The Wholesaler: AIM/R President Brian Burke on life as a rep, value of association

thewholesaler

AIM/R PRESIDENT BRIAN BURKE ON LIFE AS A REP, VALUE OF ASSOCIATION

by Mary Jo Martin

Each year in our August issue, it is my pleasure to spend time talking with the incoming President of the Association of Independent Manufacturers Representatives. This year, that gentleman is Brian Burke, who I’ve had the enjoyment of getting to know in many years of covering AIM/R event. Last year, he served as chairman of the group’s very successful conference in Boston, which focused on education and entrepreneurship.

Burke is a principal in Michigan-based Burke Agency Inc., which was founded by his father, George Burke. His dad invited him to join the agency in 1981, when Brian graduated from college.

George Burke had previously worked for a cabinet company called Youngstown Kitchens, which was acquired by American Standard. This gave him a chance to expand his career in the plumbing industry, and he traveled throughout the U.S. as a sales manager for both Church and Olsonite Seats. He had a chance to become a partner in a rep firm in 1970 and, after 20+ years on the road, decided it would be nice to sleep in his own bed a little more often. Five years later, he founded Burke Agency Inc.

Brian’s brother and business partner John Burke joined the agency in 1979, and the two bought their Dad out in 1989. “We were young for rep principals — John was 32 and I was 30 – so we weren’t exactly seasoned veterans,” Brian noted. “I think our manufacturers trusted Dad and knew he would keep an eye on us. But to his credit, he really just left us alone. Dad had a great organization in place, and had taught us what both manufacturers and distributors wanted from a rep. At first, we heard a lot of comments like ‘George wouldn’t do it that wa’” – which was expected. All the ‘SOB’s’ [sons of bosses] go through it.”

Following are excerpts from my interview with Brian Burke, in which he shared his thoughts on the role of the independent rep today, the importance of belonging to an association like AIM/R, and the future of the channel.

MJM: Give us a blueprint of Burke Agency today?

Burke: Our team of 15 people is our greatest asset. Most have been with us for 15 or more years. We have industry experts with deep and wide knowledge of our markets and customers, and they are internally motivated to succeed. But more importantly, we all share a common philosophy that customer service and integrity are the most important factors that will drive our success. Get out there and take care of your customer. Be honest. Everything else will fall in place.

Burke Agency has been in business for 38 years, and we focus on both the residential and commercial markets in Michigan. This dual market focus was somewhat odd in the 1970s – reps tended to be either a “spec rep” and call on engineers, mechanicals, and wholesalers that served the commercial market. Or you were a “shelf rep” and called on wholesalers and plumbers that did residential work. We did both, and still do today. It is a good business model for us, our manufacturers love it, and it helped us smooth out the wild swings in the Michigan economy.

We have represented Delta Faucet Company and Olsonite Seats (now Church Seats) since 1975. We have also enjoyed a very long relationship with Bradford White, Brass Craft, Charlotte Pipe, Watco, and Woodford. All have been on our line card since the 1980s. We added many excellent showroom lines over the years, including Maax, Brizo, Hansgrohe, and Toto. And we address the heating side of our industry, selling Bradford White’s boiler line, plus Wilo pumps, Omega Flex, and Roof Top Blox. I know I can’t list them all here, but we are very fortunate to represent great manufacturers.

MJM: Do you stock product?

Burke: Yes, we maintain two office and warehouse facilities. Many manufacturers demand that reps provide warehouse services. However, “buy-sell” has never been a significant contributor to our overall sales. You must maintain warehouse capabilities to be a full-service rep, and we are a full-service rep.

John lives and works out of our office in West Michigan, and I work out of our Metro Detroit location. I often tell people that our partnership has worked for so many years because John is in Grand Rapids and I am two hours away in Detroit. It’s meant as a joke of course, but I think it helps that we aren’t tripping over each other every day.

MJM: Describe the importance of education and training and the rep’s role in this?

Burke: Of all the value-added services that reps offer the PHC industry, product education and training always ranks at the top. Independent reps are the recognized product experts for the lines they represent. Training is what we do, day in and day out, in the office and out on the road. Yes, it is important to be personable and shoot the breeze with our industry friends, but everyone eventually tires of the empty suit sales guy. Our customers are hungry for product and technical knowledge, and they rightfully expect their reps to deliver. Successful reps are armed with a “PK” session on every call they make.

MJM: What do you feel is the reps’ role in creating demand in their territories?

Burke: From my first day on the job in 1981, it was made clear to me that Burke Agency created demand for our product lines by calling on the “secondary market.” It’s just the way we did things. So engineers, contractors, kitchen and bath dealers and builders have always been a key part of our business plan. It can create conflict with your distributors, but I think this was more of an issue 30 years ago. Even then, if a rep was honest, and clearly communicated his goals to the distributor, it was rarely a problem.

However, I believe the biggest issue reps have today with “creating demand” is more of a profitability issue. How do we call on different channels to create demand, when we have so many “new” demands on our time and resources? It’s a serious problem. Reps are in a strange position – both manufacturers and distributors want reps to absorb costly functions, like order entry, warranty administration, or local inventory. This isn’t necessarily bad – we add value in many ways. However, we may not have adequate resources left to go out and effectively create demand for our products. I talk to our manufacturers about this all the time – they get it, but it’s difficult to fix. Believe me – no one wants to pay reps more.

MJM: Describe the major changes that you have witnessed in the industry over your career, and in particular, things that have affected independent representatives?

Burke: Sometimes it seems like everything has changed. In 1981, we did not have big box retailers, the Internet, or cell phones – and we wore ties. The industry got together a lot – conventions, dinners, golf outings – which meant that competitors knew each other personally and so did the spouses. This doesn’t happen now, which is a shame.

The other day I was describing to someone how we took orders in the 80s. It was a steady stream of phone call orders from wholesalers, and our most important business tools included carbon paper and the U.S. mail. Taking a PVC fitting order over the phone was difficult – so many line items and everyone used different terminology for the same fitting. Salesmen really did “…go get the order” from the wholesaler. They had to, and also bring it back to the office so we could mail it in.

The FAX machine changed things first. I remember seeing my first FAX machine while on a visit to Charlotte Pipe. The office manager told us how it worked. It took 17 minutes to transmit just one page, and I was instantly sold! I looked at my Dad and said we have to buy two of these right now – he just laughed. But we bought two, one for each office. And then we waited for our customers to get one too…and waited and waited. It took many years to reach critical mass. We still receive about 75 faxes a day, which some people find ridiculous in the age of email and EDI, but our industry changes slowly.

And of course computers have had a huge impact on reps. We had a computer in the early 80s — the Tandy TRS-80. My dad bought a system for about $8,000 and sent it back to college with my brother Dan, who was studying computer science. He told him what he wanted it to spit out, a basic sales report by customer and a quotations program. Dan programmed the computer at school and set it up for us that summer. We soon had better sales reports and job quotes than our manufacturers. Dan eventually set up Interep Systems, an IT consulting firm that specialized in PHC rep agencies. He created a pretty successful business, all because of our first TRS-80 computer.

And now with tablets and smart phones, the amount of information that is at our fingertips is astounding. In many ways, the first computers and laptops we had were a nightmare to operate. Not anymore. This technology is stable and simple to use.

I also want to say what hasn’t changed. When I started, relationships obviously mattered. People wanted to do business with people they knew and trusted. And now we hear so often that relationships don’t matter, in the age of huge corporations like Pulte, Home Depot, and the Amazon. I couldn’t disagree more. A strong customer relationship is still critical to be successful in our industry.

MJM: The business climate in Michigan has been challenging in recent years. Talk about some of the things you’ve done as an agency to successfully navigate these times?

Burke: Truthfully, I hate to think about 2009. It was not a fun time around here. It helped that we had experience dealing with recessions. I started in the industry in 1981 during a severe downturn. The car companies were a mess, and construction plummeted. And it happened to us again in 1990-91, right after John and I bought the company – great timing! So when things started to decline in Michigan this time, we knew we had to stay on top of things. By 2009, it was a train wreck. This meant constant sales forecasting, financial budgeting, and watching our cash flow very closely. We updated everything in writing monthly and, during 2009, almost weekly. It was a pain to do, but necessary. Many of the financial tools and strategies we used were picked up at AIMR conferences.

Everyone here had to change how we did things, absorbing new responsibilities and pitching in wherever help was required, and not complain about it. We represent excellent manufacturers and have a fantastic team, and we came out of the “Great Recession” in excellent shape. 2011 and 2012 were very profitable years, and I’m extremely proud that our team stuck together. Everyone is still here.

MJM: When did you become a member of AIM/R?

Burke: My father was a big believer in networking with other reps around the country. We used to go visit reps at their office before or after a national sales meeting, just to see how they did things in Dallas or New York. And these reps were always very gracious, telling us about their latest marketing strategy or computer fiasco.

The AIMR conference was the same thing, but on steroids! I believe I attended my first AIMR conference in 1985, and we have been a member ever since. We have attended organized sessions hosted by many of the best and brightest reps from around the country. Most were leading a discussion on a topic they were passionate about. So I was hooked. And I have made so many great friends at AIMR, people I can call and ask a question on most any rep topic and get a straight answer.

MJM: What interested you in pursuing a seat on the board?

Burke: Like most people, I kind of got pushed onto the trade association board. Michigan had the only AIMR “chapter” in the country, which consisted of about 20 rep firms. We got together almost every month for lunch and someone brought in a speaker, maybe their lawyer or an insurance agent. All they got was a free lunch and some good jokes. The best speakers were from our wholesalers. It was pretty casual group and usually very funny. The restaurant would print out 20 copies of the bill and each rep would throw in their $15 — and then put the entire $300 lunch in their expenses. Ha!

You eventually got sucked into the trade association officer rotation, because it was “…your turn.” As we had a large chapter, AIMR reserved one seat on the national Board of Directors for a rep from Michigan. Eventually it was my turn, and I found myself on the AIMR board. I eventually served several rotations, and was the Conference Chairman twice. At this point, 25 years later, I feel a little bit like an “ancient” voice at AIMR.

MJM: What have been some of AIM/R’s major accomplishments in recent years?

Burke: Like many trade associations, we got hurt during the Great Recession, with a big falloff in conference attendance and some membership attrition in 2009 and 2010. We heard many horror stories of trade associations simply closing their doors. However, AIMR management and the board did a fantastic job protecting the financial resources of AIMR, and we are all very proud of how healthy our organization is today. Membership is once again growing and the books are in excellent shape.

The conferences in both 2011 and 2012 were very well attended, and among the best ever. We have a great conference scheduled for 2013 in Albuquerque, N.M., too. The Leaders of Tomorrow group is a shining example of how we have improved the relevancy of the AIMR Conference for younger members in particular.

Adding manufacturers to our annual conference was a major change for our organization, and it has been successful. The manufacturers now join us for the first half of the conference, and we tilt the topics and interactions to benefit both groups. Manufacturers then depart, and the second half of the conference is strictly for reps only. It has worked quite well, and manufacturer participation has grown each year. Manufacturers are our clients and we are their business partners. We have much to gain from improving communications in any way we can.

In the last 12-18 months, AIMR and ASA have also started a dialogue to once again find ways that our two associations can interact and support one another. At one time, AIMR and ASA enjoyed a close, supportive relationship. But there has been little to no communication between the two associations for many years. The current boards of both AIMR and ASA believe we can change that quickly, and we have already met several times. Jeff Pope and Mike Adelizzi have been excellent to work with.

MJM: Describe your goals as president? What are some of the key issues/initiatives set to be tackled in the coming year?

Burke: Our goal is to strengthen our position as the recognized voice of independent sales representatives in the PHC industry. This takes many forms, some simple, but many are long term initiatives. The bottom line is AIMR must be the advocate for independent reps to various industry sectors, including manufacturers and distributors.

It certainly helps to have strong membership to back up our programming, and increasing our rep membership is a primary goal of our board. Like distributors, we have had consolidation in the rep business — there are fewer and larger rep agencies today. However, we have many opportunities to increase the number of reps that belong to AIMR. It is not expensive to join, and we offer a money-back guarantee. Attend the conference and if you do not feel it was worth your time, AIMR will refund your money. Several manufacturers have actually written to their reps and asked them to seriously considering joining AIMR, and attend the conference. They understand our mission, and want all their reps to benefit from AIMR membership.

And as I said, being the advocate for independent reps to manufacturers and distributors is paramount in all we do. AIMR wants to escalate the level of communication between our industry partners, and make sure we are on the same page. One way we do this is by hosting a “Manufacturers Advisory Committee” meeting once or twice a year. We invite 6-7 manufacturers to join us for a few hours, and discuss various topics we both feel are important. We use this anonymous feedback to guide our membership communication and the annual conference sessions. For instance, if manufacturers think reps need to do a better job of on-boarding new employees, we try to shape our education to address this need.

Another example of this is AIMR members regularly volunteer to serve on various ASA committees. I recently completed four years on the ASA Education Foundation board, and it was a fascinating experience. I simply had no idea how many training resources were available from the ASAEF that were 100% relevant to reps. This lead to Amy Black, the ASAEF Executive Director, attending our 2012 AIMR Conference. She introduced ASA University to our members, and I believe she sold about $8,000 in educational materials to reps at the conference. It was a great success.

The whole area of “buying group meetings” is an open wound with many reps, and it would be wonderful if we could find a way to address it creatively. Distributors and manufacturers get together at important buying group meetings, but their reps do not have a seat at the table. Overall rep performance is often evaluated at the meeting too, but again, the rep is not there to participate. AIMR has invited the buying group execs to come to our annual conference, and many have. We’re slowly opening up communication. It’s a start. AIMR has discussed this with manufacturers too, and truthfully some have told us to be careful what we ask for…leave well enough alone.

MJM: Last year, you were conference chairman, and hosted a spectacular event in Boston. What type of feedback did you get on the program?

Burke: It was very good. After 20 years of resort locations in the south, I took a little different approach to the 2012 conference. I put us downtown in an urban location, instead of on a golf course. Our theme was “AIMR University” and we brought in MBA professors from Boston to supplement our industry speakers. Our social events included an extremely popular dinner and tour at Fenway Park. And after our “4 Years” at AIMR University, each rep walked the stage to receive their diploma from our commencement speaker, the honorable Kelly Michel, who gave a touching and hilarious “Last Sales Call” speech. We like to say that reps come to an AIMR conference to “…work hard and play hard” and we accomplished this in Boston.

Our attendance skyrocketed and the feedback was excellent. Boston was designed with two goals in mind – education and networking. I tell everyone that 50% of the value at an AIMR conference is in the workshops and sessions, and 50% will come from networking with your peers from around the country during breaks and at social events. You have to jump in and be an active participant.

MJM: And can you give us a sneak peak at some of the highlights attendees will experience at this year’s conference — both when it comes to sessions as well as any special social outings?

Burke: We are headed down historic “Route 66” to Albuquerque, N.M., and the Hyatt Regency Tamaya Resort. The 2013 conference chair is Steve Fleming, and his theme is “AIMR – Your Route to Success.”

The AIMR Board listened carefully to the feedback we received from the last few conferences. Everyone’s favorite session has been the Rep Café, a two-hour small group meeting where reps discuss any topic that is hot for their agency. Each rep has a chance to present an issue, and then other members provide feedback and suggestions. Notes are kept, and compiled after the conference. Our members like it so much they asked AIMR to expand this session. And in 2013, Steve has added a second Rep Café’ session, this one involving manufacturers. Should be interesting!

Tim Schoenicker of Bradley will be giving his thoughts on “The Perfect Rep” and our legal counsel, Dan Beederman, is meeting with manufacturers to discuss the ideal rep contract. The Institute for Trend Research economic forecast presentation has also earned high marks the last two years, and Mr. Beaulieu was invited back to address AIMR for an unprecedented third year in a row. And of course the Leaders of Tomorrow group has special LOT sessions planned too. For a little downtime, there is golf at the famous Santa Ana Golf Club, a trip to Santa Fe, or Kayaking on the Rio Grande. Reps and manufacturers can check out the full schedule at www.aimr.net.

MJM: Is there a message you would like to share with rep firms that are not currently members on why they should join AIM/R?

Burke: I once had a manufacturer that I admire a great deal tell me that he has two or more “Rep Council” meetings every year because reps are simply the best consultants he can bring into his manufacturing business. Unlike general business consultants, reps are experts in this market and PHC product lines. They are on the front lines of the industry, and can bring him their knowledge of what is going on all around the country. They see what competitors are doing, as well as describe the “best practices” of other manufacturers they represent. Trends can be identified earlier, and sales forecasting can be brought more clearly into focus. No time is wasted – they get right down to important agenda items. What products are working and what is missing? What is getting in your way, keeping reps from increasing sales? Where are the opportunities and how can we capitalize on them quickly? What threats are on the horizon?

On top of everything else, we actually want to come help him! Reps are, in his opinion, animated, personable, and have strong opinions they want to share. He can ignore what he can’t use, and quickly implement the best ideas that make sense for his company. And it won’t cost him $250 an hour either – the rep “expert consultant” just wants him to cover some travel expenses, take him out for a nice dinner, and help him sell more. It’s a win-win.

My point? AIMR, my rep brethren, is the Rep Council for Reps. These same consultants, your peers, are waiting for you at AIMR. Why would you ever skip that? Enough said.

MJM: Earlier, you mentioned AIM/R’s LOT Division [Leaders of Tomorrow]. This group has really grown — talk about some of their initiatives and special interests for this younger generation of reps.

Burke: Truthfully I’m embarrassed we didn’t think of this earlier. The Leaders of Tomorrow group has grown dramatically, and is the most dynamic group within AIMR today. LOT was driven by the needs of younger agency management personnel – people that attended AIMR looking to hone their skills as a rep agency manager or future principal. However, today they may not be interested in sessions on retirement planning or rep contract issues. To resolve this, LOT now organizes special sessions for younger members, directly addressing their needs, and also has sponsored sessions for the conference at large. The Leaders of Tomorrow group has been a great addition to AIMR.

MJM: Where do you see our traditional distribution model headed in the near future? Will reps continue to play an important role in the channel?

Burke: I don’t see the current distribution trends being altered too much. More consolidation, yes, but in a measured and strategic way – not as haphazard as before. Certainly we will see more online shopping, adding stress to pricing, and pressure to justify how we all add value. Like most, I have a wary eye on the concept of “Amazon Supply” and where this business model might take us. Like Big Box retailers, reps largely get cut out of Internet sales, which is simply wrong. We help create local demand, then lose the sale to an Internet supplier. We understand why local distributors, and in particular ones that operate showrooms, are concerned about this issue. Reps are too.

The “good news” is our industry is obviously driven by a certain, shall we say, lack of organization, and this works against an Internet supplier. Plumbers may not know what they need tomorrow, but expect a distributor to have it available 100% of the time. And even if the plumber knows what he needs tomorrow, he probably won’t tell you until he walks in your door. That means our “bricks & mortar” distributors have a tremendous value to offer – local inventory. And of course credit!

And yet, we are all seeing these same contractors starting to use smart phones and tablets, and become vastly more efficient. This technology is finally easy to use, reliable, and affordable. I had an emergency plumbing service call at my home a few weeks ago, and the tech used his smart phone to write up my invoice, scan my credit card, and email me the receipt right on the spot. I was very impressed – but only because he was my plumber. If it was the appliance repair service, I wouldn’t have thought twice about it. So maybe the tech revolution will now consume the plumbing industry too – just a bit late, sort of like what happened with the FAX machine in the 80’s.

But will this technology really change the behavior of plumbers on the front lines of our industry? It will be interesting to see.

Reps will thrive as long as we add value, and I firmly believe we do. Independent reps are simply the most cost efficient and effective method for a manufacturer to reach the marketplace. We are the local experts with extremely deep knowledge of our market, customers, and product preferences. And as I said earlier, relationships matter. The customer of the manufacturer wants to do business with someone they know and trust, not a “black box factory” in some distant state or country. They know and trust their local reps.

MJM: Why is now a great time to be a rep?

Burke: Because 2009 is over! It’s all downhill from here!