The role of the electrical distributor in the commercial/industrial lighting market attracts plenty of debate among independent manufacturers reps. Some lighting reps think distributors don't add much to the equation and prefer to work directly with building owners, architects, lighting designers and manufacturers.
KSA Lighting rejects this mindset. Instead, the 30-employee lighting rep based in Hanover Park, Ill., not only factors electrical distributors into its equation but also relies on electrical distributors to bring in business.
Jim Konnerth and Jim Williams, two of KSA Lighting's partners, believe the firm has more to gain by developing partnerships with electrical distributors that allow both entities to profit on lighting work.
KSA Lighting wins a sizeable share of Chicago's lighting jobs as well as well as many smaller lighting jobs distributors send their way.
Konnerth and Williams use their background working for and with electrical distributors to build relationships. Paul DiTomo, also a partner at the firm, focuses on roadway and transportation lighting.
Before founding KSA Lighting in 1988 when he landed the Lithonia Lighting package, Jim Konnerth spent years with Cooper Lighting, eventually becoming national sales manager. He also worked for Genlyte for one year, as well as Alko Lighting.
Williams ran several branches as a district manager for a Chicago-area distributor, and says that helped him learn the business disciplines that drive distributor profitability.
“I understand they have to worry about turns and earns,” Williams says. “Margins are a critical part of their business, and I understand that a distributor can't live with 5 percent business, especially when the cost of money is running 2 to 3 points. I understand the issues they are going through.”
Konnerth's background as a manufacturer and the years Williams spent as a distributor exec helped them develop an appreciation for joint strategic planning powered by accountability. They review the strategic plans they develop with 14 electrical distributors on a quarterly basis to ensure each party has met the agreed upon goals. These plans include sales forecast by product line, and commitments to perform a variety of marketing activities such as lunch-and-learns, counter days, promotions, factory visits and on-site training at customer locations.
“It's measurable and holds both parties accountable,” says Konnerth. “Each quarter we can go back and say, ‘Did we follow through on what we committed to?’ A traditional agent kind of wings it.”
Some other Chicago lighting reps don't work as closely with electrical distributors because of their business orientation, Konnerth says. “You have some niche agents that are architecturally-oriented. They don't have any need to develop distributor relationships. They aren't anti- or pro-distributor, they just do their small section of the business,” he says. “Then you have the other side of it — the intimidation factor with a large agency. It's, ‘You will do business with me.’ We want our distributors to want to do business with us.
“The other issue in this market is that all electrical distributors have access to all the manufacturers. They have the Cooper Lighting and Lithonia packages. Sometimes you are competing within the distributor for your business. We have taken a real selective distribution approach. Distributors are making a commitment on inventory and we are going to quote big projects to the distributors that support us. It becomes more profitable for the electrical distributor and, hopefully, more profitable for us.”
END USERS AND ARCHITECTS
KSA Lighting strengthened its relationships with other buying influences in the Chicago lighting market with a key merger two years ago. “In August 2002, KSA merged with Bell and Gustus, a lighting agency that was a very good closing agency,” says Konnerth. “We had great relationships with distributors and contractors. Bell and Gustus had good relationships with specification people such as architects, engineers and city roadway business. We gained the specification business, which ultimately strengthens your business with the distributor. Now we are even stronger with distributors.”
Part of KSA Lighting's strategy to strengthen ties with Chicago distributors, contractors, architects and specifying engineers is implemented in its “train-and-entertain” events. For instance, at the lunch-and-learns it conducts at distributors' branches, customer facilities and its own headquarters, KSA Lighting often brings manufacturers as instructors.
The company also hosts an annual golf outing for electrical distributors and electrical contractors as well as one for specifying engineers. After golf and before dinner, the manufacturers who help sponsor the outings show products at what amounts to a mini trade show.
KSA Lighting also sponsored a specifiers' show at a local winery. The lighting manufacturers it represents had products displayed throughout the winery. More than 40 specifiers got a tour of the winery and introductions to new lighting products before a wine tasting.
Another good venue for product training has been the lunch-and-learns it offers at the Union League Club in downtown Chicago. With many specifying engineers' offices within a few blocks of the club, the engineers don't have to spend much time out of the office.
The company has found these events to be more effective in reaching the Chicago lighting community's key customers and buying influences than relying on local trade shows. In the future, KSA plans to do lunch-and-learns at the Union League Club for electrical distributors covering Chicago's emergency code.
“It's easier to get manufacturers to support those events than to spend $3,000 to be at a trade show in Chicago and maybe only see half-a-dozen customers,” says Konnerth.
“People don't have the time they did 10 to 15 years ago,” agrees Williams. “They are working longer hours with less staff. In the evening, they want to get home because they have other commitments. They don't want to spend the time at a big trade show.”
Plus, employers are hesitant to let employees spend a whole day at a trade show because it's billable hours, says Konnerth. That's why KSA Lighting brings product training or product shows to customers whenever possible.
“If we can get 20 people at a location, that is what we are going to do,” Konnerth says. “The cost is not significant. We can do a lunch-and-learn at a nice club downtown for $30 per person and have 1.5 hours of intense private training.”
Still, the company did have success gathering customers for an after-hours event several months ago when it hosted 150 architects and specifying engineers for a private viewing of the movie “My Architect” at Chicago's Landmark Theater. The movie tells the story of the relationship between legendary architect Louis Kahn and his son. At the end of the movie, the film's director answered questions. “That is one of the few after-hours events that really did well,” says Williams.
THE BIG JOBS
Since 1988, KSA Lighting's approach has helped land some of the biggest lighting jobs in the Chicago market. “If you look back at our history over the past 16 to 17 years, we have done a lot of the big project business in Chicago — McCormick Place, Soldier Field, Cook County Hospital, the Sears corporate headquarters and Oprah Winfrey's studio. We did almost all of Soldier Field,” says Konnerth. “I could probably name a half dozen others.”
Williams says they sold $2 million in lighting products for the renovation of Soldier Field, home of the Chicago Bears football team. While one might think first about the sports lighting for the field, Williams says that was actually a relatively small piece of the lighting products they supplied for the project. KSA Lighting also sold the lighting for the luxury suites, concourses and landscape lighting.
“The only thing we didn't do was some decorative lighting that the architect put in at the end,” says Konnerth.
To track the status of about 150 line items KSA Lighting supplied on the Soldier Field project, every Friday afternoon they e-mailed the contractor and the distributor the status of all the products so that when the construction team had their project meetings, they would have a status report. The report helped them manage the project more effectively. By being proactive, KSA was able to identify any problems before they got out of control.
Although KSA Lighting knows where to find the big Chicago lighting jobs, it relies on electrical distributors to find smaller work, such as the relighting of a parking lot or factory.
Says Williams, “Hopefully, we bring to the table the contract projects going out to bid. In return, they bring discretionary business for opportunities with end users and smaller design-build projects.”
KSA Lighting helps electrical distributors service this discretionary business with a full-time application department that produces free lighting designs for distributor partners. “We are the only agency in Chicago with a full-time application department, says Williams. “That's all they do: drawings, layouts and energy analysis at no cost.”
Adds Konnerth, “We do all of the designs for them. They can actually e-mail drawings to an application guy we have at the company.”
Another unique feature the company offers is its access to Lithonia Lighting's Midwestern regional distribution center. KSA Lighting's headquarters is actually in the building itself, a few steps past the reception area. That kind of immediate access translates to 24-hour pickups at the mammoth facility's will-call area and the ability to tap into the facility's inventory.
“Because this Lithonia Lighting warehouse has $20 million in inventory, customers can usually get anything they order from us the next day,” says Williams. “Their inventory commitment isn't as great. We provide that next-day service and special pricing to our partners 24 hours a day, seven days a week.”
That access proved crucial recently when an entire section of a steel mill went down, threatening the potential loss of hundreds of thousands of dollars per hour in down time. The customer needed 50 high-bay lights and called a distributor who worked with KSA Lighting. Because that distributor was linked to the Lithonia Lighting RDC's inventory through KSA Lighting, they were able to place the order at 2 a.m., pick up the product at the 24-hour will-call at 4 a.m., and get the steel mill running by 8 a.m. the next morning.
Konnerth and Williams harness the Web's timesaving abilities to help customers order and track product deliveries. The Internet Age hasn't produced any real threats to their livelihood in the lighting market because KSA Lighting's customers still need the firm's design expertise and related services.
“It hasn't cost us anything that I know of,” says Konnerth. “Electrical contractors are reluctant to work on lighting without some kind of help. They want someone to come out to the job-site, give some recommendations, do a photometric light-level and show them what they need. In that aspect, we will always be secure.”
The company offers electrical contractors and other customers an annual training session on how to use photometric software so they know some basic lighting design, such as producing a layout for a square room.
Introducing customers to new lighting technologies is another value-added service KSA's owners believe customers will always value. Williams says architects proactively search for the latest in lighting products, but it takes much longer for new technology to catch on with distributors and contractors.
“They want as much information and training as you can give them. We still have electrical distributors stocking T12 lamps. You actually pay more for a T12 product than a T8 product.”
He says it took a few years for electrical distributors to feel comfortable selling T8 lighting systems by themselves. Today, as distributors' customers need newer technologies such as T5 fluorescent lighting systems, pulse-start metal-halide lamps, or modular wiring systems, they want KSA Lighting on the sales call. In the future, Williams and Konnerth expect requests for joint calls on LEDs and electronic HID ballasts when these technologies hit the mainstream.
“Hopefully, that's what we bring to the party,” says Konnerth. “We should be the leading edge of the technology, helping them define how to sell it.”