By Bridget McCrea
The management and ownership teams at Colonial Electric spend a lot of time planning for growth. “Our vision is to achieve an average of 10 percent growth on an ongoing basis and continued improvement of our bottom line,” says Peter Bellwoar, co-owner and executive vice president of sales for the King of Prussia, Pa.-based distributor. For 2012, the NAED member exceeded that growth projection and was on track to repeat that performance in 2013. Some of the increase is organic in nature and the rest has come as a result of smart acquisitions.
Growing from $40 million in sales in 1997 to a current $210 million is no easy task to accomplish in a 16-year period. Bellwoar credits the 25-location company’s intensive, forward-looking planning for buoying its sales through the most recent recession and continuing to drive its success. “We put some plans into action about four years ago that have supported our 10 percent annual growth,” says Bellwoar. “Along the way, we’re continually honing and improving our plan to ensure that our growth stays on track.”
Bellwoar says the turning point came after Colonial Electric hired a number of business consultants in 2007-08 to help the firm ferret out new growth opportunities. Several opinions and one customer survey later, the distributor was able to indentify its weaknesses and start filling in those gaps. “We wanted to improve our bottom line and get a better return on our business,” says Bellwoar.
Full Speed Ahead
Part of Colonial Electric’s ongoing growth initiative involves the use of “predictive analytics.” Defined as “a variety of techniques from statistics, modeling, machine learning, and data mining that analyze current and historical facts to make predictions about future, or otherwise unknown, events,” predictive analytics has helped the distributor more strategically target new customers and sell more to existing clients.
Bellwoar says the 380-employee distributor’s approach is similar to those used by today’s retailers. “When my wife walks into the supermarket that she has been going to for 10 years, the store can see what she buys,” he explains. “Ten years ago she was buying diapers and formula and now she is buying Captain Crunch cereal for our teenagers.” Knowing this, the stores send out the appropriate coupons – a process that’s enabled by predictive analytics. “They know what a family with two teenage boys is most likely to buy,” says Bellwoar, “so they don’t send us diaper coupons anymore.”
Now apply that same logic to the electrical distribution field, where Colonial Electric uses NAED’s 11 categories and multipliers to create its own customer-centric approach to marketing. Using the NAED data, the distributor knows that the average electrician accounts for about $50,000 in products annually. By breaking the market down into the 11 standard categories, the distributor can examine its current market share and figure out ways to increase it. “If we know they’re buying $100 in products a week – and if we’re only getting $10 of that – we strive to get to $40-$70 per week,” says Bellwoar.
Using this specific target marketing with a rifle-like approach (versus a cannonball strategy), Colonial Electric has been able to increase sales across more than 100 of its key customers. Getting there wasn’t easy, according to Bellwoar, who says it was a “huge cultural change” for the distributorship. Re-training outside sales reps to target specific pieces of business with certain customers, for example, took time and effort. “That’s something we never really discussed with our reps before,” says Bellwoar.
Taking the frank approach worked best. Colonial Electric’s management team would, for example, point out that while it was great that a salesperson was selling $200,000 in product annually to a specific contractor, in reality the latter was acquiring $1 million+ in supplies annually. “We broke things down to a pretty granular level with our reps,” says Bellwoar, “by, say, looking at why we weren’t selling any receptacles or fuses to a specific contractor. Then we developed a plan to get that piece of business.”
Offsetting Market Trends
The fact that Colonial Electric’s target markets aren’t currently posting 10 percent annual growth rates puts another cog in the distributor’s wheel, so to speak. “Most of our markets are expanding at a national average of about 2-3 percent right now,” Bellwoar admits, noting that the Philadelphia market alone is posting very low job growth numbers within the construction market. “Some economic data indicates that the Philadelphia market lost 5,000 total construction jobs in 2012. That’s really shrunk our core market and made it challenging for us to grow market share.”
The positive spin on that scenario, says Bellwoar, is that Colonial Electric’s predictive analytics approach allows it to glean more sales from existing customers as opposed to having to get out into the market and find new clients. To achieve that goal, he says the distributorship also works to make its own customers either stay profitable and/or become more profitable. “We focus on high fill rates, higher accuracy levels, on-time deliveries,” says Bellwoar, “and other services that help them keep their guys working.”
Looking ahead, Bellwoar sees more organic and acquisition-based growth in Colonial Electric’s future. He also expects the firm to meet or surpass its 10 percent annual growth goal for the next few years, and credits the organization’s predictive analytics and target account strategies with helping to drive a good portion of that increase. “We’re going to continue to mine the data; we see definite opportunities there,” says Bellwoar. “Our trucks are already out on the road making deliveries, so let’s get more product onto those trucks.”
McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at firstname.lastname@example.org or visit her website at www.expertghostwriter.net.Tagged with tED