Progressive Distributor - Customer care

Customer care

With new ownership and a solutions-centered attitude, Elvin Safety aims to keep customers safe and companies sound

by Rich Vurva

Since its acquisition by Platinum Group in May 2006, Elvin Safety has taken on a new attitude. The Minneapolis area company has transitioned from viewing itself as a supplier of personal protective equipment (PPE) and other safety supplies to a safety solutions company.

In addition to offering gloves, safety glasses, respirators and other PPE, Elvin has expanded its value proposition to include safety consulting, software programs to manage PPE, material safety data sheets (MSDS), and OSHA compliance, plus custom-designed Web sites to order safety products and track training.

Platinum Group is a private equity firm in Eden Prairie, Minn., that provides turnaround management, consulting and advisory services to companies in the Upper Midwest. The firm also invests in and acquires organizations that are facing financial difficulties or going through a transition, such as the retirement of an owner of a family-owned business, like Elvin Safety.

“When we looked at buying Elvin, the company viewed itself as a safety products distributor. We saw a lot more strengths than that. Our value proposition has changed from a safety products distributor to a safety solutions company,” said CEO Bob Cass.

Cass is a partner with Platinum Group, who was brought in to manage the business when Jim Elvin retired after running the operation for 40 years. He was joined by another partner from Platinum, Tom Ahonen, who serves as vice president of operations and finance.

“If you look at private equity deals, most of the time they’re financially driven. It’s fairly rare to have two guys from the private equity firm running the company. Yet, we think that’s the right model. We’re not just financial guys; we’re operators,” says Ahonen.

Along with existing managers and employees, Cass and Ahonen began the transformation process early in the summer of 2006.

Change begins
One of the first changes needed to transition from a product-centric to a solutions-centered company was to make sure salespeople fully understood the new value proposition. Product peddlers and order takers wouldn’t do. Salespeople require skill sets to talk intelligently not only about the right safety product for the task at hand, but also about risk management and the importance of an efficient supply chain.

The goal of salespeople is to engage customers in conversations about the cost of safety.

“So often, procurement organizations are looking to save another penny on an earplug. But in the end, when you look at safety, the cost of acquiring the goods is just a tiny piece of the total cost. The real cost of safety is when, heaven forbid, someone is injured or killed on the job, and the productivity impacts of an unsafe environment,” says Ahonen.

Some salespeople didn’t make the grade. Of the existing eight salespeople, three were hired after the acquisition. In addition, the compensation plan was adjusted to put more emphasis on commissions and to reward salespeople for selling consulting and software services.

“All of our salespeople articulate our value proposition very well today,” says Cass. “We want them to know the customers’ goals around safety so that everything we do helps them reach those goals and objectives.”

Partnerships develop
Employees understand they need to develop stronger relationships with customers and suppliers if they don’t want to be seen as a run-of-the-mill vendor.

“We don’t want to be seen as a vendor to our customers, and we don’t want our suppliers to be seen as a vendor to us,” says Cass. “We want much deeper relationships than that.”

One way the company builds relationships with both customers and suppliers is by giving employees greater responsibility. For example, by giving purchasing director David Elvin the additional title of director of strategic sourcing, and promoting customer service manager Jeff Bourbonais to director of the new customer care department, they’re now charged with growing those relationships.

The company developed several new reports to show customers how to make their relationship more efficient. For instance, an order status report lets customers know when to expect orders to be filled. They’re e-mailed weekly or even daily if the customer wants to receive them more frequently.

A posting report depicts purchase history and usage patterns. Sharing such data with customers helps them understand how to minimize stockouts and slow-moving inventory and improve fill rates.

“When demand is all over the board, fill rates suffer. Customers are not always aware of their order patterns, so this is useful feedback. We can suggest that if they order more often in smaller quantities, it might improve fill rates,” says Elvin.

Customers with multiple locations sometimes don’t realize they’re using different PPE at each location, and can save money by consolidating their purchases with one supplier.

“We’re not selling a generic product to a large universe, we’re selling a solution-specific product to a smaller universe. It’s not efficient for us to stock a lot or for them to stock a lot. So, we try to collaborate with customers,” says Ahonen. They ask questions such as: What’s the demand? What’s the use pattern? What’s the lead time? How can we manage this situation together to make us both more efficient?

Salespeople also have access to an internal report called margin guardian to help them make better pricing decisions. The color-coded report shows at a glance if the price being charged is profitable (green), might need to be reviewed (yellow) or unprofitable (red).

The customer care team studies data on major customers and strives to learn as much as they can about that company’s safety requirements and procurement process.

“We want customers to become partners of ours. If we’re dealing with a vendor/customer mentality, it’s not going to work,” says Bourbonais. “If they have outages or they hire a bunch of people, we need to talk or otherwise they’re not going to have the right quantity of product.”

Encouraging supplier involvement
Convincing suppliers to join in the transformation proved challenging.

“I’m spending a lot of time with our product suppliers to try to get them to move from being product-centric to solution-centric,” says Cass.

He says suppliers like to show off their newest products, when he’d prefer they present solutions that salespeople can take to customers. For example, safety eyewear manufacturers often roll out new models and point out style enhancements. When he asks what problems the glasses solve, they struggle to come up with an answer.

Elvin prefers to work with suppliers that know how to communicate how their products offer solutions to specific job hazards. For instance, a major airline pointed out how mechanics often must lie on their backs or reach above their heads to perform maintenance tasks, so they needed safety eyewear with bifocals at the top of the lens.

“Some of our suppliers have come up with safety glasses for specialized applications like that. There are ways to look at the hazard industry-by-industry and identify solutions that work,” Ahonen says.

When the company holds quarterly product showcase events, Cass expects suppliers to do more than bring in new products for display. He wants them to present case studies and examples of how their products solve specific problems.

Cass also hopes to convince suppliers to eliminate spiffs and similar promotional efforts that reward salespeople for creating artificial demand. Instead, he’d like them to apply those funds to pay salespeople to participate in training sessions. Rewarding them for the knowledge they gain will help the salesperson become more effective and also benefit the supplier through increased sales.

Weeding out price shoppers
Cass says the company succeeds at helping customers at both ends of the buying spectrum. For organizations with an established safety culture and understanding of risk management, Elvin works closely with their safety managers to lower their workers’ compensation claims and insurance premiums. On the opposite side of the spectrum — organizations with poor safety records struggling to develop a safety culture — Elvin can become their de facto safety department, providing safety supplies, consulting and services to help them establish a safety mindset.

The changes taking place at Elvin Safety have yielded positive results. In the first full year following the acquisition, sales grew by 18 percent. Annual sales are about $16 million, and the customer base has expanded to include larger corporations with multiple locations. The goal is for about 65 percent of revenues to be based on product sales, with 35 percent resulting from services.

Services include online safety training with up to 70 courses including hand safety, fall restraint systems and more. The E-Safety Center keeps tabs on which employees have completed each course and identifies when people need to take training. It can also track on-the-job injuries and accidents, serve as a repository for OSHA records and safety procedures, and maintain PPE status reports.

Many changes have occurred in the two years since Platinum took the reins at Elvin Safety. Cass and Ahonen believe the transformation is only just beginning.

“It’s exciting to watch the enthusiasm our salespeople have when they can talk to customers about the solutions we offer,” says Ahonen. “It’s a lot more fun for a salesperson to go in with a solution than to talk product price.”