Why Customer Experience Is Essential To Growth

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Welcome to around the Horn in Wholesale Distribution with Kevin Brown and Tom Burton. Sponsored each week by LeadSmart Technologies. Tom, Kevin and their guests review the news of the week and dive deep into the topics impacting manufacturers, wholesale distribution, independent sales agents, and the global wholesale supply chain. Whether It's M&A SaaS and cloud computing, B2B, E commerce or supply chain issues, we peel back the onion with our guests into the topics that impact your business the most.

Hey, hey, hey.

Good morning.

How are we doing? Good to see you guys.

Good to see you, Tom.

How you doing?

Good afternoon, Marty.

Yeah, it's afternoon for you, huh? Morning on the west coast here.

We're rolling into the weekend too, so looking forward to. It's a beautiful northeast weekend for sure.

Yeah. You know what, I was we joined in here a few moments ago. A little bit earlier you were talking about weekend plans, maybe a little golf. And I was just thinking about it. You know, it was last night I was chatting with somebody and they were here, but they were had just been looking at the weather and it was 70 degrees in New York City last night and here in Southern California it was 52. Well, there's something wrong.

This is the time of year you can be here and want to be here for sure.

That's right. There you go. Very good. Well, hey, you know what, before we dive in, we always do a little bit of housekeeping this morning as we get started. So we'll do a little introduction. Welcome today, all that you are joining us live and that will be listening later on the podcast. Wanted to share with you a little bit about who we are. My name is Kevin Brown. I'm joined by my co founder of Lead Smart Technologies and business partner Tom Burton, as well as Marty McLaughlin. Marty's the chief marketing officer at Affiliated Distributors, one of the largest buying groups globally for industrial and wholesale distribution. So we're going to chat a little bit more about Marty in a bit. But what we do each week when we get together both live and later on today, this will go on to all the popular podcast formats is we review a weekly newsletter that we've developed that goes out to a few thousand people every Friday morning. It's called around the Horn in Wholesale Distribution, where we kind of consolidate all of the news and M and A activity and things like that and economic data and technology data. We join together, we try and get a guest on pretty regularly and we talk through all of that and how that impacts wholesale distribution. So if you happen to be listening on the recorded podcast, you'll be able to now envision that when we were live here that, that we're actually kind of looking at the newsletter and talking about these specific articles. If you don't get our newsletter and you would like to and see what's happening in wholesale distribution each week, feel free to. If you're on Live with us, direct message us with an email address and we'll add you in. Or if you're listening on a recorded platform, just send us an email. Email address is helloadsmartech.com we'll get you added to that list right away. So let's dive in, guys.

Yeah, and good morning to Tom May. I want to acknowledge him here early again. He just keeps racking up the podcast Brownie Points and, and Floyd and Brian as well. So good morning everybody who's live with us. And yeah, we're definitely interested in hearing some of the comments. I think we got some really good stuff to talk about today.

No, we're going to talk about a handful of different things. And so just to, as a further introduction, Marty, maybe you can just tell us. We're going to talk a lot more about AD and your organization a bit later, but maybe just give us the quick intro bio on you and then we'll dive into the news.

You got it, Kevin. And thanks for having me on board. Both Tom and Kevin too. And I really enjoy the newsletter. It's not often where you get somebody that's knowledgeable in the space to curate the content across multiple platforms, multiple publications to bring the best of the best. And I really enjoy it. So thanks so much for doing that too and really becoming the spark for our conversation today. So again, Marty McLaughlin, the chief marketing officer of AD. I've been with AD just about two years now and really, if you think about AD in two parts, there's the, the rebate part where we're best in class at driving rebates for our members and working with our suppliers to do that, our supplier partners to do that. Then there's all these value added programs and all those value added programs like E Commerce, like our service providers, which you're a great service provider for us from an overall view of our education space, our center for independent distributor leadership, all these programs roll up to me and they're all focused on what our members have said to us and what our members need to drive growth in their organization. So from a rebate side, we're best in class. From a program side, that's the part I'm driving and thinking about. How do we improve Those consistently integrate them to our members and then constantly innovate based upon where our members are going. Before that, I was 20 plus years running my own consulting practice across divisions and across industries with a real focus on helping my clients understand the value they create for their customers. Not what they sell, but what value they create. And before that, I was with a big consulting company called Accenture now, what was then known as Anderson Consulting.

So that's Anderson Consulting back in the day. All right.

That's right.

Yeah, that's something. Well, you know what, And I think that's that, that tie in that you described there of helping, helping folks understand their value and positioning, that, that is so powerful and such a great crossover into your role at AD now as well. I think that's, I think that's fantastic. Good. Well, we're going to talk more about that and about AD at the back end of the broadcast this morning. But. And let's dive into the news, huh?

Let's do it. If I can get my screen to move. Here we go.

All right, so first topic we're in, by the way, for those listening in versus watching with us. You know, again, we're looking at a screen here of our newsletter that goes out each week to that. And one of the first things we talk about typically each week is a little bit of economic data. So, you know, this talks about Fastenal, one of the largest wholesale distributors of industrial products, a publicly traded company based in Minnesota, talking about a little bit of a red flag that they're seeing based upon some of their results. We're kind of early into earnings season now that are showing some little bit of red flag about the impact of kind of the broader economic slowdown that we're seeing out there. Starting to hit into the manufacturing space a little bit.

Yeah, I think this is pretty, you know, and I think this is probably what we're going to start to feel over the coming few months is the cost of capital is higher for everybody. Right. So whether you're building a building or you're, you know, construction or whatever, the cost of capital to get new loans, to get new capital is higher. I think what happened is, right, a lot of people had procured capital prior to the interest rates rising a lot, so they were able to continue with their projects and so forth. But as that starts to move forward and the cost of the cost of loans and cost of capital gets higher, then things, you know, people think twice and they slow down. The other thing that if you really think about it, the cost of capital was nearly zero. Nearly for what, 10 years, 12 years, something like that.

Yeah, I didn't get enough of it during that time.

No, we didn't. We absolutely did not. We should jumped on that earlier. But you know, so a lot of companies built their whole models. You know, back in my day I used to do some stuff with real estate and real estate funds and things like that and they built their whole model based on cost of capital. And when that cost of capital switches, all of a sudden your models change, your financial models change and then everybody starts to look at something differently or look at things through a different lens. So I think, I don't know that it necessarily means that demand is down of what's happening. I think that there's just more scrutiny going on with the cost of capital. That's not specifically what they said in the article. That's more my take on the whole thing. But I think that's likely what we're going to see over the next few months.

Well, I think what I found interesting with that and it ties to your comment there about Tom about cost of capital. In fact they made the comment here about non resident sales to non residential construction customers declined for two quarters in a row. And that's tying to the underlying demand for industrial capital to get, to get that capital to do that industrial related construction. Right. It's. If you didn't have the money ahead to think to your point, right. If you didn't have that money tied up before interest rates went through the roof, right. And have that available to you, you're probably going to push off a little bit. And I think interest rates, while they've fallen the last two weeks in a row and hopefully we see some plummeting of them through the next, the rest later in the year I guess is probably what we'd see it. So I think that was a little bit of a tie to that as well.

Yeah, no, and I mean inflation has dropped, right. Interest rates have not. Are not dropping yet. But inflation is slowing or showing some sign of slowing. But you know, one of the things that people forget is that a lot of models and ROI calculations, if you want to look at it that way, are based on the cost of capital. And when the capital cost goes up, then those models can definitely change and it causes people to look at things and projects through a different lens on all of those things. So again, I think we're going to see that over the coming months and my guess is we're not going to get back to zero cost of capital anytime. Real soon. But it's going to be optimistic. Pardon? Speak?

Optimistic. Let's get there.

Okay. All right. So good.

If we want we could kind of jump ahead. Marty, do you have any other thoughts?

You know, you know, I would say you got to question it. Number one, coming from the independent distributor and supporting the independent distributor. So, so but you know, I would say from the conversations that, that I've had from those in our member network and member community, things are still going well, things are still strong. Backlog is still there. The group is very positive about the future but they're cautious. I mean they're just taking more cautious approach to the overall view of what looks like the next six months could be a little bit different. But we've been hearing this saying it for a while, but business continues to be really strong and for AD too.

That's good, that's good to hear and I'm glad you took that tact on the of the independent side because this is referencing, this is from annual report stuff, right? Earnings report I should say from, from Fastenal. What's interesting, there's two last things I wanted to mention with this. We spend a lot of time talking on around the Horn each week about E Commerce and there's two factors that came out of this. It said that in Fastenal's case here and you know, by the way this article was from what's Brook's last name met her Brook Sutherland from Bloomberg. Brooke was a keynote speaker at ISA's Industrial Supply Association's fall event in Houston, Orlando last, last November, December. Anyways, really great insight. She covers M and A and wholesale distribution in general. But so she's, she put this particular article together but it talks about two things that and many of Marty in this case AD's members, some of the larger ones in particular are big on long term supply contracts, inventory management, service vendor owned inventory and vending as well. And I know we've got Andy Mitchell who with Mallory Safety Supply joins us almost every week. I don't know if Andy's with us today or not, but those are things that Mallory's really good at as a, as a loyal and longtime AD member as well. And a lot of the larger regional and or independent national distributors do that. And the mention here was that Fastenal didn't sign as many new contracts as it had hoped for in their inventory management services that are embedded at onsite customers. So that ties back to a softness as well because you know when you get VMI going on or internal tool cribs that you're managing and, or vending at a, at a manufacturing plant or something like that, that is a sticky account, right? You love that. And they just, they didn't do as much of that. So it'd be interesting. And you've got some events coming up Marty, in the next month or two with some of your members. I'd be interested to see what some of those folks are or if anybody here has any comments if they're seeing, you know, vending system contracts lowering or any other type of VMI type solutions lowering as well.

Great point Kevin. And as you mentioned we'll talk about the meetings coming up in a little bit. But that part of connectivity, right, this aspect of being almost subscription based in terms of your connection to your customer, that's probably a signal that people aren't making longer term commitments to the overall supply base too. So it's still there from a transactional standpoint, from a week to week standpoint. But those longer term commitments might be holding back right now because of the future look too good.

Two last things on this topic and we'll move ahead. But in this particular article it mentioned too the Fastenal was looking at steering smaller customers their E commerce platform to focus time and energy towards their larger customers. The reason I love to bring that up is we, you know, we, our audience is a mix of national accounts or excuse me national players, publicly traded players down to you know, the five person regional local distributor that's independently owned and or family owned and kind of everything in between. And we talk just about every week we spend some time talking about E commerce and the growth and of E commerce and it's not just slapping up some product online and maybe hoping somebody buys. Tom and I were on a call with a large new customer this morning and talking about that, about being able to do quotes online and online purchasing and whether it's EDI or directly through a website. Regional, local, independently owned folks need to up their game and continue to up their game in the e commerce world because the large guys are putting huge dollars at that whether it's a large independently owned or it's a large publicly traded company throwing big money at that E commerce opportunity to bring those smaller customers in and the bar is rising of how you need to be able to do that. So we always kind of like to talk about briefly about E commerce and continuing to up the game for wholesale distribution.

I couldn't agree anymore and just felt like jumping in on this one. We do have our E commerce solution, E Commerce team that is helping members to go live with more than just a website, but really an overall view of ultimately how to extend the customer experience that we're delivering, they're delivering to their customers. And the purpose, really the vision and mission of that group is to make sure every one of our members is on a digital journey. Because if not, you look out five years from now those, those, those distributors that aren't are just going to be at a disadvantage compared to where the investments are going. So our overall drive is to make sure every one of our members is on a digital journey and helping them do that.

That's great. Love and love that phrase too. You know, it's interesting. I never like to tell anybody and I've heard people say this, right. If you're not up in your digital game literally weekly, right. Or focusing on it in an organization, I've heard people say you're going to be out of business in 36 months or whatever the time frame. I wouldn't ever say that. What I would say is your business is going to be very different than if you, if you do this, it's going to be very different and if you don't do it, it's going to be very different to the negative. And the question is, will you be in business for the long term then does pop up. Before we jump ahead, one last comment that came out of this article. This is, this is either super positive or doom and gloom. Brook ended this article and said so the question is whether the slowdown that's happening is now merely a lull before the wave of spending linked to so called mega projects and government stimulus starts to filter its way down or whether it's the start of a bigger problem. We don't know. I want to stay positive. Right. And hope things are going to move in the right direction.

Well, we shall see. Hey, by the way, I just want to let you know there's a little bit of problem with the comments coming in. So we actually do have some comments that I'm looking at on LinkedIn that are not getting into our feed for whatever reason. Speaking of technology. So anyway, just, I'll keep an eye on those but Kevin and Marty, you may not see them on the screen here.

We'll count on you for that tomorrow.

Yeah, I'll be comment air traffic controller here.

That's right. I knew we would find the right role for you.

Yeah, we all have to be good at something.

You're the comment hostess.

That's right.

Okay, perfect. Next. Next article came from posted in Industrial Supply magazine, new manufacturing tech orders nearly 50% above February's average. You know, if you guys have some key thoughts on this, feel free to share it. I was going to recap it and kind of move to some of the more meatier stuff. We wanted to. We all agreed we wanted to talk about. But you know, we see this manufacturing tech order information comes out pretty consistently. And I think, you know, what we're seeing throughout this is. And the crux of this article that I took away was things aren't as good as they have been, but they're still great. And that in the manufacture tech side, manufacturing tech orders that I was just looking at this, it said, despite the fears of manufacturers show a broadly positive outlook for business conditions over the next 12 months. And that they said that although many had anticipated a reception to take hold, recession to take hold at the beginning of 2023, we're not yet seeing that in the data. And while declining somewhat, manufacturing technology orders remain at a historically elevated level. So it's what we see in a lot of places relating to manufacturing and distribution is things are booming. They're just not booming as much as maybe they did last year. Marty, did you kind of see that in your member discussion?

I would say, you know, if you think about the element of growth is there, but it's at a declining rate potentially. I mean, it's still there. I mean we're overall, we were just talking about this earlier, ahead of last year and you have great expectations for beating budget, but these are some of the biggest, best times that we've had over the last two or three years. So there is an element of normalcy kind of setting in and that's ok too. I mean, there's an element of a supply chain kind of. Right. Sizing and catching up. The element of focusing on your best customers has been driven into how our distributors had to play. Now they can start thinking about growing beyond their best customers into new markets and new customers. So it does give a breather. Kind of come back and say, instead of just running and catching up strategically, where do we want to go next? And that's the conversations a lot of them are having right now, too.

That's great. Very good. All right, let's kind of jump ahead. This is a.

Before we go any further as my role as comment facilitator here.

Hostess.

Hostess. Comment Hostess.

Yeah. Comment Hostess. So first of all, Brandon was feeling. Brandon Lee was feeling upset that we didn't say good morning. So I really want to acknowledge Brandon. Good morning to Brandon here. And also Andy Mitchell is with us as well. So good morning to both of you. See, aren't I doing a great job?

I'm astounded. This is phenomenal.

Yeah.

In fact, you might have even heard Cooper, the wonder dog. He was just barking in praise of you, Tom.

Yeah, no, I'm very impressed on my handling.

If I could jump in, this would seem like tension oriented until I just found out these guys have known each other since they've been five years old.

Yeah.

If, if you back to that reminder. Right. Tom and I are our business partners, co founders of, of Lead Smart Technologies, which is a customer intelligence, CRM and channel collaboration platform. And yeah, we've been friends since kindergarten, so we don't, we don't, we don't hold back on throwing any rocks at each other. So our, our, I can just tell his wife if he misbehaves and you can tell mine.

So. All right, so let's move on to customer service here.

Yep. So this first article, it comes from npr. It's called Press one for More Anger, and it talks about Americans fed up of customer service. I think you had mentioned earlier, Tom, that a regular frequent viewer, listener, participant with us is Tom maybe. And Tom and I did some work together a number of years ago. Tom's one of those people that can make Excel do things that you would never imagine from a sales operations standpoint. And he's a whiz and does some great, great work, the companies that he works with on sales operations, sales planning, sales management stuff. But he shared this article with me early last week and it didn't make it in this week. But, you know, this was interesting. I'm going to throw this to you guys first, let you guys kind of take a shot at this customer service piece of it first, and we'll add on to it.

Sure.

I'll take a cut at this. So, you know, we've talked about over and over, right, the younger buyer, the millennial buyer, and that the millennial buyer, the younger buyer's tolerance for a poor buyer experience is not very high. In fact, you know, as older buyers like we are, Kevin, we're probably a little bit more tolerant of a poor buying experience. And when I mean buying experience, not just the purchasing, but the post sale experience, which was the customer service and everything that goes with it, whereas younger buyers are not tolerant. And what you see in this article, I think really, really spotlights that is that whether it's pre sale or post sale, the experience that is expected or wanted is pretty high. The bar is pretty high. And you know, I recently had to call a customer service thing for something, you know, where you had to like, you know, press 1 and then press 6 and then press 8 and like 14 different things and then it ends up going around in circles and infinite loop. Infinite loop, right. All that kind of stuff. That's not a great experience, but it's something that I think we grew up with. So we put up with it, but for others, they don't put up with it. And as the buyer gets younger and younger, the bar for not just the purchasing experience and the research experience, but the bar for the customer service and the post sale experience is continuing to rise and go higher and higher. And I stated on a previous episode that I really believe that the buying experience, and I'm putting buying in, or maybe I'll just say the customer experience, which is all the way from the pre sale, pre purchase, post purchase, all of that from one end to the other, that is going to define your brand. In fact, it's going to be more senior than your brand. So you're going to be recognized. Our companies are being recognized by how well we provide that buyer experience. And it's in a lot of ways more senior than our brand and more, even more senior than our products or services or what we're actually selling. And I think this article just further illustrates that. I thought there was some really, really, really good data and great points in there, Tom.

So many great points. I want to pick up on what you said and the two words that first jumped out at me were expectations and experience. And, and you know, this aspect of there's no boundaries around these things, like it can't be a good experience or expectation for, or retail. And then I hold those aside when I go into a distributor and say, okay, I have different expectations or experiences. No, our, our expectations and experiences are being shaped wherever we shop, online, in store, everywhere. And we carry those with us everywhere we go. So this aspect of rising, you know, lifting the bar, it's not just within an industry, it's across industry. So I can't put those on hold when I show up in different locations or have different opportunities. So that element of shaping expectations and experience is absolutely true. And, and we, you know, and your benchmark is not just your industry too. So that's important. The other part is this aspect of brand, it is so important. I mean, I get up on the soapbox a little bit about this stuff. You know, overall, what you sell is going to be at a price point and quote, unquote commoditized. The real value and the, where the value is migrating, of course, is those services that you wrap around it ultimately what you solve for your, your customers. And to your point, Tom, the experience, the unique experience you create and that is your brand, when you put all those together, that defines your brand. And if you think it's anything about that, you know you're mistaken. It is absolutely relying on your experiences that you're creating.

And Marty, you know, from your role and from, from working with people, do you believe kind of what I said is that that experience is almost going to be the catalyst for that brand as you go forward?

Absolutely, yeah. Sorry, go.

No, I was just going to say it's not, it's not just something that's on the side. It is the catalyst that then drives all of those other things that you just went through.

Absolutely, yeah. I would say it's the great differentiator. I'd always start and come back and say solutions in terms of what you're solving for your customers, that's why they come to you. But that element of experience is the true differentiator, especially when there's a proliferation of touch points that need to be integrated and seamless. And it's so kind of people oriented too. So this aspect of turning this element of complexity and confusion across all these touch points into a seamless, orchestrated, authentic experience is truly the essence of future brands. It really is.

Those are great, great takeaways for me with what you're just saying there, Marty and Tom's intro to that, that piece of that from the brand experience, I, it really comes to my mind and, and you know, I, I told Tom when we decided we would. What are we. We're at episode 36 today, Tom. I think 36 weeks we've done this. 35. So when we first got started on this, I said, if, if I have to be perfectly politically correct and, and anything has to be scripted or I, I can't have a cup of tea with me, then I don't want to do this. So it just this article mentioned, as they talk about technology relating to customer service, they reference, have you ever tried to contact your Internet provider about anything? And you know, you think about that we use the phrase infinite loop, right? Which is very. That's the street that you enter as you go to Apple's headquarters. That's the street that goes around it. It's. They call it infinite loop. And in my mind, infinite loop, though, goes back to, you know, I get stuck in this circular reference back to A database idea. But it's just this horrendous experience, right. And this article talks about, right. You call, you get the voice prompt, you click through. You maybe speak to it about what your needs are. Then it goes, pushes you on somewhere else. It asks you half of the same questions again, you might do that three times before you get a person on the phone and then they ask you all the exact same stuff, right. And then they're going to transfer you. And. And you think about that model. I look at it as, you know, I'll. The reason I'd mentioned that about being politically correct is I'm going to throw a rock. Here is where my parents live. They. Their only choice up until recently for cable television was Frontier. And, and I don't know if they're big frontiers, big where you are in the East Coast, Marty in the Northeast, but you know, on the west coast they've got a much bigger presence. I think they took over Verizon's.

Okay.

Verizon had been doing. But anyways, the only reason I say that is I had to go online to try and solve something, to help my folks with something. And I could not. I can't see how they're still in business when you look at the reviews and the experiences that other people have had with them in their customer experience, right. Of how it is to do business with them, whether it's the technician that arrives that's four hours late or it's anything. And the reason I bring that up is there are competitors of theirs out there in that space that have solved all those problems.

Right.

So it's not that they're incapable. Right. There's a brand and again, you know, throw the rock where it's due is there's an opportunity for these people to do the things that you talked about, right. To raise their game. And it doesn't matter whether you're an Internet service provider, cable provider, or your XYZ distribution in Omaha that services manufacturing plants. Right. That experience that Tom brought up is just becoming key.

Well, and the monopoly companies like Frontier and the cable people, right. They just feel like they don't have a lot of choice but. Or they don't have to do those things.

They don't have to.

But against that will catch up. We do have a few comments I want to hit on here before we, before we go on. And Brandon, you know, mentioned Marty on your point. He says that's so spot on that we can't separate B2C and B2B when we think about our buyers. The B2C experience sets the bar for B2B buyers.

Absolutely.

And I think, you know, whether it was Amazon or whatever, and any of these B2C transactions, those are the expectations. To your point, Marty, we take into the business, we don't go, oh, I expect to buy this way at home and this way in business.

Right.

That line is being blurred. Tom May brought up another good point which I thought, which was, you know, we talk a lot about AI here week after week, and he says AI can't replace the human empathy and element of direct contact. And it'll be interesting. I think that a lot of companies will expect that AI is going to be like this silver bullet for customer service. Obviously, I think it can help and it has a place in there, but it's not just, oh, now I don't have to worry about this anymore because I have AI to take care of it or a bot or so. That's another danger that I think you'll see companies trying to do is rely on AI all the way through and.

Go ahead, Tom.

No, I just going to say. And then there's quite a bit of trash talking in here about Kevin, but I'll, I'll hold off on that.

Those comments, I didn't see that. I'm able to now see on my phone here, these comments separately. I think Andy Mitchell just took a big stab at you here. So Andy called you my. He said. He said, Tom is Kevin's Ed McMahon.

No, that's what he meant is Kevin is Tom's. I think he just got it backwards. It's all. That's fine.

It's not at all the case. Andy doesn't make mistakes like that. Tom, He's a pretty sharp guy.

Okay.

Marty, you know Andy, don't you?

Yeah, I think so. I'm pretty sure. Yep.

So Andy's VP of operations and all things safety products.

Oh, sure.

Yeah. And he is, he is as, as gurus in the safety marketplace come. Andy is, is the leader of that pack and he's an okay guy, too.

That's awesome year.

Yeah.

So I could comment between you, between you two, it's. And really tying both those comments together, too. And this aspect of when you pick up your cup of tea, which you're doing right now, Kevin, and this aspect of the, the human part of the brand, this is where, you know, when people talk about where do our core values and our culture show up and, you know, this brand, this experience has to be authentic. Right. So, you know, if it means that you have a cup of coffee or a cup of tea. You know, if this means that you're more informal in your engagement, if this means that you're, you're, you know, more kind of holistic or spiritual, like those things can come out. Like, ultimately, it has to be authentic and it has to meet your, your customer needs. And, and this is where to me, the investment and culture and core values is critically important because this is where it shows up every single time in the interaction between your employees and your customers.

Yep.

I, I think that's, that is a great kind of recap on all of this. And in our, in our organization, we're working really hard right now on what is that culture of as we scale the company that Tom and I have. And, and it becomes critical.

Right.

And if you, my view of it is if I can't be transparent and I can't be authentic, I don't want to be involved. All right. And people resonate typically or, or I want to be around the people that. That resonates with, so they can be that way as well. You know, and, and I think there's a lot of companies and Tom made that, you know, the comment earlier. Right. If you're a monopoly or you're just so big that you're going to continue to do fine regardless.

Yeah.

It's sad, right, that people are willing to, to go that direction. So this actually transitions really well into the next article we posted today from Smart Brief. They were referencing that the, the. I think it's an HBO show, a succession. I've seen like 10 minutes of it in a, like flipping channels in a hotel one night. And. But it talks about, you know, a family and a family media empire. I think they reference it. It's kind of loosely based on the, the Murdoch family. And. But the point of that whole thing is that they call talk about using your own product and you know, this is where that opportunity. And I think this really ties to wholesale distribution. Right. And I think a lot of lot definitely in the independent side of things is we're growing. We're. We're experiencing nice growth. We've done things a certain way forever. Maybe we started to plug some technology solutions in and in the leadership role, we're so focused on where we're headed, we sometimes can miss the boat on. Is our customer experience the same to. Back to what we talked about with the previous article and about experience. Right. And what is the brand? How is my brand look in the marketplace? I know, I know I've been a market leader all these years. Am I still. This article is kind of interesting talking about, you know, when was the last time that, you know, a senior executive picked up the phone and ordered something from his own company?

Right.

How was the experience of when your company shipped you a box of something versus Amazon's experience that your customer has as well? And I just thought this, this article kind of tied nicely into that whole customer service idea.

Yeah, yeah, completely agree. It was, I think, a really good dovetail because it is a good way for you as an executive in your company to look at it through the other lens and, and go through the experience yourself and see what, you know, how you felt about it or make that phone call and, and go through the infinite loop as you talked about and Right. All of that, you know, be the undercover boss, you know, that kind of stuff.

Well, that's, and that's. They even use that reference, I think in the article of that undercover boss. And you know, I've, one of my wife's clients was on that show and, and going out and seeing his franchisees and it was pretty astounding. So I've watched that, only probably watched it like four times, but the times I've watched it, those CEOs kind of got a little bit of an awakening about what they thought about their brand and their company versus what was real.

Yep.

You know, and I think that's key. Right. It's, it's easy for a senior executive to approve the cost of a new phone system because it's supposed to do all these things, but what happens when they call in to talk to customer service? Did it help them?

You know, that's a great point, Devin. The couple things is I dropped down notes as I hear you guys talk that the thing I put down there is traveling the journey of your customers and doing that at the highest level of the organization too. And it's extremely important. And I think one of the great traits of a great CEO and the executive team is being able to see things at the 50,000 foot level and then seamlessly going down to the 5 inch level and saying actually from this best laid plans, how are things showing up to our customers today? Just a great kind of recent example on our website we have joined and Bill Weisberg clicked on joinad and he didn't like the experience of the Joinad click button on our website. So that element of Bill getting ingrained to see every touch point in the organization and then we went looked at it, he was absolutely right, we fixed it and it's a better experience going forward. So it's this element of just being able to see it from the eyes of the prospect.

Yeah.

Is a great reflection. It really is.

Bill went and walked a mile in a potential customer shoes. Right. That's great. That's good. So well, let's jump ahead. Just kind of three things that we every week we do this industry scuttlebutts and things going on in M and A and so forth. Blackhawk Industrial, one of the largest independent wholesale distributors in the industrial space in North America. Longtime ad partner and member as well, just did another acquisition. I think that gives them seven additional locations throughout the south central southeast part of the country. So good for the folks at Blackhawk. We're going to talk as we close out today about some upcoming events. Next week is the industrial supply association's ISA 2023 event and I know there's four or five people from Blackhawk that are going to be there. So that's great that they're, they're going to be supporting that. So that's a positive. We want to move a little quick because we want to talk, spend a little time talking about one last topic and then we want to chat about AD a little bit. But Tom, before you go too far with that, I thought it was really interesting. If you get the newsletter, take a look at that article. It's quite interesting that that MSC Industrial Supply is taking a play in a e commerce deal with a software SAS software company and they're going to become an exclusive e commerce distributor of the metal working products for machining cloud. So that to me and that's probably, we could probably spend a half hour talking just about that idea of you know, a metal working company that started out as a metal working company. MSC is I think Manhattan Screw Company is the original acronym for that and their migration into technology. It's pretty cool. So do you guys want to talk really quickly about that last little good read that. I'm sorry the tech spotlight about some actionable marketing lessons from Chat GPT.

I thought it was pretty straightforward, you know is kind of along those same lines of some of the things we've touched on today is that you know Chat GPT is a great way a lot of times to jump start stuff or trying to blank page syndrome. And I think there is obviously more and more need that will, you know there will be jobs that will be replaced or augmented. Maybe not replaced but augmented for through AI and ChatGPT. But I think it was a good practical article about some of the things, you know, where you could Use it and maybe some places to not over overestimate its capabilities. You know, on your end, Marty, be very interested, you know, as leading a marketing team, are you seeing, you know, the use of AI and ChatGPT in your organization and what are people's thoughts on it and are they nervous about it? Are they excited about it? Kind of where you see it, it's.

Almost the, you know, the element of looking at it and seeing where it applies. And I think everybody's kind of looking at it with, with a different eye right now and just trying to get a sense of, okay, where we're at today versus where we're going to be one year and two years from now too. So I don't hear a lot of elements of concern, but more around the aspect of how can this apply to my business to take advantage of it. So it's getting a lot of press and people aren't just kind of sure, you know, from our organization to other organizations where it applies to them. At this point too, I think these.

These kind of six steps they talk about are very helpful. Right? Because I think what to. Tom, to your point earlier, I think people are trying to start getting their head around this. So they're talking about, you know, ad copy, things like that that a marketing team could use. Was the first one they said you use it but understand it's, don't rely on it and understand it's, it's limits that it has and where some of the challenges could be and where it needs human input. The third one was it's great for repeatable tasks that it talks about that you may need to do ongoing repeatable steps for, for searches on whether SEO or whatever it might be. Fourth was it's an effective cure for writer's block. That has helped me many times in that place. And they said it's best used to plug ad hoc skill gaps. And so said, you know, if you're a web developer, don't use chat GPT to build a site from scratch. If you're a brand marketer, you don't want to call on a developer for quick website updates. You can go ahead and use chat GPT to give some segments of some changes to a website, but not building one. And then the last thing it talked about was mastery as a differentiator. And that's really something Tom, we've talked about both on the broadcast here and personally. It's really understanding how to use it. Right. The prompts that are going to go in to any type of AI tool, whether it's ChatGPT or any of the other ones, the prompts and how you ask things and then how you refine that is really going to define what type of results that you get.

Yeah. And as the AI gets more and more powerful, the prompt cape, the prompt ability will become more and more important. Right. Because as you get more power of the AI behind it, there's more that you can kind of, you know, get misled or get wrong feedback with the wrong prompt. So, yeah, that's going to be a real, it is a real skill and it's a skill that companies are going to have to start to really develop in their arsenal.

Tom, if I could add to it, it really is this. We had somebody coming to talk to us about this and it's training the algorithms over time. How do you train these algorithms and tying it to marketing and going back to a conversation you started, Tom, is around the brand and I come back and say brands are conversations. What conversations do we want to own in the marketplace? And from that you could start potentially training the chat GBT of what those conversations are. And it could help you with content, it could help you with those elements of, of getting some knowledge out of the marketplace. But I think you train it through something around your brand, which is what conversations do you particularly want to own in the marketplace.

Exactly.

Great point, great point, Marty. Thank you for that. So let's kind of jump, jump out of the news for today and those topics. Unless anybody had anything to add. I wanted to spend a little time talking with, with Marty, just kind of a, you know, we have people internationally that join us as well quite regularly, Marty, but maybe give us just kind of the, the quick overview tour of affiliated distributors, markets, you serve, that type of stuff. What, what, what does the future look like? What are your members seeing? Whatever you, you, you kind of tee that up and we can chat about it a little bit.

You got it. So I'll give you kind of the, the quick demographics here. When you look at the collective sales of our 850 plus members, we are over 70 billion strong in independent sales throughout our marketplace.

So that's 70 billion with a B, right?

That's correct. So that's our members selling to their customers. It's over 70 billion last year too. We're at 850 members plus and growing three countries. So we're throughout North America, Mexico, US and Canada and across nine industries right now too. The element of sales that go through our network from our members to our partner suppliers is 20 billion. And that's I'm just looking at some numbers here. 67% increase since 2019, which shows the overall growth of our members converting business to our suppliers. Rebates 1.4 billion, up 89% since 2019. And that's money that goes from our suppliers back to our members for them to reinvest in the independent model to grow.

So that's just kind of pandemic. What pandemic happened? Right. It's over.

I heard, I heard it's over, which is great.

I mean those results would suggest there wasn't one. Yeah, well, it's certainly didn't impact your, your members in the way that you might think one might.

Absolutely. And Kevin, going back to the meetings we were talking about earlier and I had the opportunity to walk around these meetings and just talk to our members around what is the limitation to their growth and it really is around getting people to join their business, you know, and it was really not so much around kind of customers buying but you know, the overall talent and resources to actually make that happen. And that continues. And we're in a, you know, you look at the demographics of the US we're just in a, in a tighter spot that's going to continue to go forward too. So I like to say from an overall view beyond the rebates, we're many companies in one. And I touched on this earlier, we're an e commerce company where we have 6.5 million SKUs that we deliver deliver to our product content to deliver to our members to drive their empower, their e commerce capabilities. We're a training and development organization and we're launching something called the center for Independent Distributor Leadership to help the next generation of leaders lead independent businesses. We heard through kind of many conversations, succession planning is a challenge of who's going to be running these businesses next. We're stepping into that with a four year program to help the next generation leaders to move forward. Kevin and Tom, you're part of our infrastructure support. So we go in and help our independent distributors grow their businesses from areas of not selling what they sell, but supporting their businesses in terms of technology, CRM and every bit of infrastructure we can bring to them. We're a marketing company also where we do planning between our members and suppliers where they plan together, grow together and really attack markets together. So and the last one is we're a sales enablement company too. When we have a rewards program that we make sure that our member sellers, and there's 2012,000 of them in part of our ad rewards program that are connected to our members and selling their products every day and getting rewarded for that. So ultimately everything we do is because we're member owned. Everything we do is in connection to our members and suppliers and ultimately whoever we are today, we're going to be very different in a year or two, but all based upon the needs of our members.

Hey, can I ask a couple questions, Marty, on the member seller that you were talking about, is that a reward that goes back to the individual salesperson?

It does, yeah, absolutely. Tom. That person standing across the counter from the customer who can influence that sale has the opportunity to engage the customer, talk to them about their needs, making sure they're delivering upon the best needs. And if there's an element of moving that and converting that to an 80 supplier, that's where they'll get rewarded through the ad reward so that they can transfer over to great gifts for sure.

And then the second comment I just wanted to make is from what you just described, I would see that ad and buying groups, possibly in general are a real catalyst to increasing that customer experience that we just went through. All of that education and everything you're doing are all to try and help and enable your members and your supplier members to ultimately provide a better customer experience, whether it's their internal actions or their external actions.

Tom, you're a great point. So this certification that we talked about, certification processes of a cidl, we are helping the next level generation of leaders. We have a solution based selling certification. So moving from product selling over to solution based selling, which will help drive the top line. And then we have an operation certification that will make sure that we're helping our procurement teams and our members and our operations teams to understand the strategic direction of the business and drive profitable growth. So we're executive sales and operations that we're trying to drive an experience for.

So two things I'd like to kind of touch on before we wrap up today related to all of that, Marty, is your organization. There are varying. A lot of buying groups out there. Many of them are very narrowly focused on great point welding equipment as an example. Right. And that's, that's a great group over there. And there's multiples of that in that category. AD crosses a lot of areas of wholesale distribution. Seven divisions, is that right?

Nine industries. Yep.

Seven events, I think. Is that right?

Closer?

That's right.

And then we have a fourth industry event too, for sure.

Yep, yep.

So.

So we go everything from decorative lighting to gypsum and drywall and metal studs for a Building and kind of everything in between. That from an industrial supply, safety supply and so forth crosses over into ad, correct?

It does. And again, can we follow our members on that? So when our members come back and say not only am I in plumbing, but I'm in decorative brands or I'm in plumbing and vac. So we really developed the multi industry approach to meet the needs of our members to make sure that we're growing to where they're going and that's not going to stop. We're going to look at industry number 10, 11 and 12 and in adjacencies to where we're at today. So absolutely, that's a key part of our value proposition is this multi industry approach.

Last, last question briefly before we wrap up Supply Force, that's another part of your business. Maybe you could give a little recap of how that works because I think that's a really unique benefit for ad distributor members. Maybe you could just give us a quick overview of Supply Force.

You got it. It's, you know, a sister company of ours. I don't know the legal connection, but it's a sister company of ours. And this aspect of. When you think about that collective element of 850 members spread throughout the country, North America, when there's a large national buyer, let's say a Boeing, that that needs an opportunity to meet the needs of their product purchases. To do that with one independent distributor is impossible. When you do it across the entire view of 850 distributor members, then it becomes possible and that's the coordination that Supply Force is bringing from an overall view of meeting the needs of national buyers and driving that down into our network of members to get the service and product they need when they need it to. So it is a coordinated effort that Supply Force puts in place to take it from a territorial view to a U.S. view or north America view.

That's great. I think that's a really neat tool.

Right.

Because if I'm a local distributor in Arkansas, but I participate with that Supply Force, I can now have business with Ford Motor or absolutely, whoever it might be at a national account level. I can participate and compete against the large nationals. But that's saying so great, great feedback. So great day. Marty, thank you for being with us. We're going to see you at some of the fall events, if not sooner, that we'll be participating with affiliated distributors as well. Great feedback. Marty. Really loved some of your thoughts and comments today regarding brand, regarding, you know, customer services. We talked about and really changing the experience and that drives back to all facets of the business, including the technology business that we're in. So, Tom, before we go, anything to wrap up with?

No, I apologize that our comments and everything got a little messed up, but I think we caught most of the relevant ones. And thank you everybody again for, as always, for participating and jumping in and yeah, have a good weekend, everybody.

Have a great afternoon. Great weekend. Be safe, do good things. Foreign.

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