In his first speech as NEMRA president, at NEMRA's 1986 Annual Conference in Washington, D.C., Hank Bergson said he felt like a teenager who had just been given the keys to the family car.
In the 17 years since, Hank Bergson has driven the 34-year-old association many miles toward respectability in the electrical industry with a unique mix of leadership by example, occasional badgering and quiet diplomacy.
In NEMRA's formative years before he came on the scene, its leaders didn't mind starting a few brushfires on a proposed product numbering system or electronic communication standard just to get some attention. While Bergson must still must stomp out the occasional controversy that flares up, he doesn't have to light fires for NEMRA to make a statement.
In a business where many senior executives don't remain at their posts long enough to make a mark on the industry, Bergson stands out. He is the man that people call when they need a new rep in a territory, are looking for a job in the electrical business or need a crusader to promote the independent rep.
A born leader, his leadership skills have been honed by his years of experience as a fire chief and his tour of battlefield duty as a company commander in the Vietnam War.
Well over six-feet tall, he has a commanding presence that fills a room, and a quick mind that helps him articulate the role of the rep in today's market. However, his eyes give away a softer, more mirthful side that's eager to catch up on the industry gossip, fill you in on the latest addition to his collection of fire fighting equipment or keep you posted on the latest adventures of his daughters, Susan and Abigail. He took some time out from his preparations for next month's NEMRA Annual Conference, March 12-16, Washington, D.C., to chat about the role of the rep in the 21st century.
There's one thing you must understand about independent manufacturers' reps. They spend more time explaining their role in the marketplace than do electrical distributors or electrical manufacturers.
That's because manufacturers and distributors have more clearly defined roles. Manufacturers make stuff, and distributors warehouse it in local markets, provide credit to customers and employ a field sales force to sell the stuff to electrical contractors, industrial maintenance personnel and other end users. Whether a distributor or manufacturer is large or small, they perform the same basic functions.
The function of independent manufacturers' reps isn't always as clear. While all reps have the same basic function — creating demand for electrical products sold to end users — they all reach this ultimate goal in different ways. They may or may not warehouse products locally. Most reps work with electrical distributors to some degree. But a rep can easily spend as much or more valuable selling time working with end users.
GETTING PAID FOR PERFORMANCE
However reps approach the market, one of Bergson's greatest concerns is ensuring that the methods manufacturers use to compensate them keep pace with the activities they perform. The more progressive rep compensation programs utilize an activity-based compensation philosophy.
“There are reps in the food industry who have gone to contracts for specific services. When they add new services, manufacturers pay differently for them,” he says. “We have seen a smattering of that in our industry. Some of it is still a percentage, and some of the percentage goes up as you take on more services. We see a lot more activity relative to split commissions for specification credit. A lot more manufacturers understand three major service tasks take place within any order process — where the order was placed, where the specification was generated and where the material finally ends up after the sales service.”
Bergson says this is a radical concept for some manufacturers and distributors to understand because of a debate over who “owns” the customer. “This becomes a bit of heresy to the traditional electrical distribution market. But the manufacturers understand that consumers are going to choose how they want to buy the product,” he says. “Therefore, they want their rep to know the consumer as well as or better than any distributor salesperson, Home Depot salesperson or Grainger salesperson, because the person closest to the customer is going to win.”
To provide these additional services, reps have taken on many marketing responsibilities that were formerly performed by manufacturers. In some cases, they have hired full-time marketing personnel to monitor and facilitate the sales programs that manufacturers and the marketing/buying groups offer.
Bergson traces this shift of marketing responsibilities to the recession of the early 1990s, when many manufacturers reduced their inside sales and order-processing personnel.
“Those jobs have never come back, he says. “We are now in another recessionary period. Other options are moving into the rep community where the rep can provide those services that the manufacturer has chosen to eliminate on a cost-effective basis, and in many cases, a more effective basis. It's not in every phase of marketing. Some of it is more market management, such as literature distribution and lead processing.”
LAUNCHING NEW PRODUCTS
Another marketing function that's changing for independent manufacturers' reps is bringing new products to market. Bergson says more manufacturers now realize selling a new product takes more of a rep's selling time, and they are providing a better risk/reward scenario to attract the attention of the established reps.
He says established reps will take on one or two start-up companies with innovative new products because they can fit them into their product packages and look toward additional income in the future. But some small manufacturers are looking at longer-term contracts during their start-up periods, and hiring the rep to perform services for them, he says.
“It makes it very difficult for some start-up companies. Some start-ups have taken to partnering with existing product lines that already have a rep sales force. Some of them have had to target specific territories and not been able to roll out the product nationwide. Some of this has been very positive for reps, because they know there is a certain amount of reward taking place on day one.”
THE DE-INDUSTRIALIZATION OF AMERICA
Bergson says many reps realize the electrical market is changing in other ways, too. They know when the electrical industry comes through the other end of this recession, parts of the industrial base that went overseas or out of business aren't coming back. Smart reps are proactively searching for new accounts to replace this lost business, he says.
“We are seeing reps do much more statistical analysis of the marketplace, customers and potential customers. There is much less ‘chasing smokestacks’ and a lot more target marketing that identifies potential customers. The rep first goes in and qualifies that the customers is a user of the product. When they get established with a new customer, they ask, ‘What else do I have that you might need?,’ or, ‘What do you need that I can provide for you?’
“Smart reps understand if the customer wants to buy the product a certain way, they can't say, ‘No you can't.’ Their answer should be, ‘Let me help you do that as conveniently as possible.’”
When Bergson reflects on how life will change for NEMRA reps in the future, he looks to other industries for inspiration. In the food-service industry, reps are already experiencing trends such as consolidation. But food service reps are also seeing the rise of national reps and reps specializing in single markets. He has discussed these trends with Mark Baum, now executive vice president of the Grocery Manufacturers of America (GMA), and says the benchmark issues in that industry are the same in the electrical business.
“The bigger reps are getting bigger and the smaller reps are getting more focused and more niche-oriented,” he says. “It's very difficult for a small rep to become a successful big rep firm. It used to be that a rep could grow in a natural progression. It's very difficult to make that move now with the mergers and consolidation taking place. This ‘start small, get big’ growth strategy is not as easy as in the past. That doesn't mean that being small is not a very profitable place to be.”
One reason for this consolidation is that a large regional or national customer may require it. Bergson says in the retail world, some reps only serve one customer — Home Depot. This is happening on a smaller scale in the electrical business, too.
“Fox-Rowden-McBrayer has gone from nine states where they are electrical to 12 to 15 states on the electronic side of the company's business where they have to mirror the BellSouth footprint,” he says.
Bergson says at least one electrical rep has brought together several different rep organizations in different product markets.
“Hugh M. Cunningham in Dallas has nine rep organizations serving the Texas marketplace out of a central warehouse/operations center. They have rep firms that focus on plumbing, pipe, valves and fittings, turf maintenance, retail and electrical.”
For reps just getting started in the electrical market, these trends can make the cost of entry much higher. Bergson says reps can't start out today with “one product line, a smile and a briefcase.” “Instead they must have a professional selling organization,” he says. “The capitalization to get started is much more difficult. Customers are demanding immediate answers to their questions. Time is money. You can't leave a message on a guy's answering machine and have him get back to you next week. People are much more connected, and you must be a much more sophisticated sales organization than before.”
That being said, when new rep agencies get started today, it's often the result of someone leaving an existing agency to start his or her own business. “That's still one of the more common ways news agencies start,” says Bergson. “You have to be better capitalized and be sure some lines are available that provide some near-term income. I don't see as many people starting rep firms because they know the territory, have a good reputation and a hearty handshake. It takes a lot more careful planning.”
Along with struggling to run profitable businesses in today's tough business climate, Bergson says it will become increasingly important for reps to remind manufacturers, distributors and end users about the importance of their value-added services, says Bergson.
“Reps need to position themselves as the go-to solution provider in the territory. It's a mantra of sorts with NEMRA to get people to mentally reposition the rep in the channel of distribution that it's a rep's job to facilitate the flow of goods through the channel of distribution. Having said that, I also need to say factories make stuff and consumers consume it. Until someone consumes something, there is no need to put another one into the supply chain. The rep's job is to create satisfied consumers by providing services throughout that market channel and facilitating the flow.”
MEET HANK BERGSON
Hank Bergson is so inextricably linked to the National Electrical Manufacturers Representatives Association that it may be hard to imagine him in another role in the electrical industry. The path he has traveled to get to NEMRA actually started long before he first began working in the electrical industry during the 1970s, first for Federal Signal Corp., Oak Brook, Ill., and then with Tork, Mt. Vernon, N.Y.
His career story can be traced back to his days as a Boy Scout, when he enjoyed going out on fire patrols at Scout camp and fighting fires. He first became a volunteer fireman during high school. While taking a break from his studies for a year at the University of New Hampshire, he took a paid position with the Durham, N.H., fire department. That job helped him realize that he didn't want to drive a fire truck for the rest of his life, and he resumed his full-time studies through the ROTC program. Bergson graduated from the University of New Hampshire with a business degree. During that time, he also had a job selling fire fighting equipment. Some of his customers were distributors who also handled some electrical lines, including Federal Signal and Tork.
To fulfill his ROTC obligation, he and his wife, Jackie, moved to Germany in 1968, where he was a company commander and supply officer on a military base. The Vietnam War was raging at the time, and Uncle Sam decided his services were needed there. Bergson landed in Saigon on Valentine's Day, 1969, to begin an assignment as a captain and company commander of “B” Company in Army's 27th Infantry, a unit called the Wolfhounds. Bergson says “B” Company was typical of the “walk in the water” infantry of that time, and they were involved in many firefights with the North Vietnamese. Their assignment was to cut off the flow of supplies coming down the Ho Chi Minh trail to the Saigon area. During the year he fought for the United States in Vietnam, Bergson was awarded three Bronze Stars and a Purple Heart.
After Vietnam, he considered a military career, but he and his wife opted for civilian life. When he took a job as a salesperson in New York for Federal Signal in 1970, he met his first independent manufacturers' reps in the electrical industry. He credits Les Osterman, founder of Les Osterman Associates, Syracuse, N.Y., with taking him out on his first sales call in the industry.
After meeting Osterman in an upstate New York diner one gray winter day, they visited a junkyard that was having trouble with a Federal Signal siren. Bergson climbed a pole in the junkyard to check out the faulty siren. During his tenure with Federal Signal, Bergson called on the New York City police and fire departments and managed a network of reps in the Northeast. He and Jackie (and an antique fire truck he had purchased for his growing collection of fire fighting memorabilia) moved to Federal Signal's Illinois headquarters for several years.
When an opportunity came up with Tork to move back to their roots on the East Coast, Bergson and his family settled in Katonah, N.Y. in an 1814 Federal-period house that Jackie, today a librarian at a private school in Connecticut, has decorated over the years with fire fighting artwork and memorabilia.
Bergson left Tork after five years for an executive-level position with GSC, a manufacturer of commercial kitchen supplies. While working at the company, in 1985 Larry Rodgers, now vice president of industrial sales for Synergy Electrical Sales Inc., Fairless Hills, Pa., and some other friends in the electrical industry told Bergson NEMRA was searching for a new president. The rest, as you might say, is history.
On the home front, Hank and Jackie, now married 37 years, are empty-nesters. Their daughter, Susan, went to the U.S. Army Language School and is now a Russian language interrogator at Fort Hood, Texas. After graduating with honors from Skidmore College, her sister, Abigail, spent more than two years with the Peace Corps in Ivory Coast. She now works with the Save the Children foundation. Both of his daughters were members of the Katonah Fire Department. Bergson is the ex-chief of the department and is currently vice chairman of the board of fire commissioners.
HANK'S COLLECTION OF FIRE FIGHTING EQUIPMENT
Some people collect coins, sports memorabilia, toy trains or stamps. Hank Bergson is a collector, too, but his passion is not quite as mainstream. He collects fire fighting equipment, including the antique fire truck in this photo. You can see more of his collection in his office at NEMRA headquarters, and at www.firehydrant.org. Says Bergson of his collection, “I have been collecting antique fire fighting equipment since the mid-1960s, so I have amassed quite a collection of helmets, speaking trumpets, lanterns and alarm equipment. Obviously, no collection is complete without a few hydrants. As part of my collection I particularly like working models, patent models, and salesmen's samples hydrants.”