustainability, things like social issues and awareness. So there's going to be this tension between cost and a more aware and conscientious buyer in the future. We've been talking about some of this for years, and just like with technology, COVID has accelerated a lot of these issues too. But lots of opportunity be with that for even within that tension?

I think where the pressure comes in that is that we're certainly seeing within the COVID context, a very bifurcated impact in terms of consumer spending. So those kind of on the higher-end earning end of the equation, they have dramatically cut back on consumer spending during this time. There's been a huge paydown in debt that has happened. And so you're seeing this as to how that kind of translates in the future, whether this desire to spend less overall is going to continue in a post-COVID context is obviously a significant risk to the economy and just overall recovery and GDP growth. But I think that what that translates into is if people are spending less, then they are going to buy things that are more meaningful. And that the way they think about the process of kind of consumerism may have changed potentially fundamentally as a result of this. And this is where I think the impact on our industry is particularly acute. When you look at the mix of products that we have typically seen sold within our industry, that there had historically been a very high proportion of low value, low cost, as our friend Jamie Mayer likes to call it, brand fill, that has historically been given out and partially as a function of dealing with high-volume in-person events. And those aren't coming back anytime soon. And so as we cater to this change in demand, as far as what it is that the consumer is looking for within their own spending and how that translates into the B2B context, that I think that there is enormous opportunity to really double down on that kind of socially conscious, sustainable, high-value, high-perceived-value gifts and how it is that the consumer kind of responds to receiving those.

Yeah. Speaking of low cost, low value, that's a good segue into trade shows and virtual events. What do you think the future landscape is going to look like? And this is something we obviously all have a strong opinion about because we are, you could say, suppliers in the industry in the sense that we've attended trade shows in the past. We've been around every trade show experience as distributors. We were both doing shows and client shows and this landscape has obviously just been so shaken up. What's the future landscape going to look like for suppliers for events and trade shows? Mark, do you want to tackle that first?

I think the future is in hybrid, 100% hybrid. And here's what I mean by that. I think what we've seen over the last 7 or 8 months is that suppliers have been able to lean into virtual experiences, whether they're a virtual conference or something as basic as a webinar, which has been around for a long time.. They've been able to see how they've been able to launch these properties at extremely low cost relative to an in-person trade show and open themselves up to unlimited customer opportunities, customer engagement opportunities, or prospect engagement opportunities. The economics on it are incredibly attractive. You think about the efficiency of putting together an online conference, being able to attract people all around the world, and the attendees are able to attend at either no cost or very low cost. They don't have to spend time traveling. They don't have to to spend time out of their office. They can get in and get out and engage in that educational experience or product knowledge experience efficiently. And so on all counts, that is incredible. And the fact that suppliers are now seeing this, because many suppliers never did this before, because they just would go to the trade shows. The genie is out of the bottle on that front. Any supplier worth their salt would never want to go back to those terrible economics of trade shows. Now, I don't want people to think that I'm a trade show hater. I love trade shows. And here's what I mean by when I talk about hybrid is that I think the successful supplier marketer of the future will engage a virtual strategy like I just mentioned, but they'll also find a way to be able to have either an in-person event that brings people together where people can build relationships and they can establish those friendships that are so critical to the promotional products industry. And I can tell you, all three of us on this call have been incredible beneficiaries of those in-person events where we've been able to build a really great business because of these rock-solid relationships that we formed in person. So going forward, I think the successful marketer is going to have a great virtual strategy where they're going to have low-cost customer engagement opportunities, and they're going to think about what an in-person strategy is going to look like. That may not be a trade show. It could be a social event. It could be a conference. It could be something that I don't even know what it could be. But at the end of the day, if they can figure out how to get people together networking and having fun and building those relationships in person and can complement it with this great virtual education strategy, that to me, and I can tell you I'm a marketer, is a dream come true for someone like me. Whereas I look in the past and I think about how much money we would spend on just going to trade shows or conferences, and we would do it just because because everyone else was doing it. And to be honest, it was idiotic. So I think that we have such an opportunity now that the genie's out of the bottle to completely go to market in a much more effective way. And I'm thankful for COVID for showing us this new reality.

Catherine? You know, I think that we're going to see a lot of innovation in this space. We've already seen it in terms of virtual event platforms. And I look at, you know, our own use of Hopin that we've used for the virtual events that we've done during COVID and how successful that has been in terms of engaging people. There isn't that opportunity to be together. And I think that there's no question people will want to return to some form of in-person events, but I think that that ability to create a hybrid where it's not, you know, someone sitting at home watching the live stream of a conference, that would be pretty lame. It's figuring out ways in which you can create an equally as engaging creating the same engaging experience for the virtual audience as you are creating for the in-person audience and what that does to be able to expand reach, to be able to create engagement in a totally different way. And I think that that and trade shows, and there's just a real opportunity for an incredible amount of innovation in the space. And I think we'll see either new companies coming in to kind of fill that gap with interesting ideas and approaches or existing companies stepping up with tackling innovation. There too, but I think it's an exciting time from that perspective.

Is there a distinction for distributors? I mean, they have done shows and user experiences, in-person events. In fact, we as an industry relied heavily on face-to-face distributors. Where do the future opportunities exist for distributors, or is there any distinction at all?

I think that there's elements that apply to both 100%. You know, if I think about Catherine, our experience in running Right Sleeve and all the in-person events and marketing that we would do with our customers, I think it's the same thing. It's the same thing. I give credit to Kirby Haaseman at Haaseman Marketing who hosted a virtual experience about 2 weeks ago. Bobby, I know that you were a very popular speaker at that event. But in all seriousness, he— and I hope we don't cut that part out. I hope we don't cut it out.

We won't.

But I'm proud of you.

It only took you 20 minutes to throw in.

I know, I know. I'm trying my best. I'm trying. But let's get back to business here, folks. But to credit But Kirby, he did this, I believe it was his first virtual event. I know that he has also been meeting with his customers in person, socially distanced, masked up, and all that stuff, but he decided to go and launch this. I think he had over 100 customers that attended this inexpensive event, and it was an effective way of connecting and engaging his prospects and customers. Would Kirby have done that a year ago? Likely not. He probably would have only thought about an in-person experience because that's all he would have ever done. And we did that as well at Right Sleeve. Yeah. So I kind of like the fact that now the customer of today, they've gone through the virtual world. Yes, there's Zoom fatigue and we could probably talk about that later, but they're used to this. And many, many people will say, you know what, I actually kind of liked going into that meeting in my PJs. I didn't worry about having to go into the office and I could have just had a much more effective meeting. And for a lot of what we do, That, that accomplishes at least 50% of the interactions that we have in this business.

Yeah. Kate is getting lots of inquiries from distributors. I received an inquiry Monday from a distributor who is trying to create an end user experience— I'm sorry, a client experience. And I was proud of him. He said, I'm going to try and get 200 of our clients at this virtual event. And I was really proud of him for pushing the envelope and doing that, because as distributors, it may be a little bit easy to say, well, that's the supplier's world.

That's not at all our world. Not at all.

Yeah, not at all. I think part of a narrative that's kind of weaving through this is time. And I look at whether it's the willingness of a customer to jump on a Zoom call for half an hour, where trying to get them to commit to going out for lunch or coffee or something historically was more difficult. And so, you're more convenient for them and more efficient, and therefore, they're willing to say yes. And I think that there's analogies to to conferences and trade shows with this, that there's a tremendous opportunity cost of time, both for the attendee as well as for the organizers or the ones exhibiting in the case of a trade show and how that translates ultimately in terms of ROI. And are there ways in which, you know, through a hybrid model or through, you know, thinking in a way, thinking in more innovative ways about this, that we can accomplish a more kind of efficient approach and still get to the same end result. And you look at even working from home as a perfect example of this, that you take away people's commute time, you take away the hassle around all of that, and the incredible efficiency that I think people have had during this time when, myself included, who never would have considered working from home before this. And not for any criticism of it, just that it wouldn't have occurred to me. We had an office.

I worked in the office. Right. Yeah. I'll give you one other quick example here that I actually experienced today. And I think that this is interesting It's an interesting supplier story. So we were hosting one of our SKU Talks. We do these twice a week. I'm sure folks that are listening to this have maybe attended one before, but if people don't know what I'm talking about, these are 20-minute virtual meetings live where a supplier will come in and talk about a few highlight products, some case studies, and share a common SKU collection with the distributors if they're interested in adding these the products from the session to shop or a presentation they can do. So right after the fact, I will attend some of these because I've had my distributor background and I'm a product nerd and I'm always interested to hear them. So there was a supplier that was presenting today and I was thinking to myself, if I was still running Right Sleeve, I was trying to compare the experience of attending the SKU talk today versus what the experience would be like if I was sitting in my office pre-COVID running a distributorship. Here's what happened. So I'll just line them up. So today I attend a SKU talk with a supplier I didn't know much about. Okay. The rep did a great job of introducing herself and her line, and it was 18 minutes. And over 18 minutes, she showed about 7 products, went more in depth in them. There were 4 of them that I was like, man, if I was a distributor, I would be selling these to my customer within the next 30 minutes. Okay. And I thought about it. It took me 18 minutes to get 4 amazing product ideas. I thought of 10 clients of mine from before that I would have had out in a presentation or a shop within an hour. Okay. Yeah. So contrast that to back in the right sleeve days. So right sleeve, there's a gatekeeper.

Don't get me started.

Right. Okay. The supplier would have called the gatekeeper. The gatekeeper would have said, we don't know who you are, and would have been very polite to them and would have said, you know what, we just don't have time to meet with you.

Okay.

So even if they did get past the gatekeeper, they would have come in and we would have felt bad for them. So we would have given— because they would have been out of town, we would have given them an hour's time, there would've been 18 people that would've trudged into the showroom. They would've spent an hour and shown maybe 30 products because they're just trying to fill the time. And by the end of the hour, most salespeople would be itching to get out of there. They would've been totally overwhelmed with all the products that were shown to them, and they would've left and gone, I just have to get back to my email, as opposed to saying, here are the 3 products that I loved, and I'm now going to go and present them to my client. So think of that in-person example is absolutely horrid. The only difference is that maybe there was a personal relationship that might have been formed, but unlikely if it's one person speaking to 18 people that are ADD, you know, type A salespeople. So to me, which one's better? Hands down, the virtual experience was better for me as a distributor. So to me, there's so much that you can get from that. In terms of what the way forward will look like, not only between a supplier and distributor, but think about how the distributor could also present to the end client in that same circumstance.

Let's talk about that next. How do you think the sales dynamic will change for the distributor in the future? We've largely been just talking about supplier experience to the distributor and how we handle product knowledge sessions, but how do you think the sales dynamic is going to change for us distributors in the future?

We're used to using product as a crutch. You know, we go and say, oh, we're going to— we want to set up a meeting with you and bring in some stuff we're really excited to show you. And every— the entire meeting becomes focused about product. And sure, clients love to touch and feel and they get excited about stuff. And so, you feel as if like you're getting somewhere and getting closer to a sale because of the fact that they're excited about touching and feeling the product. But you leave that meeting and did you really get any better understanding of what it is that the issues are the client's wrestling with or what business objectives they're trying to achieve? Probably not. And I think that part of kind of what the opportunity is in this environment while we are operating in a more digital context is that there isn't that opportunity to use product as a crutch. Sure, you could show them some over a Zoom meeting if you wanted to give some examples kind of to them, but I think it forces the distributor to have a more strategic conversation with the client to add value, you know, in terms of the reachouts and how it is that they engage.

Yep, that's exactly what's happened. I've said it for years, the suppliers sell product, distributors sell purpose. And that's exactly how we're being forced into that conversation because we don't have the what's new crutch to lean on. Exactly right. So speaking of what will be the future salesperson's role in this new world, Katherine?

Really to be that true partner to the client. And, you know, it sounds as if that's such a cliché that we've been talking about, you know, consultative selling and all of these things for years. But But I think that the reality is, is that the days of being, you know, an order taker and product pusher are over. They've been over for a little while, but they're even more over now. So, if you can't kind of reinvent yourself as someone who can take the time to research your clients, to understand kind of the environment they're operating in, their industry, the context, challenges they're facing, and to be able to go in and add value in a conversation, then you're going to be dead in the water. And I think that the key kind of transition for the salesperson within this is really understanding the mix of how it is that they currently use their time. And, you know, historically, far, far, far too much time has been spent on, you know, product research, creating presentations, dealing with vendors, with a very small proportion of the time being spent kind of truly engaging with the client. And that has to flip entirely on its head. So, it means kind of carving out the time to do the hard work in terms of the research and that deep work in terms of the focus on that. It means carving out the time to be able to step up and have those more difficult and more value-add conversations with the client. And it means getting a heck of a lot more efficient in terms of how it is that you put together ideas and process orders. Yeah.

Even the best of us, are struggling with this transition somewhat, but it's such a crucial transition for us to make.

Mark? We talked a lot about the concept of engagement commerce over the, particularly, Commonsku sessions last year. And, you know, just this whole idea or engagement commerce really talked about this environment where today's customer is looking to be inspired. They're not looking for anything else other than to be inspired and educated by their distributor sales partner. And I think that the truly successful distributor sales partner of today is someone who is going to be able to meet their client at that level of inspiration. Bobby, you've talked a lot about storytelling, and I feel like this is really the time when your evangelism of storytelling is now going to get its due respect. In the past, I think people would go, "Yeah, yeah, storytelling, whatever. I'm just going to go and take that order." And I mean, I don't I don't need to be glib about that, but I think that some people would go, that's great, but I'm too busy for it. And whereas now I feel like the best salespeople are storytellers, are ones that are able to really connect the product with the client's marketing strategy and can be a true partner in a way that I don't think has ever happened before.

Right. I think where, where that storytelling piece comes in is around the business development muscle that people are having to exercise now that they have not really had to do as much of. Like, we have been boom economy for close to a decade now. And ultimately that when in a boom economy, you can be more of an order taker and all of a sudden kind of that has disappeared overnight and people are having to truly get out and do hard business development and storytelling and the ability to relate to the client, to kind of understand the challenges and ask those difficult questions is really where that people have to get up, back up that curve and kind of flex that underutilized muscle.

Muscle, right? We've been saying too for a while that marketing is sales, sales is marketing, and we've never seen the blend like we're seeing now and the need for our marketing to vastly improve. That's part of the reason why SKUCon in January, we've, we've put such an emphasis on marketing. Marketing is sales. So that whole muscle that sort of atrophies during those rich times in the boom economy, then we have to now exercise that muscle a whole lot more and use that. How do you think the infrastructure By the way, I want to make one other comment. One other comment about the salesperson is that I think we have relied in the past on campaigns, and we're going to see this partnership that we're just— we're not the only ones saying this. Most of the research firms that we've done research into are saying that partnership is— has been cliché, as you said, Katherine, but is now the most important and vital word for suppliers, for distributors, and for clients. But there's a distinction between being a campaigner and a crusader, and I think we're going to see more crusaders as salespeople out there working toward their client's purpose. Let's chat a little bit about infrastructure change for the distributor, because I think this has huge ramifications and opportunities for distributors. How do you think the infrastructure of the distributor should and will change, Katherine?

I mean, it really goes back to the timepiece that we were talking about earlier. And I think the ability to have salespeople spend more time with clients might result in organizational changes., you know, within the distributor environment, if a salesperson was historically, you know, putting together orders, following up on orders, production, you know, all those pieces, and that was consuming a huge part of their time, that the only way to be able to get them out spending more time with clients is to be able to offload, you know, those aspects kind of off their plate. And the easiest way to do that is leveraging technology as far as being able to help with that overall workflow, but also being able to remove the burden of things like follow-up by like leveraging, you know, integrations like the order status and ship notifications and things that we automatically pull into our production report, that those types of non-value-add activities have got to disappear. And technology is the only way in which we're going to be able to get there. So, I think that there are inherently, you know, infrastructure changes that are necessary from that perspective. I think the other infrastructure change that is going to be very interesting to see kind of how it plays out is what's the future of the office? And, you know, what, what are, what are, what's going to happen kind of when the time comes that people can go back into offices? And I know some people are doing that now, but I think that there is a fundamental shift that is happening as far as what the future is of, of that piece of infrastructure kind of within the distributor environment.

Yeah, Gartner's Future of Sales report predicted that by 2025, 80% of B2B sales interactions would be occurring digital channels, and most of us are not going to go back to the office in a permanent sense. Um, yeah, I believe it. Let's talk a little bit about collaboration, because projects for distributors and suppliers have become more complicated than ever, and we're trending that way before COVID But now we're doing more kidding projects, we have multiple addresses, we're shipping to homes, shops, and e-commerce is absolutely booming. The business is requiring far more moving parts for virtually every distributor. How do you see collaboration between distributors and suppliers changing in the future?

Catherine? I think that because of the complexity of these projects, that engaging the suppliers earlier on in the conversation, both to understand capabilities. So there's lots of suppliers that are doing fulfillment now, and I mean, every supplier is now having to do crazy dropshipping, even if they weren't doing that before. So having that capabilities conversation upfront to see how it is that you might be able to streamline what it is that you are therefore offering the client in terms of within a kit specifically. I think the other piece of this that is really important to look at is the remuneration end of the equation. And this applies for both the distributor and the supplier. I think that during COVID people were willing to, or the early days of COVID people were so desperate to take any kind of business that they weren't charging for things like doing fulfillment themselves, both kind of at the distributor and the supplier level. And I think that that can't continue. Value. So looking at how it is that you ensure that you're getting compensated for the value that you're adding into the equation, especially with fitting, that both suppliers and distributors need to ensure that they're charging fairly for that and getting compensated fairly for that.

Yeah, I do want to say on that, to that point, Catherine, we saw this in the industry in the previous decade where shops and stores and the complicated projects, maybe it was just because when I was with Robin, we had a very complex flex store model, but we had to focus on charging for services. And we saw the entire industry in a, in a boom economy give away a lot of those services and fees. And now what I see in the future is I see there's been lip service to the agency model, meaning that there's a big part of the industry that claims their agency, but they really just— their infrastructure for billing is just like a regular distributor. You know, no different than a, than a, than a trunk slammer in that sense. And I know that's harsh, but what we're going to see now is this trend toward actually charging for these services and for these more consultative type selling projects. I think there's a vast opportunity ahead of us in this category. Also a vast education opportunity for us in this category.

There's a huge opportunity. I mean, if you are bringing an innovative solution to the table for the client that is solving a real problem for them, and there is a large amount of design time and thought that goes into that. And when I say design, I mean, you know, traditional design in terms of graphic design, but also design in terms of designing of what's going in the kit and the experience and, and the whole overall kind of process, that ultimately there is value in that. And charging a design fee, there's nothing wrong with that. And the client, if they unders— if you've been able to communicate sufficiently to them the value that you are bringing to the table, with this, they'll be willing to pay for it, right?

And we have two different types of values that we're talking about. We're talking about the value of our time to pull off a project like that, and then the value of that for the brand. This is where ad agencies are far better than we are as promotional agencies, is that an ad agency— you'll get sticker shock the first time you interact with an ad agency about what they're charging for things because they know the value for the brand. So when we, we get lip service to employee retention. But wow, what is the real value for a significant employee retention program?

It's huge. And I think translating that a bit more kind of to the client, and this goes back to those having those strategic conversations, is that if you are able to translate to the client the cost of turnover, the cost of, you know, recruiting someone new, you know, all of those pieces that ultimately the— that where it is that branded merchandise can play kind of in that equation to reduce those costs, it seems all of a sudden kind of the cost of doing a mail-out kit to employees to help with kind of retention in a high-value context totally changes.

Yeah. I think that there's also value in these charges, these non-product charges, because it forces the client to think of you differently. Because if anything, they're going to go, "Wow, that ABC Promotions came in and charged a $10,000 design fee. No one else did that." And sure, that may be the reason you don't get the order. But if anything, if you back that up and say, here's why we charge that, here's what we're doing, here's what it's like to work with our company, what that's going to allow you at a minimum is to at least have their attention because most of them are going to say, who the heck do you think you are charging me this amount? You might actually be able to unlock that. I actually think about— so Catherine and I have been undergoing a landscaping project. This is a non-promotional product story, but it's an example that illustrates this. So we're speaking to a couple of different landscapers. Shaping services. And we have this one firm that comes and says, we're going to charge you a design fee, a flat design fee, and here's why we do it. It commits our team. It allows us to make sure that the client is invested in this as well. No one else was charging this. And you know who we went with? We went with the firm that charged the upfront design fee. And we've been very, very happy with that whole partnership and the whole ability to work with them on a strategic level so that they can, I suppose, meet our objectives from a landscaping perspective. It was a bigger job. I thought about that and I thought about their approach within a somewhat commoditized space, similar to the promotional product space. They got our attention. Yes, they had to earn that attention to be able to justify the fee. But at the end of the day, when we looked at the whole project, we said this was peanuts because we ultimately got what we want as opposed to going with something that would've been cheaper. So I think if there's any time to do it, it's now. I mean, the industry, all the normal rules have been upended.

But in that example, they also did a great job of communicating to us why we should value their time. I think that that's kind of the piece to highlight is that often because of the fact that clients are not used to paying for time with a distributor, they just expect the distributor is going to do all this work and get paid in the margin on the product. And that part of it is also helping the client understand what is involved in a complicated project and how much time it takes to be able to put something together that is really going to wow the end recipient. And when you can do that and they understand, then of course they'll pay for it.

Right.

And the product can no longer bear the burden of all of those services. The product margin can no longer bear the burden of all those services. We face this with company stores all the time, but now look look at the opportunities ahead of us, and maybe this is an actionable point for us as we talk about this pricing. We might all nod our heads and go, yeah, yeah, I agree. But I would challenge distributor to look at the services you're offering because you're offering kitting, you're offering possibly fulfillment, you're offering shops and e-commerce and what the value is for time saving for a company and their employees. And then you have the value of what all these projects are for the customer. So there's lots of opportunity, I think, for future profits in this category here. Let's talk a little bit about the dramatic shift that's happening in tech, and I don't just mean tech for promo but tech in general in the industry. And you both obviously study the SaaS industry. Jim Franklin had an op-ed in PPAI that talked about the vital importance of technology and that those that have a technology center to their operation will emerge as the clear winners. Where do you see the future of technology playing out for distributors and suppliers? And let me just say this, this is the point in the conversation where most folks say, well, of course Kominski is going to talk about technology. But listen to this for a minute. McKinsey and Company calls it quickening. The world has experienced 10 years of e-commerce growth in 3 months' time. 10 years. And the BVP Nasdaq Emerging Cloud Index, which is a study that tracks the performance of emerging companies that provide cloud software to their customers, report over an 800% increase. So there's some dramatic things happening happening when it comes to technology. But how do you see the future of technology playing out? Let's start with distributors first.

Kathryn?

I mean, you look at the impact on a distributor's ability to manage risk, and COVID is the perfect example of this. That who could have imagined, you know, on a Friday afternoon in the middle of March that all of a sudden, you know, there were going to be shelter-in-place orders and that you had to, you know, pick up your entire office and move home for who knows how long. Like a completely unknown period of time. And those that had been kind of early, like I look at our experience within the Commonsku office that because our entire business is run in the cloud, that our team literally picked up their laptops, maybe a spare monitor and went home and started seamlessly on Monday morning. There's, COVID is one example, but you look at wildfires, hurricanes, like flooding, you name it, all the, the wonders that 2020 has brought to us in terms of plague and pestilence and all the rest, that ability to kind of manage the risk of your business, that technology plays such an incredibly important role in that. So that's kind of the first piece of it.

One quick thing on that, Kathryn. Sorry to interrupt. One quick thing on that, just because it's real-time experience for me, that as we're recording this in Oklahoma City, a city of around a million people in the larger land population, almost half a million people have been without power. For the past 48 hours. And if you have a business where you can work remote, you could literally drive away from that disaster and still be in business and still focus on your business.

But anyways, go ahead. Hence the reason why Bobby and I had our regular weekly meeting on a video call on his pickup truck.

My truck—

longest meeting we've ever had, and it was in a truck.

There you go.

That's where you live, right, Bobby? You're— you live in a truck, right? So I don't know what Actually, go ahead, Catherine, I interrupted you.

But I think that's, you know, one part of it in terms of, you know, risk mitigation. But the second part of it, and I sound like I'm, you know, beating a dead horse on this one, but time. Just, you know, the amount of time that is wasted when you're not kind of leveraging technology and tools and efficiency and all those things that are readily available at a very, very affordable price now in comparison to what it would've cost kind of 10, 15 years ago to implement what are now really sophisticated technical solutions, whether it's something as simple as VoIP phones or something as complex as workflow management, that to not be taking advantage of those kinds of things and not recognizing the opportunity cost of time in this context, I think is just so, so critical.

Yeah. Well, and to add on to what Katherine's saying, that technology is the true multiplier effect. And if you think of how a traditional salesperson in the promotional product space might think, that they think that, and to some extent this is true, that they go out, they spend time dialing for dollars, they go and have a client meeting, and that results in a sale. And that I think is still a reality. But imagine if you could now be supplementing that approach with a technology experience, whether it's workflow management or whether it's e-commerce shops or whether it's a more efficient way of getting your ideas in front of customers. Now, that's a superpower because now the technology is effectively working for that salesperson to drive sales literally while that salesperson is asleep. And so now they're not necessarily always having to to sit there having to grind it out for sales each and every day. They can still do that, but now it's supplemented with this. This is a silly way of saying, but it's almost like a bionic arm they now have that allows them to be that much stronger to do that much more. And I think that the distributors who will not only, A, be around in the next 5, 10 years, but the ones that are going to be truly dominating this space are those that marry those two approaches. I mean, that's a lot of what we talked about, the concept of engagement commerce, and we're really seeing that happen today.

Yeah. You look at something as simple as video calling and the explosive growth that Zoom has experienced kind of during COVID And we have obviously always been users kind of from the beginning of video calling and whether it's having had part of our team being remote kind of for a long period of time or because of the fact that we sell often virtually, we onboard customers virtually, that that's just a skill set that we've had to have from the beginning. So that none of this was different for our organization, but I think for a lot of customers that had never used— a lot of distributors that had never used Zoom before, either to communicate internally as a team or to engage with their clients, that all of a sudden that opened up a whole new world in terms of how it is that you get around this issue of not being able to see people in person. And those that adopted those kind of tools early on and were able to create that engagement kind of early on and learn those skills because it's different, obviously, creating rapport in a relationship in a Zoom environment than it is over lunch or a cup of coffee. But I think that those who are willing to get uncomfortable with trying out new tools that they weren't familiar with and get up to speed on that, I think really were able to capitalize on that in the beginning.

And what we're also going to see accelerate, since we're talking about distributors, are the in-client experience. You think of how much time, again, is wasted infested with so much back and forth between the client and the distributor and supplier in terms of where's my order, when will it be here, what happened. All of that interaction and engagement that's happening for distributors, we're taking very smart salespeople who are excellent at delivering on ROI for a customer and they're spending their time on where's my order type stuff. We're going to see that. We've talked about this for a while, Kathryn, you're big into this, automating those kinds of almost senseless They're important, they're vital, but that's not where our energy needs to be spent. So we're going to see this trend accelerate dramatically where end clients are going to demand and expect it and expect it now that those kinds of systems be invisible and work behind the scenes as opposed to always taking up mindshare between the distributor and the client.

Well, and that, that, you know, the quickening as you referred to it with McKinsey's findings that they had regarding e-commerce adoption. All of those things accelerate what clients are comfortable with in terms of how it is that they engage digitally. People that had never ordered groceries before online did that kind of stuff during COVID or started placing all sorts of orders through Amazon of things that they historically would never have not bought in person. And I think that that same expectation of that experience, that ease, that efficiency is how they're now going to expect expect to interact in a B2B environment as well. Yes.

What about for suppliers? That landscape is changing dramatically as well, Kathryn.

Yeah, I mean, for sure, for, you know, the production environment or like the, sorry, I should say customer service around production, you know, order status, ship notifications, the kinds of things that suppliers spend an inordinate amount of time on. I mean, John Norris from Starline was remarking the other day that ever since implementing promo standards in their organization, that it has cut their customer service costs in half. And he hasn't gone and let those people go. He has deployed them into more value-add roles. And I think that is where the opportunity exists in terms of this, you know, this, you know, partnering in terms of how it is that suppliers can work more strategically with their distributor customers, that that time has to be freed up on their end as well to be able to not, you know, maybe answering inventory questions or, you know, what's the setup charge on this product or has it, did you get my PO? That instead being able to work kind of in that more consultative fashion around solving the client's problems.

Mark, is there a comment? And speaking of someone like John Norris at Starline, you know, it's, it's so interesting to see how technology right now actually works to streamline and remove literally all the friction in the process. So if you just use an example of something like Commscue Shops, you know, you've got a scenario where you can have an end client place an order through a common SKU shop that a distributor has designed for a Starline product. The distributor gets that order. The distributor then prepares a purchase order. It's already automatically prepared for them in the backend of the system, and they could submit that order directly into Starline's ERP and production management system so that there's not a CSR who's having to go and check this, and then it goes and ships out right from there. So you then talk about a completely frictionless and touch-free experience that operates right now. And that's really exciting to think about that one example being an example of how the rest of the supply chain will work very soon. Like, it is a short-term future where you're going to have this complete integration from that end client ordering experience through to the distributor, to the supplier that is going to free up all of this time that you would've argued in the past is kind of wasted on administrative work. And all those people are now freed up to be that much more strategic, that much more value-added. And I think in an environment like that, you just think of the, again, going back to the comments about the industry moving up the advertising food chain, that you now have an industry filled with people who are freed up from having to do administrative crappy work. It's going to free them up to be way, way better and more strategic. And if it doesn't free them up to do that and can't be more strategic, then unfortunately they're probably not going to have a job. But it's my hope that with all this time that's freed up, to your point, Katherine, was John at Starline, that it's freeing those people up to work on more value-added tasks that make Starline a better company. So I just love that scenario. I think it's very exciting to see where this is going to continue to go.

Let's shift a little bit to the industry as a whole. How do you think a post-COVID world will reshape our industry? For example, distributors and suppliers, are those distinctions becoming more blurred? Is it irrelevant now, becoming extinct? What are your thoughts on the relationship between suppliers and distributors for the future, Mark?

We've talked about this as an industry for as long as I've been in this industry, and I know that people were talking about it before I got into this industry as well, and that's specifically the relationship between distributors and suppliers and whether that supply chain model will continue to uphold. And I think the reality is is that it will continue to be a hybrid scenario. You're going to have direct sellers that are out there. You're going to have some of these classic relationships that are supplier, distributor, and client. At the end of the day, we operate in a free economy. No supplier is obligated to sell through distributors. They sell through distributors because they're getting value through that channel. I have no not really seen any major cracks in that system, even during COVID with maybe one possible exception, and that was within PPE, where the traditional supply chain was not able to source PPE fast enough for the market, which forced a lot of enterprising distributors to go out and find PPE on their own. And that kind of created a bit of a Wild West scenario. And then you saw them bringing in excess inventory, and now distributors were then sort of masquerading as suppliers of PPE. But to To me, that was a very short-lived experience, and you don't see that as much anymore. But the reality is, and I've seen this over the last 20 years, and I will see this for the next 20 years if I happen to be in the industry for that long, that the supplier-distributor relationship will continue to look much the same over the next 10 to 20 years. I really, really believe that. I agree. And not because I have a vested interest in that. Because if it was easier for PCNA or for HIT— and who knows, maybe these words will come back and haunt me, but I'll say it right now— if it was easier for these big suppliers to go and set up direct selling divisions where they could go and communicate directly with Coca-Cola and Microsoft and whatever the case would be, they don't need Paul Bellantone at PPAI telling them not to do it. They could do it themselves, thank you very much, without anyone's permission. Permission. And the reason they don't do it is because their go-to-market strategy through the distributor base still makes sense. And we see, like, yes, we see cracks in it. You know, you see these jokers on the Facebook promotional page that complain about Hit or Snugs or SanMar that screws up an order. But to me, I view them as like the bit minority players of this industry. To me, I feel like the supply chain still remains very strong and the majority of the business is done through these incredible partnerships. We see a very strong future in that.

You know what I think it comes down to is the, the ability— the reason why supply chains function is when each component of the supply chain is able to add value. And to quote the famous Jeff Bezos, whose expression, 'Your margin is my opportunity,' that if you don't show how it is that you are adding value and therefore able to charge margin, then your margin is his opportunity. And I think that that is something that we need to keep in as distributors, as suppliers, as service providers, as how it is, where it is that we fit in the puzzle in terms of the supply chain, and to ensure that we continue to focus on adding value.

Yeah, and the three of us have spent the majority of our careers in this industry, this industry that we love. And credit to Paul Bellantone for saying this, but there's a difference between the industry and the market. Yeah. And the industry echo chamber forces us into a tunnel vision where we only see the industry and we see these industry aspects, whereas the The market is huge. And just for example, we've mentioned it before, but the respect for brand, for swag, has never been bigger. It has never been more important. Streetwear and the things that are happening with apparel, the things that are happening with comfort at home, it's an amazing time to be selling swag. There are new folks getting into this industry, and the industry, so to speak, as Jim Mart would say in air quotes, the industry, there are new folks getting into this business who are going, what do you mean the industry?

Industry.

They will source from anywhere they want as long as that will provide value to their customer. And again, credit to Paul, he's the one who recognizes the distinction between the market and the industry. And I have seen when distributors open up their focus, open up that lens, and look at the market, they're more optimistic. There are more interesting things happening there. They're more optimistic than they are if they just singly focus on on the industry itself. Not to say that the industry is negative, but we tend to get in this real tunnel vision when we think of the industry.

Well, I think this is where there is a re— this is where our opportunity is to redefine what the market is. And if you look at the, you know, the pigeonholing of the past of saying promotional products are something that you give out to people in person, and if right now in person is not possible, that, you know, what are, what, what are promotional products in a different context than that? And what are ways in which which, you know, people can be utilizing, you know, budgets in different ways, that all of these things kind of redefine what the market is that distributors can be going after. And I think that that is where it is just a really, really exciting time.

What are you each most excited about for our future?

Kathryn? I think that what I'm most excited about is reimagining, you know, what this industry can be. And if we take advantage of the overall, you know, digital and technology acceleration that's going on right now around us and embrace that and allow our salespeople to get out and to really kind of add value in the market. I think there's just such a huge opportunity to capture kind of a wide open space right now and the ability to take that and to carry it forward kind of when we do get back to a time when, you know, we're going to conferences and trade shows and sporting events again, that, you know, how do we continue to reposition the way in which the market sees our value and our medium and to to grow that share. Yeah.

Mark? I think it goes back to something I was saying a little bit earlier is this whole idea about how we have this golden opportunity as an industry to move up the advertising food chain. And it's happening. It's happening before our eyes. Yes, there's a lot of bad things that are happening in the world and certainly our industry, but I think that this industry is so flexible, so versatile, and full of so many creative of sales and marketing professionals that we've learned from over the years, you, me, Bobby, and Kathryn, that to me, I just think we have this incredible opportunity. I was reflecting also on the relationship between promotional products and our ability to augment and accelerate a brand for an end client. And I'm a marketing and branding nerd, I have seen firsthand as a software company, someone who's in the marketing side of a software company, so we're an end client. I've said this on a few occasions that we're seeing firsthand how the use of design and promotional products that are put together strategically have an incredible impact on a brand. And we see that firsthand with our own brand. And that, to me, I feel represents a new frontier because a lot of marketing people on the end client side, I don't think would look at promotional products as their go-to to really help them build an amazing brand. And I think you're starting to see that that's starting to change now. And I just love being in the front seat for all of that. And if we can do that, that's gonna allow us to not only grow the top line of our industry, but it's gonna allow us to grow the bottom line and the margins of our industry because we're gonna show up as true strategic partners that have a medium that really accelerates an end client brand. And the time is now to do that. So that's what I think.

Future's bright. Bobby, what are you most excited about?

I'm most excited that the collapse of budgets for traditional trade show promotional product purchasing is in inverse proportion to the opportunities that are opening up before us if we simply change our focus. Of course, it's never been harder. Sourcing's been harder. There's all kinds of things that have been harder. Budgets have collapsed. Like I said, but there's also never been a better opportunity to truly build something you can be proud of through these opportunities we have to help brands that are really struggling right now. So I think it's an energetic— we'll look back on it. It doesn't feel like it now, but we'll look back on it and go, that was an energetic time that completely transformed our company. And I think that's the thing that we can get excited about the most.

Thank you guys for joining me today. Thank you, Bobby. That was a pleasure. 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.commsku.com. Until next time, friends, thanks so much for listening. Mm-hmm.