Around the Horn - Episode #22

Good morning, everybody. I guess. Good afternoon, Jennifer, to you. Welcome to our season finale of around the Horn. And it's been a good season. The next season is going to even be better. But anyway, welcome everybody. And as you notice, today we have somebody else other than Kevin and I. We have Jennifer Murphy from president of Netplus Alliance. So, Jennifer, welcome and tell us a little bit about, or tell everybody a little bit about yourself and NetPlus.

Thank you, Tom. It's great to be on the show with both you and Kevin. And I will just give kind of a little quick intro plug to say that Lead Smart Technology is one of our preferred business partners here at Netplus Alliance. So we're grateful for that relationship as well. NetPlus is an industrial and construction supplies buying group and we've been around for 20 years. This was our 20th year in business. I've been the president since 2013 and been in the industry working with NetPlus since 2006. So very proud to work in this great industry and also proud to continue to lead our family business which started in distribution in the late 1800s. So I am actually the fifth generation and first woman president of a business that started as a machine shop right here in Lockport, New York back in 1859.

Wow, that's great. Thanks for that, Jennifer. I'm assuming behind you there's a few of those people.

Yes, here they are.

That's great.

Those are my great, great uncles, the Ward brothers. They were the ones who inherited the machine shop from their uncle and they incorporated it into a full line distribution business in the early 1900s.

That's, that's super. You know, before we kind of jump in things today, I wanted to one, thank you for mentioning us in our partnership together with you because it's certainly something that we're enjoying and bringing our technology solution to your members, which is great. And we're working with a couple of great ones right now and some fantastic discussions with some other ones as well. But I had an opportunity in October to come to my first NET yearly event in Las Vegas. And while my golf performance was substandard at best, the event was phenomenal. But I met so many great people, both your team and your members. But what really stood out for me was I got to spend about 15 minutes on the final morning in the kind of corner behind where our booth was with your father. And Dan talked to me about what was really kind of the like early, early days in the 80s of what became ERP.

Yeah.

And the adoption that he had done and the people that he worked with. And it was like I was dried, you know, live about four and a half hours from Las Vegas. So I drove in and driving home I was just thinking about, you know, I've been around wholesale distribution since 1989 and have seen a lot of changes but listening to Dan's comments on this, it was just, it was awesome.

Yeah. Yeah. I will tell you a quick story. We just did a demo with a price optimization platform, another business services providers group. And after the, after the demo was over my dad is telling our staff and our younger staff about how back in the day at ward Beals and McCarthy that was his job, like doing it himself. You know this, he's like these pricing, this price management used to be handled by a person in the company who was like with a pencil like changing decimal points on pricing to just you know, create like that little bit of additional margin. Now we have AI that links up to your, you know, your EDI and your, your piece systems and does all the work for you. So that was kind of a little funny story but he is a wealth of knowledge. I'm lucky to he's still here working in the business with us. I am the full owner of the business now but still great to have him around and he has does have great stories.

You know as I remind my kids is that there's some wisdom with, with age. So it might not be as much as they think or I think but there's some wisdom with it. So and dance that he was going to join us today as well.

So before we, before we get I want to welcome a couple of people from the audience. So Brandon is a the CMO of a buying group called Prolink in the Jansan space. So I know he's going to be looking for and they're a lead smart customer as well. So I know Brandon will be looking for some great insights today. And Phil, I, I guess that I've got to really kick up the game here because he's a big fan of Jennifer and Kevin but he hasn't met me yet so I don't think he.

Said he's a big fan of mine. I think he said he's a fan of Jennifer. I'll remember that. Phil.

I'm going to work for, I'm going to work towards. I'm going to work towards. Okay today.

Yeah, there we go. And Molly's with us as well. Who's the whiz bang marketing person at Net plus. So that's we've seen so far. I Thought Molly was off today because.

I think I know she is off today. So grateful that she's watching today on her day off.

Yeah, I saw an out of office reply to our email that goes out with this event. So before we jump in, I didn't do. What we do every week is we get new people coming to this. We have a lot of people who watch our broadcast here on, but not just LinkedIn but on, you know, Tom, I was thinking, if you see an option there, we should put Jennifer between us so we have the rose and the thorns. Put her in the middle there because I think we're going to hear more comments like, like Phil's today. But you know, we have a lot of people who watch this broadcast on after the fact and the recording that's on YouTube on the Lead Smart Technologies YouTube channel, on Facebook, on our LinkedIn or Facebook page and then either live or on the recording. So we try and talk each week about this. So the purpose behind around the Horn is we talk about wholesale distribution, what's gone on in the previous week or a period of time and what might be coming and how that impacts people. And we do that by really not just talking about M and A issues or things like that, which we do some of, but we try and consolidate a lot of the things that are going on in the economy, in the world around us and how those impact wholesale distribution as well as happening. So as Tom mentioned, going into next year, this is actually going to, we'll be announcing this shortly. We're going to turn this into a podcast besides this live event. And we've got a slate of. I think we've already got about 15 guests lined up for next year already. And we know we're going to get Jennifer back again and maybe even some people on her team. So we do this each week. We send out every Friday morning to a few thousand people get an email from us that you can see on the screen here. If you don't get that and you would like to just make a note in the comments here or send us a message, the easiest way to do it is certainly in a direct message, if not helloadsmartech.com and we'll get you on that list and send this out. So those are my little preface that we do each week and maybe we can dive into the news now.

Let's get into the news.

Yeah, so we talked a little bit last week on a topic that we're going to spend quite a bit of time next year unpacking next year. Right. Starting in two and a half weeks. Crazy to think, but, you know, we're seeing so much on the news right now about this FTX thing and cryptocurrency, and we started to unpack and discuss a little bit last week about the blockchain and the implications, the blockchain to wholesale distribution. So we'll unpack that a little bit. But, you know, this whole crash thing that has gone on with ftx, we've got, you know, major celebrities and athletes and, you know, Mr. Wonderful from Shark Tank has actively been involved with FTX and we've got this big crash that's gone on with that. There's securities fraud issues going on and thought we'd kind of unpack this a little bit. Tom, what are your thoughts on this? I know you follow this a lot closer than I do and have a lot more depth of knowledge on blockchain and crypto.

Yeah, well, I think the first question you. You had here is, how does this relate to wholesale distribution? It doesn't really. It really has. This was, you know, a fraud. We've had numbers of frauds and scams that have existed in the financial world over the years, and this one just happened to be around crypto. Crypto. I believe that, you know, the founder, he was arrested this week and is, you know, been indicted and all of that. So this is a criminal action. Right, that just happened to be around crypto. But of course, we've had a lot of, you know, frauds around there, you know, as we talked about last week. And Jennifer, definitely be interested in your take on this. You know, I've been in a lot of events and talking to a lot of companies over the last few weeks, and there's a tremendous amount of talk about AI, artificial intelligence and use of data. But very few companies are talking about, you know, what I think could be the most disruptive of all of these technologies, the blockchain, and how the blockchain can be used as a platform and a really amazing tool for this industry. And I think it's an area that most companies have not, you know, the idea crypto equals blockchain. Well, blockchain is just the platform that enables crypto, but there's a lot of other great capabilities that come from the whole. From the whole platform. And so I think, you know, next year there should be a lot more, hopefully a lot more conversation about it. I don't know, Jennifer, if you hear anybody in your world that talk about this much, but I know in the conversations I've had, it hasn't been a lot of conversation. It's been more AI and data.

Yeah, I mean, I would agree. I have to say I did some homework when you talked about the topics for this and you know, have been following what's been happening with, with ftx. But one of the things that I that I noted when I was doing that research was, you know, that FTX was a crypto exchange. Like they were essentially like a crypto hedge fund. They're not necessarily like a Bitcoin, which I think those, you know, they've had a pretty decent recovery since that crash, but I are currently at it's are at their lowest value since they launched. There was also an article in the Wall Street Journal just this morning that was talking about blockchain. So I was really happy when I saw it. But the thing is that even some of the largest distribution companies like Walmart who had adopted blockchain a few years ago, have not really made much progress with it. And I think there was a couple of other sightings in the article of companies that have just dropped the initiative. So I think as AI becomes more widely adopted by people in our industry, that is most likely, in my opinion, going to be what's embraced next by distribution. We got, I think, over the e commerce hurdle a bit. I know we're going to talk about that a little, but you read about more and more larger companies adopting AI to be able to help support sales, be able to crunch and recognize all of the data that comes through from customer transactions, to be able to make more, you know, educated purchasing by either customer salespeople or by salespeople in the field. So I will tell you one little story though, about Blockchain. Within the last year, my son Sam, who is a junior at Stonehill College, he's studying finance, he plays football. There go Skyhawks. He sent me an article about Blockchain and I didn't, you know, I didn't know a lot about it, but they had been studying it in school. And he sent me this article which was really interesting. And he had told me that when was reading it and learning more about it, he had said that it made him think a lot about, about the buying group, about our buying group and how we do business with distributors and suppliers and they're reporting sales and purchases back and forth with us and then we're getting reported rebates and distributing rebates and he just said all the attributes of how blockchain works and being able to really have that digital ledger of everything that's happening and Being able to provide that kind of visibility across all the distributors and manufacturers in the group. You know, he had said this to me, sounds like so much like a benefit that you could have, you know, within the group. So maybe that will be kind of the next generation's task of adopting blockchain.

And he nailed it. He's right on the money. Because what he was talking about. Right. Has nothing to do with crypto. Right. It's the blockchain capability for having what you just described and the communication and the interoperability between companies and systems and all of that. You know, that has nothing to do with crypto or Bitcoin or. Or money. It's using the technology to facilitate a better experience and a better just overall system of doing things. And I think that's where the real opportunity is.

Yep.

And he's right on the money. We should have him on the show, talk more about this.

Yeah, it can certainly create a greater amount of efficiency in that kind of regard. But I did find it interesting that that article was just published today where whatever. In the applications that some of these larger distribution businesses are trying to apply it, it's just not seeming to work. So I think it has to become just like CRM. I can give you guys a plug. You know, I remember Talking about CRM 10 years ago and people would look at you sideways when you talked about CRM. So it has to become, you know, easier. It has to become more, you know, widely adopted and less fear. I think one of the biggest, you know, Tom, you know this, you know, one of the biggest threats to it is for there to be what they call, whatever, a quantum meltdown, you know, or like a major breach, a major breach of security that could cost trillions of dollars. You know, so that's, I think, another big hurdle. Fear that people have to get over in the future in order for it to be successful.

No, of course. I mean, even look at E Commerce right in the beginning.

Yeah.

Oh, my God. I'm going to put my credit card into a computer thing here.

And now the computer makes sure that we're not a computer. Right?

Yeah.

I think there is a lot to overcome with that. And you know, Jennifer, you used the comment that your son had made about Digital Ledger. It made me think about the comment, you know, you made about Dan in the old days. Right. Taking things out by multiple decimal points. And when you get enough of these done, it adds up to X percentage of additional profits. And now we can do those in, in these amazing tools that are available to us. But it was an interesting point that you just made though that that article talked about was that meltdown piece, right? Because it made the, it made the comparison to the gold standard, right? And the dollar being, and the dollar and so forth. But you know, there's one thing when you have gold in a vault somewhere that the currency is tied to. It's a little different when you have a vault that could be hacked. And you know, to Tom's point, we were afraid of E commerce at one point and this is going to move forward. The reason though that I made the comment about how does this relate to wholesale distribution? There's two parts of it, right? Is one is that issue about the blockchain, right? And to Tom's point about separating out what is blockchain versus what is the cryptocurrency piece of things, right? And because our world that we all make our living within and wholesale distribution will be moving more and more and more month after month after month into blockchain related technology. So getting that mindset out to the people that we work so closely with to, if they're not educated on this, to getting away from that mindset that blockchain crypto are both bad. You can decide how you feel about cryptocurrency. Everybody gets to have their opinion just like they do about which, you know, money market fund to do, which stock to buy, whatever it is, that's, that's the separation. But the other piece to think about is, and I mentioned this to when we all got together this morning before we went live this morning, is that, you know, and I'm sure there are Net plus members as well as lots of other people in the wholesale distribution world who are very into cryptocurrency and it's a part of their investment strategy and the things that they're doing. What this article pointed out though too is, you know, there is regulation coming to this in the US no matter how you slice it, the government's going to get involved. This FTX thing, which is one of the main reasons I posted this article today was this is the government's likely going to use this to get deeper involved with this whole thing. One of the comments it made is that companies, the potential regulating companies that have a large percentage of their holdings of cash reserves in cryptocurrency, the government may look at that related, I'm assuming related to solvency. I mentioned, you know, Tom and I know a few people who, they're putting some cash reserves of their business into cryptocurrency things people are going to have to pay attention to. And most, I don't say most, but many wholesale distributors, including probably a lot of Net plus members, do a lot of business with the government. So something to pay attention to. Yep. So should we jump ahead, Tom?

Let's do it.

Yeah. What's next?

I'm going to go the wrong way here. Okay, here we go.

Even when you go the wrong way, I'm glad you drive this.

So this was another interesting article about branding and the relationship of branding and how that improves the customer experience and how that relates to actually online sales. And that's, you know, to me, not surprising when you really look at it, but I think sometimes people think about customer experience more when it's that in person customer experience or how you, you know, how you're dealing person to person. But now when you have, you know, person to technology or. And how does that all relate and how does that tie into, you know, how companies look at you and perceive you and all of that? Some really interesting data there.

Yeah, I mean, I'll jump in on that and just talk a little bit to the distributors in our group that are really successful Both from a B2C and from a B2B standpoint on E commerce and how they have really successfully built their brands around a lot of the social channels that drive interest to their website and around a lot of the SEO that they do to drive more traffic to their website. But I think that, I guess to say maybe the human part of your brand in the deliverables of E commerce is making sure that packages come on time and that they come undamaged and that they're delivered appropriately. And if people have questions, a person is answering those questions, at least for now, there's no AI answering those questions. But like at Imperial Max Tool, they're one of our big E commerce distributors, they answer all the questions, they follow all the reviews that they get. They look at everything. They connect with customers that are buying from them all the time. And likewise, Ohio Power Tool, Jay Amstutz took over that business from his dad and brought in his experience and his digital experience to a very traditional business that was started by his father and started a blog and then he started a video blog where he was doing reviews on tools. It's called Coptool. So Cop Tool essentially kind of drove the brand of Ohio Power Tool, which is now one, which is now a significant E commerce player. And it accounts for. I'm probably not going to get this number exactly right. Probably accounts for about 40% of their sales. So I think doing those things like this morning.

I'm sorry to interrupt you. I think he's with us this morning. He had said he was going to join us.

So Jay, so, and, and all of the things that Jay does. Jay is a very much a hybrid distributor in terms of they have a very strong E Commerce presence, but they also have brick and mortar, beautiful brick and mortar store in Columbus, Ohio. So they are driving customers through E Commerce to come into the store and pick up products. They have traditional customers that they're selling to in the construction industry and then they have a lot of sales that they do through their E commerce site as well. So they have counter days and they have a big outdoor event once a year. So they're the two things really work together in terms of cultivating and building your brand new reputation and driving interest and sales on E Comm. And that can be through traditional methods and it can be through a lot of sophisticated digital methods as well. But I'll just, I'll give one last example because this is a small distributor, which is Erica Sherman from MC Tool and Safety and she is in Minneapolis. And Erica, I think started on her E. Com journey a little over two years ago, maybe a bit more where she got really serious about it and she invested in the development of her E commerce site. She invested in good content and since then she's been doing a tremendous amount of videos on YouTube and she has a really great presence and following on Facebook. She does a lot on LinkedIn and some of it is funny, some of it is serious. You know, she's a safety distributor as well. So she kind of couples those two things together which really, you know, brings the personality of her being a woman owned business to the customers that are both buying from her online or you know, her utility guys who are coming in off the street to buy hard hats and safety vests. So I think you can't really have one without the other because both are driving the reputation of the business overall.

I couldn't agree more with you on that. We kind of talk about that often here about that omnichannel purchasing option, right? Buyers are changing. You know, more than 50% of B2B buyers now are millennials. They're used to having a different experience and that is going to change every day. I really appreciate this article. It said B2B marketers should focus on brand vision, identity, positioning and differentiation. And I think sometimes people that are new to any type of technology, they don't go in with a plan. And if you go into E commerce with a plan and you put that omnichannel option together and you really plan to do some great positioning with your brand overall. You kind of put these things together. So the experience is such for the customer that says I may want to research online, I may want to even build an order online, but not purchase online and show up to pick it up at the branch. Right. Because I can do that tonight at 11:00 and I'll pick it up Tomorrow morning at 8. Making sure we have that experience and show how we can differentiate I think becomes key in this setting.

Well, and I think, you know, to Jennifer, you brought up an interesting point. Right. I think especially for independent distributors, having the ability to tell their story and build their story into the brand, that's a very, you know, Kevin, you, you listed off a few things there. I would add story to that. I think in this industry in particular, I mean how. What better way to build the relationship than your story and your, and especially for an independent, what that that's the big value. Right. It's like build that personal relationship, build that affinity, that it's going to be much harder for a much larger national sort of distributor to do. Yeah, so I think that's really right.

I agree. I mean you see at the bottom of your little page there is Zorro who's peeking out from the bottom. And I, and I think we'd be remiss talking about E commerce without mentioning Zorro. I mean their, their platform was kind of an experiment that people wanted to embark upon like in, within the Grainger organization. And they started this little separate but affiliated organization called Zorro. And you know, the one thing that Zorro has done really well is taken a B2C approach and applied it to B2B customers. The one thing that I always really do talk about with our distribution is how important it is to have an E commerce solution for your customers for your B2B customers. It creates more efficiency. It frees up time for your salespeople to be in with end users. You can set up pricing for your larger customers. There's so much that goes into having a Solution for your B2B customers. But again it starts to translate back and forth between B2C opportunities and B2B opportunities as well. And Zorro, which started out as a direct to consumer platform, is now really capitalizing on going after and taking market share from small B2B customers who want the ease of buying online and love couponing and adding a discount code from RetailMeNot. So if you've ever bought from Zorro just as an experiment. You really understand the power of the digital marketing that they put behind everything that they do. So you'll get, you'll get push notifications through Instagram, you'll get paid ads, you'll get paid ads through Facebook, you'll get emails for coupons. If you don't come back, you get another coupon. So they're doing a lot of the tactical things that distributors really have to implement in order to make a E commerce site continue to be successful.

So, Jennifer, I'm glad you brought that up, you know, so we can talk about Zorro here real quick. Right. We can skip it when we get to industry topics today. But, you know, a billion dollars in annual E commerce revenue. What's. I find it interesting with them and you might remember the days where, you know, everything was tied to catalogs, right. Whether it was a Connie Safety or a Granger or, you know, or there was just a handful global, you know, just it seemed like every day there was a new catalog arriving. And it was interesting because I remember when I first, probably late 90s, early 2000s, called on Grainger for the first time, they were very narrow, right? You just saw them. They were their catalog. They were just kind of getting into a little bit of an online presence. And then their traditional, you know, brick and mortar offering that they had, but they very narrow amount of vendors per category. Right. Three respirator vendors. They acquired Lab Safety. Jennifer, do you remember the old Lab Safety supply and in Janesville, Wisconsin, Lab Safety was all things to all people. If you had a brand, you could get in the Lab Safety catalog and on their website. And when Grainger acquired that, they started expanding out with a lot of more, a lot more vendors and categories within Grainger as well. That didn't work as well for them. They scaled that back and then out comes Zorro out of this. And I look at it as Zorro is the lab safety of 2003 or 2000, because it's that endless aisle, I think is the term that they use. Right. That goes with that. And now Zorro, they can be all things to all people. They carry, you know, just about every brand out there. And what I find really interesting, I'd really be interested if you've seen this or have any of your members, Jennifer, that participate in this. But Zorro has an option to partner with regional and local distributors to help them fulfill orders and take part of this, all this as well. So do you know if any of your members are participating that I don't.

I don't know if any of them are participating.

It's an interesting program. I don't know the ins and the outs of it. But they, I listened to Ian and Jonathan at the distribution strategy group had Zorro CEO on a while back and they talked about their partnership that they want to bring in regional and local distributors to help them on a fulfillment strategy. So we just got a comment there from, from RP Ron Paulson, who's a retired senior Granger executive. Rp, did I tell that lab safety story reasonably close. You can comment on that as well. And then will address building key building blocks to having strategy for product information, sticking to it. So that's interesting too. Right. There's all those tools out there about that are product information management tools and sharing data and so forth that can become a real challenge when it gets to E Commerce and making sure you've got that data correct. So thanks for that, rp.

Yep. Oh good.

I told the story right because RP knows that story better than anybody because RP was one of the senior executives on a lot of those, the M and A that Granger did in the 2000s and up until he retired a couple years ago. So RPM coming to Lincolnshire soon for pancakes, just FYI. So RP took me out for a great breakfast one morning at a famous pancake place there. So I got to get back there. So, so let's go on.

Why don't we make, you know, make. Is there some key points you wanted to touch on, on the, on the last article here?

Well, it is. I think that really, it really ties into the first one right. Is we're seeing this and you know, Jennifer, you brought up Ohio Power Tools earlier and you know, if I remember correctly and you know, this will know this story better. But weren't they originally Central Ohio Power Tools?

I'm not sure.

I think I read that about them.

If Jason, he'll have to answer that.

Question if he's here would be maybe before my time. I think I read that on their website a while back and they saw the opportunity for expansion right out of Central Ohio. And that's exactly what this article about Road ahead for distributor E Commerce. We won't take too much time on it because we want to talk about some other things this morning as well. But there's just some really good statistics about how fast things are moving with E Commerce. And I think that previous article about the brand building and so forth within your offering, I think that ties exactly to this. There's there's some really good statistics in there. But one of the big things that people are seeing with this. Right is their ability to move outside of their local geography. You might be a five branch company in southern Utah that you know, has a great footprint there, but from southern Utah you can ship to a lot of places through E commerce very quickly. Maybe same day or next day. That becomes pretty powerful. So I think one of the my takeaways was, you know, we're seeing, Tom and I were at an E commerce event for distribution last week and you know, you see some smaller distributors who are becoming fairly powerful because to your point Jennifer, they've really embraced YouTube and Instagram and other tools to build their online brand. And you know what that buyer, if you've got the right information, you've got good reviews which become critical and you can get them something quickly. They don't care if you're a two person operation or if you're a 2,000 person operation. They're looking for something to happen and happen quickly.

Yeah, we have several resources at NetPlus to support distribution. The distributor members that are in our group. You talk about product content. We don't have our own pim, but we have a great PIM partner with DDS Distributed Data Solutions. They have very robust content offering for our members. We're working closely with them now and we were talking about other resources where we found that kind of the one missing piece that we need is to really have someone who works or acts as a consultant to people depending on where they're at in their journey. So whether you're at the beginning of the journey, we have opportunities with several different providers within the group to be able to help get people going on E commerce and you know, again data content and digital marketing solutions and things like that. So we have a lot to offer, but we're working with DDS right now to organize that into a collective offering for the membership and then also to have a person to act as sort of like a, whatever they call them, like digital Sherpa, someone who can, you know, consult with people, talk to them where they are, provide additional resources. So that's going to be something that we're going to be launching in 2023.

You know, around that, around that point. And not to, not to try and do self promotion, but when we were a lot of these conversations we've had what you know, we've seen the demand, if you will, for CRM really pick up in the last three or four months and in talking to people over the last it's because what you just said, right, they've got ERP now, they've got E Commerce. They have customer data they want to have. They need to have a more Omni Channel hybrid sales framework. The CRM provides that 360 view. Whether somebody's buying or shopping on E Commerce, they're buying and shopping in a branch, they're making phone calls. It's inbound, whatever the case may be. Because if very quickly, if you get all that silo data, it becomes very, very difficult, if not impossible to service the customer with that hybrid experience. And I really see the maturity, why we talk a lot about it, the maturity of E Commerce. Obviously ERP has been around for a while, but as the maturity and growth of E commerce has come in and the sort of Omni Channel, it's driving the demand for CRM, which we've obviously like that. But it's the next logical step in that puzzle, right? It's the next piece of the puzzle.

Well, I think too, Tom, that I'm so glad you brought up CRM. I didn't know if you were going to be talking about it, but I'm a huge advocate for CRM. We've been on Salesforce for over 10 years and we were talking about this before we got started with the show. Like another major component aside from that siloed information is the fact that people are all over the place now. So you have remote workers in different places. You may have accountants in one place and you may have salespeople in another place. And when I think for us, the greatest attribute of utilizing Salesforce as a CRM is that our team has visibility to everything that's happening across all the customer interaction that we have. From we have an account, we have accounting seat as an API built into Salesforce and that gives everyone the visibility to see what's going on with every distributor and every supplier in the group. It also gives us the ability to connect HubSpot. So our E commerce platform is connected. So all of the profile attributes that we collect on distributors and suppliers is all connected in with that as well. So I think those pieces of it too are what makes it such a necessity in any business really. But in distribution specifically, it's huge.

To your point, it's. It's interesting. And we see this day in and day out through our sales of Fleet Smart Channel Cloud. Our. Our program is Gartner, I think is the. Who did the research on this that I think it's 82% of CRM implementations fail to live up to expectations and I think it's like 50% of them completely fail. Tom and I were at an event last week. We met, I think four companies who are ripping out a product that they've had, that they bought, that they've had for less than a year. Three of them are ripping out a product they've had for less than a year because what they thought they bought, they didn't, it didn't perform for them. Another one is a nearly approaching a billion dollar a year company well down the path of implementing that same product and is getting ready to pull the plug. And they haven't even launched it yet and washing those dollars away to go find the right product. And the issue that a lot of these people are challenged with was, to Tom's point is they're not solving the problems of this silo data. And what I was on the phone yesterday with a large distributor in the Southeast and one of their executives made the comment and she said what we don't have and I can't find anybody that actually really truly has it in their business is a central point of truth. Show me true north of an organization at a glance. And to Tom's point, that's what we do with lead smart channel cloud, you know, is we bring in that E commerce data, we bring in marketing automation data, we bring in erp, we bring in that silo data from all those places for a central view so an executive can look for anomalies to see what should we spend energy and time on and a salesperson can do and everybody in the organization can do that. So I think, you know, we're moving.

That direction and it comes back full circle. Right. If you're going to use AI and you're going to try and use more prescriptive guidance, which is a lot of what we hear is like we don't want just to have a CRM to store stuff. We want to have a CRM that helps us in the future. Right. Prescribe and tell us what to do. Well, if you don't have data and you don't have good data in that aggregated data or your data is all around Google Docs and spreadsheets and things like that, you're never going to be able to employ AI or employee that prescriptive guidance that you're. You're looking for. So anyway, I know we got off topic a little bit here. I do believe that all of these things that we're talking about, whether it's E commerce or, or whatever, are driving the necessity to have that True north data source. And then the plus side of it is to be able to use that kind of going back to experience customer experience. We were just talking about to take your customer experience to another level which then builds your brand, which then creates this whole flywheel. Right. So anyway, let's not, let's kind of.

Move ahead because I want to spend some time talking about Net plus Alliance before we finish today. But just some continued good data that we see on M and A activity. That's one of about four deals that I think I read about happening last week. There's been a nice spotlight from Newsweek on some household names, both manufacturers and distributors about being responsible companies. You know, it's interesting. I'm gonna, I wanna make this quick little tidbit. I was, I commented on something that Dirk Beveridge had. I think Dirk said he was gonna be with us this morning. Had posted recently about, you know, the Noble calling of. In Jennifer, you know, Dirk, right? So that Noble. Noble calling of wholesale distribution. And, and I made this comment and Ian Heller sent me a note afterwards about it. He's like, so glad you shared it that way because, you know, I. I've spent close to 35 years now in wholesale distribution and just happen to be on the technology side of it now. But you know, I started my career selling hard hats and first aid kits and safety glasses. But people don't understand wholesale distribution. And so when we see things like that in, you know, in Newsweek and so forth, it really excites me because I'll tell people all the time, we'll say, you know, the knife that you're using at the banquet to cut your rubber chicken. Right. The, the shingles that are going on your roof on the remodel you're doing on your house, right. The tires on your car, all of those things went through some level of wholesale distribution. We just don't think about it because they appear in our daily life. Right. But if 75 plus percent of worldwide commerce goes through a channel which is forester numbers, it's probably now higher. This isn't truly, to Dirk's point, a Noble calling.

Right.

And so to see these names in light in, you know, bigger, bigger publications like a Newsweek or. Or so forth, it's great. So Will agrees, right? Dirk is amazing legend, a national treasure. We should. Tom screenshot.

He's so positive.

Yeah. Oh, it was great. We were at an event with him last week. He was. I had had lunch with him the day before. He was gracious enough to call out what we're trying to help people accomplish, you know, with Lead Smart because so many people are used to, you mentioned Salesforce a number of times or Microsoft Dynamics and buying these one size fits all software that comes off the shelf, which is the exact opposite of what we've done with LeadSmart, is we try and make this easy for people and really drive benefits to the customer. And when distributors and manufacturers drive benefits to their customer, they get great adoption of their technology, they sell more, and everybody's happy. So Dirk and I spent some time talking about that over lunch last Tuesday and he was gracious enough at this event to call us out and mention some of that. But I do believe in that noble calling thing. So it's good to see that. Let's talk really quick. If folks, if you got the newsletter, you'll see we've added a bunch of events for next year, including the Netplus annual meeting. We'll continue to add more of those into the newsletter. I want to jump in and Jennifer, kind of talk about 2023 for NetPlus alliance and what you're seeing. But before we do that, either one of you. Oh, we didn't talk about splitters and blenders. That was important. We got to do that real quick. I'm sorry, I was moving ahead.

This was one of the more interesting pieces on this newsletter. Basically what it's talking about and it at a high level is in the work world there are kind of two different types of people, right? There's people that kind of look at work as almost a 24 by 7 adventure and you're kind of always on and you're, you know, you want to be able to have the flexibility that if you need to take a couple hours off in the middle of the day, you do that and you know, all that kind of stuff. And then there's others who want that 9 to 5 and they want to turn off it at 5 o'.

Clock.

And you know, Jennifer, you and I were talking about this a little bit before we came on. It's, you know, there's, there's jobs and different, it's not just a matter of what somebody wants, but certain jobs and certain situations kind of need different, different styles, if you will.

Yeah, I know. I mean, I, I do think it's a bit generational and, and I will say I feel like I'm a bit of both. And I wasn't familiar with what the term was before you had sent the article, but there are times when I just totally separate myself from work and I don't really look at anything regarding work for a couple of days, maybe one day over the weekend. But for the most part, like, work is blended into my life because this is my business, you know, And I think for a lot of business owners, they're incredibly close to what's going on in their business all the time, especially in the digital age now, it's. It's there. Whether you're tracking analytics all the time from an econ site, or you're just receiving emails or messages or in teams or different things, there's a lot where it's overlapping into the areas of your life. But I do feel like there has been a little bit of a shift. Someone mentioned this to me recently, that when I first got my job, when I first got hired and some of the earlier jobs I had had in my career, you know, I felt like it was my privilege to get a job with that company. It was my privilege to work for that company. And I was really, you know, really feeling like I wanted to be there to do everything that I possibly could to improve my position and impress my manager, like, do really good things, make a difference, make changes. And I do think some of the things that have happened are that employees are acting like it's the employer's privilege that they're there. And so I feel like employers and employees, like, have to meet in the middle and be able to make choices and decisions together. We just had to talk about it when we were all here in Lockport for our strategic planning. I'm very much the kind of leader who wants to be sure that the people that are here are happy and feel that their lives are fulfilled as much as their career path is fulfilling to them, and that they have a legacy in the things that they're doing. When we start new programs here and the younger people that work for me start new things, I say to them, like, this is your legacy. You're starting something totally from scratch. Molly just started a new program from scratch, and she would say to me, I don't. How am I doing this? I'm like, just, you're. You're starting something new. So begin, like, with all of your ideas and then start to work through it. And it'll take several steps and a lot of tactics, but it will evolve into something that you own. Cynthia Mazarani here, she did that as well. So we've had some really new things that the young people here have driven and owned, and it's an exciting, you know, way to be in your. In your work every day.

Yep. I Think that's great. I look at myself. I mean, I'm similar to you and Tom is as well. And you know, Tom and I, it's pretty rare that we don't talk over the weekend about things going on in the business or what's coming up the following week or software development or whatever it might be. In my mind, I say I'd like to be a splitter.

Right.

Separating. But I don't know, it's really hard psychologically ever. Even if I was capable.

Always thinking about it. It's always in your head.

Yeah, but it's, it, you know, it's interesting as you talked about, you talk about Cynthia and Molly and your organization, two bright, bright young people, young business people. And, and I was having lunch with one of our software developers and architects a couple of weeks ago and we were kind of talking about that same concept that you said is like, you know, and he is in that world, right. That he has. It's not that he's done this, but people, especially in the technology world, they've almost commoditized themselves. That said, I am going to work wherever I fit best for myself and I'll do what I do for you in that whatever time frame we've agreed to. And it's really interesting to kind of watch that because that is an unique mindset. And I was talking to this young gentleman about this, you know, and, and I was sharing with him much what you described as. I said, you know, because we're a smaller company and he could probably make more money with his skills somewhere else. But he's been really intrigued about what he's working on and building. And I shared some things with him about this and, and he works for Tom. He just happens to Tom. We have an office up in Santa Barbara and I'm about four hours away down here in south Orange county, and that's where this, this gentleman is. So we were having lunch and you know, I was sharing with him. I said, what you are building is changing how wholesale distribution can embrace technology because we don't have that off the shelf product that we were talking about earlier. You're building something that is going to change people's businesses and help them digitally transform. And it's not you're building the latest app that may or may not work well or fail in the marketplace, or you're not working for Microsoft or Oracle or somebody like that, that you're one of a hundred robots coding for a certain amount. And if somebody else has better benefits or more days off, you may Jump. And it really resonated with him of that I can be part of something. But that goes down to tying to building culture. And I think you guys have an amazing culture from what I'm able to see and dealing with your team. But building that culture so that there's a confidence in I'm making a difference and I'm cared about.

Right. Thank you. I agree. I mean I can talk all day long about my team and I think it's truly one of our great value adds that we have at Netflix. Like one of our unique value props that we deliver is that we have a team that's passionate about what they do and also very committed to the growth of the distributors and suppliers that are in the, in netplus.

Yeah.

And you know, they come every day with ideas and commitment and dedication to what they're doing to try to make things better. So we are, we're investing in some, in some technology next year. We really need to bring our portal up to speed. So we have a portal that sits on the front of our Salesforce. Well, sits on top of it. I don't know what you guys would say, but it's a front facing portal that all of the data from Salesforce is fed through that and they have such tremendous ideas about how it has to be much more user friendly and we need to be sharing this kind of information. We need to create this kind of connectivity and utilizing it more like a CRM, allowing people to communicate with each other. So it was one of the things that Alan Bolio talked about at staff. He was saying one of his points for how to be resilient and continue to grow, you know, over the next several years. Before the depression that he talks about about in 20.

Yeah.

Is that how important young people are to the industry and to let them, you know, exercise their ideas in your organization because they've got a lot of good skills to bring to us.

That's good. Well, I'm glad we talked about that. Splitters and blunders because boy, it's a, it's something to manage. I'll close this out with something that this gentleman I was referencing earlier had mentioned. And there's. And I think this works maybe better sometimes in when you're working on technology type products. But you know, he was talking about really setting, setting goals and how he wants to work with his team as our company is continuing to scale. Was talking about the idea of, you know, people being able to have a lot of flexibility with. To Tom's point earlier. Right. About. Well I need to take two hours off in the middle of the day. But it's. We as a group, whether you're using a Scrum system or whatever it is, we have a group, as a group have decided that we're going to solve this issue or achieve this goal in this window of time. And we as a group need to manage ourselves so it gets completed on time because the company has allocated the financial resources of our time and everything else. And so we may find we're all meeting at 8 o' clock at night on something. But we decided that as a group that's responsible to achieve this. We use eos that you're very familiar with in our business. So it's a rock.

Yeah, right.

That needs to get accomplished. Yep. So if their rock takes them outside of some normal hours, but it gave them some freedom. So it's an interesting dialogue that's kind of going on with that that I think is pretty cool. So we, we're gonna run short on time, but I want to talk about NetPlus in 2023 and your thoughts on the economy and how distributors are dealing with stuff and what's the big plans? I know the big events coming up, not till October in Denver that we're looking forward to participating in, but I wanted to get a little bit of Net plug in here.

Oh, thank you for that.

We're fans and so appreciating what you guys do.

Well, I appreciate that we are too and loved having all of the conversations about CRM and your products too, because it's something I'm really passionate about. But we've had a great year here. I think like a lot of folks, you know, the price increases play a role in your overall growth. I mean, we're on pace to be close to 30% year over year. But if I took down, you know, 9% for price increase, I'd say we have a pretty strong core growth of around 14%, which our team works really hard at. We have a sales planning program called Growth plus. That's I think one of the biggest initiatives that my team wants to invest some resources in to be able to make that a much more user friendly product, but both through the portal and potentially going to mobile so that it can be accessible by not just our distributors and suppliers, but people maybe outside, like sales reps that we work with and other rep agencies that are affiliated with our brands. You know, I think that we have a really good focus this year, like a lot of distributors and suppliers that I've talked to of identifying our Membership, we have rock stars, they're up in that top quadrant. They drink the Kool Aid, they come to the meeting, they're transitioning purchases from outside to inside the group. They're very involved in trainings and then taking the lessons learned with those distributors and really bringing that to the people in our group who are not as engaged. So I do always make a plug for groups overall and cooperatives because I do feel like they give a distributor a lifeline that they might not have without being a part of a group. You get access to rebates, which helps your long term sustained profitability. You get access usually to education and training, which we offer, and you also get access to those partners in organizations that you might not be able to get to. So when we survey the NetPlus membership, the number one reason people tell us they join the group and their number one reason for being here is access. So the ability to connect with people, to find resources like Lead Smart or even resources in other business service areas or for a product line that you're thinking about expanding into, it gives people a lot of opportunity to be able to continue to grow their business. And as we all know, it's getting harder and harder with all of the pressures that have happened over the last two years to be a successful business owner. So we're looking to have another strong year. I think it's not going to be quite as robust as this year from the conversations I've had with both distributors and suppliers. But I have to say our distributors in our last industry Outlook survey were incredibly positive about what's to come in the next year. I think everyone's expecting some recession pressures that are going to happen. But, you know, commercial construction is still really strong. Production is still, you know, holding fairly steady. There's, there's still a lot of incredible opportunity that's out in the market for people to continue to grow. And we really came into a message in the annual meeting of being all in looking to the suppliers that are in the group to help our distributors expand their offering to their current book of customers and look to take market share with other opportunities. So we're excited for the year to come. I think we're going to be probably, you know, somewhere around 15%. I think price increases are going to be a little bit less this year. I think people are talking around 5 to 6% for next year and we're just going to keep working to grow.

That's great. I think what we see across the board out there right now is probably what you've seen with most of your members is cautiously optimistic with a focus on that there's good things that can happen. And you know, to your point, right. Commercial construction in particular, there's hospitals that are being, have been on the books and funded for years. Right. There's roads that need to be fixed, there's infrastructure that needs to be repaired. You know, and your members and folks across the board in wholesale distribution, whether it's medical supplies through wholesale distribution that, that are going into those hospitals or it's the plumbing system that's going into that building, all of that is continuing. And so, you know, when we start talking about discretionary spending, that's where I think we see in that more B2C arena. That's where that pressure lies. So I think there's definitely going to be some pricing issues as you discussed and your members are seeing. But everybody that we talk to, whether it's, you know, through our day to day or at events, it's almost like, I want to say almost cautiously enthusiastic.

Yeah, I would agree more with that. I feel like there isn't anyone that I have spoken to that has told me that things are busier than they've ever been. I do feel like there's a little bit, there's some bits of slowdown. I think people have kind of commented on that. I had my distributor advisory call last week. However, I still heard a lot of things and we saw a lot of things in the outlook as well. You know, the CHIPS act is, is putting into production some significant opportunity, tax breaks and investment. You know, I just think overall the oil and gas industry has really started to kind of continue that return. A lot of our distributors that are down like in the Permian Basin are seeing much better year over year results this year and anticipating good things going into next here. So although there are things that I think that they keep talking about, you know, in the media and otherwise, I do feel like we, there's, there's plenty of opportunity out there for us to continue to keep it rolling forward.

I think you're right about that. What we're seeing in the media, Tom says this all the time, right. It calls it a self fulfilling prophecy. So.

Right.

Tom is it reminds me all the time not to watch the news. Right. Watch, watch what we're, watch what we're experiencing and what we're seeing in everybody that we talk to is that hey, everything's going to be fine. I have not heard one person in the entire wholesale distribution network from manufacturer, independent manufacturers, representatives, distributors, anybody in the last 12 to 18 months up until this week, say anything like the sky is falling. Right?

Right.

And we're going to weather through this stuff like we always do. So that's good stuff. So any closing comments or thoughts on the coming year for your organization?

Like you said, I mean, I think the sky's the limit. We have a lot of initiatives in place. It's like you want to do a lot. But we are also really working to focus on what we want to improve and grow. I have a kind of a theme for our, for our team to really be smart about operationalizing the business and being sure that we're focusing on process and being sure that we're being as working as smart as we are working hard. So I've heard that theme, like, from a lot of, of my other manufacturer calls that I've had lately. So looking forward to great things.

Good. So we're going to wind this down. Tom, any final thoughts before we say goodbye for the year?

Yeah, I just wanted to thank, you know, everybody who's been on the show, watched the show, commented all of that. We appreciate it. And, you know, we have some, we'll be back in January. We have some big plans for next year. And I think there's just, you know, a lot of, a lot of good, interesting things that we'll be able to focus on. And Jennifer, thank you for, for joining us today. You've been a great addition.

Absolutely.

And hope everyone has a great holiday season.

Tom, you just jumped up in, in Phil's book. You're okay now, too.

Okay. All right, that's progress. We'll, we'll see what we can do next year.

Yeah, we'll work on that for you, Phil. So.

So I'm, I'm even with Kevin now, Is that what you're saying?

Phil, you're a step behind. He's 50 plus years he's been trying to catch up. He's taller. He's got that. So. All right, have a wonderful.

Happy holidays and thank you so much for having me on. I really appreciate the opportunity and keep it up with the E. Newsletter. It's good.

Well, we're going to get you back next year as well as maybe some of your team, too.

Awesome. Look forward to everybody.

Have a great time.

Take care. Thanks.