Transcript

Adam Honig:  Hello and welcome to Make it. Move it. Sell it. On this podcast, I talk with company leaders about how they’re modernizing the business of making, moving, and selling products. And of course, having fun along the way. I’m your host, Adam Honig, the CEO of Spiro.ai. We make amazing AI software for companies in the supply chain, but we are not talking about that today. Instead, we have the CEO of Ceramic Pro, my friend Brett Benito is joining me to talk about the benefits and the challenges of selling through distribution. Brett, welcome to the podcast. 

Brett Benito:  Thank you. 

Adam Honig: Hey, I know a lot of people know Ceramic Pro for the coatings on their cars and so on, but maybe you could just tell everybody a little bit about the company.

Brett Benito: Yeah, so Ceramic Pro was best known for the coatings, we have ceramic coatings and we’ve grown our product offering to be paint protection film, and window film, all using our ceramic coating technology or our nano-ceramic technology. We supply products in North America to about 5,000 different installers. We’ve grown to be more than a product company, we’ve grown a lot more to be a business solution. So we’re looking to support them on all things business, from training their employees, to leads, to marketing all the way through the process.

Adam Honig: And when you say them, you’re really talking about the installers, so you’re in the business of supporting the people who ultimately sell your product?

Brett Benito: Exactly. So we support the installers. Our mindset has always been professional-only coating or professional-only products. So we do not sell, besides some aftercare, small things to the general public, our products only go to professional installers who get certified through us.

Adam Honig: And I’m sorry that I don’t know this, why do people need to coat their cars? I know that’s such a dumb question, maybe it’s like a Southern California thing, not a New England thing, but why do people do that?

Brett Benito: The history of ceramic coatings or where they came from is you had waxes to protect your car for years and years.

Adam Honig: Like turtle wax when we were growing up. 

Brett Benito: So you have turtle wax, and you have that stuff that existed forever. And then the next generation was sealants, you remember Teflon sealants that came out and people were all using a sealant on their car, and that’s what was offered for a while. And then what they came up with was this nano-ceramic coating that leaves glass on your car. And so the idea is that you’re trying to protect your car from the staining or discoloration and things that happen. And ceramic coatings and nano-ceramic technology fills the pores of the surface with tiny little nano-particles and tiny particles and make a new surface that is glass, that’s a sacrificial layer, but also a lot less porous. So it’s hydrophobic, it’s self-cleaning your car just through rain, and will just basically clean itself. You don’t have to scrub your car, or use a clay bar anymore to remove the contaminants, you can just go out there and pressure wash it and hand wash it, and it looks new all the time.

Adam Honig: So it’s kinda like an iPhone case, I don’t know why you have to buy a case when you buy the phone. Why don’t they just do the case in the phone to begin with? It’s a little bit like that, it’s like an iPhone case for your car. 

Brett Benito: Interesting enough, the iPhone itself, if you go right now and you go on Apple and you look at what the iPhone has, they talk about on their phone, 9H scratch resistance, like our product is 9H, that is our flagship product. We made that term somewhat famous, it’s the ASTM standard of testing for a pencil test. A 9H pencil gets dragged across the surface, does it scratch the surface? Our coating makes the surface so that a 9H pencil does not scratch the surface, and so we named our product 9H and now it’s changed the terminology within all coatings to be that. But even the technology that makes your iPhone waterproof is the same type of nano-ceramic coatings, it makes your iPhone waterproof now. So that same technology is used on the inside of your iPhone and on the screen to make it more protected or more scratch resistant.

Adam Honig: But you still need a case for some reason, even with all that nanotechnology protection.

Brett Benito: They’ll need a case because my kids throw it across the room when they’re mad and dent it or something. And so it’s about the corners, it’s not about the front or the back, it’s the corner impact I think is why you need a case.

Adam Honig: Yeah, I got you, I’ve dropped it, so I know what you mean. And it’s nanotechnology, so I imagine it requires a certain level of sophistication to be able to use it. Is that why?

Brett Benito: Yeah, they’re not easy. So they come with high solid contents in our coatings. So if you do make a mistake on something, it is semi-permanent or permanent, and the only way to remove it is to abrade it or to polish it off on the coatings and on the paint protection film. The adhesive that you use, the clear bra, it works well for giving when you’re putting it on there, but also if you try to remove it too quickly or remove it around, you can damage paint and window film. It all has adhesive and things like that. And then if you just don’t do it properly, you can damage things. Same thing you’re trying to protect can get damaged from improper installation.

Adam Honig: Yeah, definitely not the kind of thing I should do myself. I’m terrible at things like that. I have to have somebody come over to saw a board for me kind of thing. So I definitely don’t wanna be putting nanotechnology on my car.

Brett Benito: Yeah, exactly, it’s definitely worth the price to have it done professionally. And then most of our products come with some sort of warranty term, depending on the product that it is, up to a lifetime warranty on our coatings.

Adam Honig: Cool. Now I know everybody’s been talking about challenges in the supply chain, right? Getting materials, distributing products, how’s that been going for you?

Brett Benito: I can’t say it was going well. It’s been bad, in fact, we put ourselves in a position to succeed with it, but the supply chain has changed everything to take maybe 10 times or five times as long and cost 10 times as much to get here. We used to ship a lot of our products via boat, and now I have to ship everything via air or have the cash flow to make sure that I have six months to wait until it gets here. And it has been extremely frustrating to have a lot of money sitting in different ports and just sitting offshore and then being low on products to be able to supply to these professionals that build their business on our products, and we can’t get it to them. But I know that there’s a container in Los Angeles and a container in New York, and we got some that landed via air, but it’s stuck in Ohio. They want our products. I want them and gotta figure out how to get to them.

Adam Honig: Wow. So you’re backed up six months with inventory, is that what I’m hearing?

Brett Benito: So what happened is we could get by with about a month or two of inventory, we had to basically take all of our cash flow and run really lean and put it all into inventory. So our inventory now, I have about six month supply of everything sitting in our warehouse, which in current economic times, then now, like on the flip side of it, still becomes even more worrisome. And possibly going to some sort of recession, but I can’t take the inventory down cause I can’t get it back.

Adam Honig: Right. So you’ve gotta build up the inventory to supply the demand. And then you’re worried, like if the demand slows down, what am I gonna do with this inventory? 

Brett Benito: Yes. 

Adam Honig: Have you seen much demand-side slow down though, or is the demand side still pretty strong?

Brett Benito: The demand side’s really strong. It’s only restricted maybe by new car deliveries, but those are coming back up right now; new vehicle deliveries. Whereas the demand as the situation hit in 2020, everyone pulled back for a second, invested in, oh what am I gonna do, I’m gonna spend it on my home. And the next thing they went to is what’s your most next valuable possession, either your car, your boat, your plane, something else like that. And so we actually saw a pretty large boom in that. I mean, we’ve been able to ride that going through this and everyone’s seen growth. We’ve seen really good growth through this. We’ve hired, we’ve expanded, it’s just the unknown creates some apprehension. But at the same time, there were a lot of industries that got hit so hard that they had to close down and we grew through that. So it feels like we’re in an industry supplying and protecting more high-end possessions and through professionals, the consumer demand is already there and they want a professional service installed. Our clientele seems to be a little bit different than some of the industries that got hit hard.

Adam Honig: Right. And because it’s harder to get cars, they really wanna protect them more and keep them longer, is this a trend that you’re seeing?

Brett Benito: 100%. It’s not just to protect them and keep them longer. That is one huge part of it. The other thing is that people are not as impulsive in buying a vehicle anymore. You order it and you wait six months, three months, sometimes over a year to receive your vehicle, and you have other things you’re doing, but then you start thinking about the vehicle and then you get on a forum or you get on some sort of group and you look up what people are doing to that vehicle. You get into an enthusiast group, and then everyone says I’m gonna put the ceramic coating on there, clear bra, I’m gonna do this tint, and I’m gonna do all these different aftermarket accessories. And so when their vehicle delivers, they’ve already lined up $20,000 worth of stuff they want to do to it right away. It’s Nissans and Kias, and it’s not just high-end vehicles that you’re waiting for, it’s everything. So everyone’s trying to customize their vehicle by the time it delivers.

Adam Honig: Gotcha. So there’s something about the anticipation of it that makes people a little bit more connected to the post-purchase process. That’s fascinating.

Brett Benito: And it’s exposed itself even more with our Tesla models, our number one vehicle that goes through all of our shops nationwide. And now it’s hitting the Rivian and those and the consumer that’s purchasing these electric vehicles is someone that has done a bunch of research. They’re looking at all those things. They’re a lot of times more connected to all those things. With the people that get probably the new iPhone every time, those customers are really in tune with all the stuff that they want to do. That customer experience, that educated customer that’s educated themselves online about a vehicle instead of just going to a dealership is the one that wants to have their vehicle protected.

Adam Honig: Gotcha. Now your distributors, the installers, I mean in a sense they kind of compete with the dealers as well, right? Because the dealers have offerings. But this process of maybe losing some trust with the dealers, does that open up the door for your distributors a little bit more?

Brett Benito: Two things open that up a little bit too. One being that the dealers, when the vehicle gets delivered, they used to have it on the lot and they could apply stuff at the dealership lot, and then they could sell it off afterward. But what we have now is the vehicle delivers and then the customer gets it right away. Then they go to another specialist. The other thing is that the automotive dealers, they’re going two ways. They’re just focusing on the vehicle and not really throwing a lot of accessories anymore because of that process, or a lot of them are partnering. We supply our products to dealerships, so we have some dealerships that are either going directly to us or going through our installers. A lot of our installers work hand in hand with the dealership to offer the services because the dealership doesn’t have the manpower to do it, but wants to make a little bit of margin on upselling it to their customers.

Adam Honig: Gotcha. And how many installers/distributors are you working with at this point?

 Brett Benito: We have about 5,000 in North America. We are focused more on a model where we have these elite dealers and these are ones that are exclusive on all of our products. We’re taking the US and dividing it up into 750 territories. We got about 150 of them in the pipeline with about 85 signed contracts. And we’re moving to support them because these are the larger business owners that are really running a well-oiled machine and they can use all of our marketing, our business support, all the support, and our technology support that we offer as well. 

Adam Honig:  I wanna talk about that, but I wanna get back to that in just a second. So you’ve essentially segmented your distributors into top tier and kind of everybody else, was that a hard decision to do? How did you get to that decision?

Brett Benito: So to get there, it took a little while. The recommendation I would have, or the path we took to it was a little bit long and winding because we always tried to find the biggest fish, the biggest installers and the biggest guys. It would’ve taken us a long time because we’ve had a philosophy, we don’t advertise or market to the actual client. We don’t market to the installer, we market to the end consumer. So we’ve tried to create the demand first, and by doing that, we had to have a lot of installers to supply that. Now what that’s enabled us to do is find the biggest ones and find the top 5% or the top 10% of installers because it’s hard to tell online who the biggest guy is. It’s hard to tell even from their shop and by having a lot of them come in, we can tell who the serious business owner is. Who’s working on their business instead of in their business. By finding those, I would’ve loved to say that we could have just found the top shops in North America and only sold to them, but it was by bringing everyone in and bringing a lot of guys in, that we built the brand up and then now we can really focus on the ones that are running exclusively.

Adam Honig: Gotcha. So you generated the demand for the installers and then you got to essentially test them out and see how they did with the demand too, in servicing the customers and then did the segmentation. I think that’s a really smart approach to it. I think this model that you have is really unique too, where you’re not just like hey, I build this product, distributors are gonna do whatever they want with it and sell it instead. You are really helping them run their own businesses.

Brett Benito: 100%. We’ve taken that approach from day one. We’ve even got made fun of for being a marketing company. And we’ve always had the belief that the biggest companies in the world, Red Bull, Coca-Cola and all of that,  their focus is on marketing. Red Bull has such a hold on marketing that they’ve had a million energy drinks come after them. They’re solid, I wouldn’t know what market share they have. But from my knowledge of online and just what I see, Red Bull owns it because they’ve put so much into marketing. Everyone in the world knows what Red Bull is, everybody because they’ve marketed so heavily. And so that aspect of it is what we focused on and then giving them the tools to get it accomplished and to make sure the product goes on right, it’s installed right, it’s sold, right, and everything else. Giving them the tools after we create the demand has been essential for the growth. And we see too many of our competitors just selling a product. They’re just a product manufacturer, and product distributor and they rely on their clients to market for them instead of us marketing as a manufacturing level marketing for them.

Adam Honig: Right. So you’re a distributor before they were doing work with you. I mean, they had a business, they were servicing cars, they were doing whatever kind of auto business they were in, and so this is something they could do or not do. And by generating the demand for them, you’re overcoming that resistance to doing something different.

Brett Benito: 100%. Now we’ve even just tested a new package we released called Ultimate Armor and it’s combining our products together. It’s our paint protection film with our coating. And we make all these marketing videos, we have a huge database of emails and things we’ve collected off generating these leads and these inquiries over the years. And when we actually launch something, the installers go “I want that Ultimate Armor, I want that Ultimate Armor.” They have thousands of inquiries right now for Ultimate Armor because we have that reach already. We want them to sell on every car, coatings and our clear bra because it’s a more product usage. It’s a better product, and it’s a better whole thing. We, the customer, it’s what I have on my own car. You want a clear bra on the front, coating on the back. And you don’t need to put clear bra on the whole car, you do this, we package it together as Ultimate Armor for your car, we push that message out, and all the customers come in asking for Ultimate Armor. And even the guys that weren’t paying attention to all of our meetings saying “Hey, this is what Ultimate Armor is, you should sell ultimate armor.” Now the customer comes in and says “I want Ultimate Armor,” and they’re like “Okay, guys, I’m selling Ultimate Armor, I wasn’t really paying attention. What is it?” And so we can create the demand that forces our installers to sell something, which actually, I’m not forcing them to something that doesn’t sell well, it’s a really high ticket service that the installers make a lot of money off of or make good money, and the client is very happy.

Adam Honig: It sounds like they almost don’t even have to sell it. Like people are coming into this saying “I want this, please help me get this. That’s the best kind of sale, right?

Brett Benito: That’s what you want as a manufacturer, is you create the demand and then our installers don’t have to sell that much.

Adam Honig: Now we’re talking about creating demand, and you mentioned Red Bull, but I think there’s something that you guys do which is really unique and different. Which is not like you’re running advertisements and people are aware of the product, you’re actually generating leads and sending it to the installers. Meaning hey, these people are raising their hand and they’re interested.

Brett Benito: A long time ago, we saw a hole in the system, as we were doing the marketing people would inquire with us through our website and we needed to get those leads out to installers as quickly as possible. And so we created a whole system from the ground up to be able to have that lead come in and then go out and get assigned out to the installers. And now we’re generating, let’s say 10 to 15,000 leads a month coming through just the US alone, and those go out and get paired with the local installer. So that they have that warm lead that’s already seen our video, been to our website, is educated, and then they just need to take it to a sale. We’re even working on that sales process. We got it all the way to where the lead says hey, raise their hand, I want this installed. Now we need to support them on things like what emails and texts and how the sales process should look because they’re busy. A lot of our clients are really good with their hands. They’re very good with installing and using products, but where they may fall short on is the outbound sales process. They’re really good in front of people, but that outbound sales process isn’t easy. You’ve got to text, call, email, and stay on top of it to get it closing into your facility.

Adam Honig: A lot of manufacturers who distribute leads to their distributors, sometimes have trouble telling what happened with those leads. Is that kind of a challenge that you guys deal with?

Brett Benito: It had been a challenge for a long time. So we had what we called our lead and warranty system, and the leads would go out and we wouldn’t know what they got converted into. So it was a huge challenge and closing rates and what the average ticket that it got closed for, that’s where we got involved in and built a thing we call shop manager. And that is to see the lead all the way through the quoting stage, an invoicing stage, all the way through getting the service completed, all the way to collecting the money. And then what we’re able to do with that is now see through that data, data is king, I can actually see what they convert to, and I can see that this many leads came in and this campaign, and it has this many work orders or opportunities created. And then this is the amount collected that got closed. And now I have full transparency for those shops that are using the full system into that. 

We have four proof of concept stores that we own. One in north county San Diego, a town called Carlsbad, one in Las Vegas and one in Houston. And we always knew our own closing rates and the activities it took to close them, but it was hard to get that out there. Now it’s just black and white. We can start showing that data that it takes and say okay, these vehicles, this lead campaign comes in. Whether that’s coming from Google, AdWords or Facebook because we run a lot of ads, it turns into this. And we even use that on the other side to see Facebook ads or when we go to an event to find installers because we don’t do that many ads for installers, but we do go to a SEMA, which is a huge car show in Vegas. And I can see how many people came in from that lead source and what we converted it into. That data helps us change our ad strategy and our marketing to get a better return on that investment. And that clarity is what a lot of our shops or a lot of businesses don’t have. They throw marketing dollars out at something, they cross their fingers and hope that sales go up.

Adam Honig: Oh yeah, for sure. I mean I was talking with a distributor of Building Products the other day, they sent out leads to all of their distributors and they were like “We have no idea what happens to those leads. Did they even call them? Did they even follow up?” They have no way of even finding out. You know, I think the strategy that you’ve got, which is creating the demand, distributing the leads, and then knowing what happens to them, that’s like the trifecta.

Brett Benito: Yeah, 100%. It gives us the data. I think the hardest thing as a distributor who generates leads and distributor that builds demand for their products within certain industries, the cold outreach, even though it’s a warm lead, but that sales process, say it’s a building manufacture, it’s a contractor, is used to selling to someone that’s in his office or out at a site. And that person’s already sold, they’re already there. The process of getting that lead in and then calling, emailing, texting, chasing it down, and doing the activities it takes to close it is not followed. And so the feedback as a distributor we would get is the leads are terrible. And I know because we’re getting the same ones in our shop that they’re not, but I also know that it took five emails, six phone calls and 10 texts to get the person to even come down to the shop so that we could sell them. That data, trying to show that to people and say tell us that they’re not good, but you texted him once. Did you expect them to just give you money?

Adam Honig: Right, people are busy man, you gotta call them at least 10 times. Come on, let’s go.

Brett Benito: You gotta keep on getting after it. 

Adam Honig: Exactly. I mean, you’re doing these people a service. They raised their hand, they said hey, I need to protect my car. They don’t have time to sit around and think about it, you got to help them. 

Brett Benito: 100%. The A to Z process gets farther down, doing as much as we can to get it all the way out. And we’re at that sales stage, and some of the things that we keep on coming back to is that if I could just put an ad out and run it on Facebook and someone would just book it and spend $4,000 on their car, just by clicking at a button, we wouldn’t need independent shops. I could just have it all sold and go through it and get it closed. But we have four of our own, I know it doesn’t happen. We’re not speaking from something that’s like not our own experience, that’s the reason why we have the four stores. It’s not because we want to own them, we want to be able to say “Hey, we’re in Houston, and we’re in Vegas. Yeah, we don’t have a store in the Northeast, but we know how the sales process is, so here’s what it is.” And firsthand, if you’re not doing these steps, you’re not gonna close them.

Adam Honig: What do you see coming up next Brett? Is it more distributors, is it getting deeper with the ones that you have? Where do you see this going?

Brett Benito: The elite dealer program that we have is just getting deeper with the big ones we have. The idea is that we are creating territories and creating programs and products exclusively for them. And what we want is to run with the people that are running with us. You can’t drag people along. If you see a vision and you have a vision and you know the vision works and everything seems to be working, there’s no reason to drag people that don’t wanna run with you. Find the people that wanna run with you and support them more, and you’re going to see more success. If you try to drag people to success, even when they get to the next level of success, they’re not gonna appreciate it, they’re gonna want you to do it more. They need to be engaged in doing it themselves, and that’s where we find ourselves going, is leaning into those people and creating a loyalty program, which is still something that says if you’re running with us, using all of our products exclusively, let me pour more money and time and resources into you.

Adam Honig: Right because you know where the ROI is, it’s very clear, and it’s right there.

Brett Benito: It’s so clear, you can truly see that it’s like if we put this much money in and their growth goes like this and okay, let’s keep on funding that, let’s keep doing that. 

Adam Honig: Great. You know, Brett, this has been great, this is such great advice for anybody who’s selling through distribution to think about how they can change the model. And it’s not just providing a product to the marketplace and hoping that the distributors can fulfill demand out there, but really driving that demand and pulling it through. Then focusing on the top distributors and tiering them, like you talked about, that’s really great advice. Really appreciate you coming on the podcast to share that with us.

Brett Benito: Well, I appreciate being here. Hopefully it helps a couple of people, just not my competitors.

Adam Honig: We’ll block them somehow. I’m sure there’s a technological way we can do that. But for those of you who are not Brett’s competitors, I’d like to remind you that you can find every episode of the Make it. Move it. Sell it. podcast at Spiro.ai/ podcast. And if you liked the advice that Brett was giving you today, maybe give us a nice rating. I don’t know Brett, do you think people should do that?

Brett Benito: 100%. Let’s get a good rating there.

Adam Honig: Please do, please subscribe, tell all of your friends and don’t forget to protect your car against all of the terrible elements that are there in the world with the ceramic pro solutions. Brett, really appreciate it, and thanks to everybody for joining in. This has been a great episode of the Make it. Move it. Sell it. podcast, and we look forward to speaking to you soon.