Transcript

Hello and welcome to Make it. Move it. Sell it. On this podcast, I talk with company leaders about how they’re monetizing 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’re talking with Kirk Reiniger, the VP of sales for Ennis Fabrics, which is, in my opinion, possibly the best international distributor of globally sourced technologies and supplies in the world. Welcome to the podcast Kirk.

Kirk Reiniger: Thank you for having me Adam, I appreciate that. We’re globally sourced textiles. 

Adam Honig: That’s right. And what do you find to be the most popular textiles? 

Kirk Reiniger: Well it’s different. I guess we’re a bit unique from an industry perspective Adam, in that we service a wide variety of markets. So from a business perspective, we sell anything through to furniture manufacturers, to somebody who’s repairing or refurbishing a boat. So it depends, our customer would determine their favorite textile.

Adam Honig: Gotcha. Do you have a favorite textile? Like there’s one thing that you’re trying to sneak home from the office every day so you can make a couch out of it or something like that?

Kirk Reiniger: We’ve got one product called challenger and it’s the best seller in our company. So there might be a little bit of it around my home for sure.

Adam Honig: All right, challenger huh, sounds good, I’ll have to look that up. Hey, I was hearing that Ennis Fabric turned 50 years old a couple of days ago, is that true?

Kirk Reiniger: Yeah, June 1st was our 50th anniversary, so we’re really proud of that. 

Adam Honig: Right. Well I know a lot of companies that maybe are not quite 50 years old, would love to know any sort of tips or anything that you feel like you could maybe pass along. What made you guys so successful over those years?

Kirk Reiniger: For sure. There’s a long history to the business and I won’t bore the listeners with it, but it was started by Mr. and Mrs. Ennis now a second-generation in the business and we have a third-generation family in the business. And I would say staying true to the original spirit of the business. As the business grows, there’s no question it gets more complex and more difficult to manage as you grow across geographies or grow across markets. But I would say the secret sauce from our perspective is to stay true to the core of the business. And the customer’s gotta be out front of that at all times. If profits or operational excellence become the core of the business and no longer the customer, my opinion anyway is that’s not a recipe for success.

Adam Honig: That’s right. So it’s really keeping the customer in mind all throughout as the company grows and I bet having the family connection really helps with that. 

Kirk Reiniger: Yeah, like from an internal culture perspective, we’re a family-owned business but we’re an employee-run company. The family can’t run the business anymore, it’s getting to be too big and too complex. But we work very hard to maintain the spirit of the family culture and the original culture of the business that Mr. and Mrs. Ennis started it with. So we’ve got Jim Ennis, who’s our president and CEO, but he’s got four sisters that aren’t in the day-to-day business, but they’re in the office on occasion, and just continue to bring the family back into the conversation. In fact, we just had dinner last night, celebrating the 50th anniversary, so it was great to connect with the family.

Adam Honig: That’s awesome. I was recently at one of our other customers and they had, in the hallway, the grandfather who started the business, like an oil painting of him and the son who is the former CEO and now the third generation. So it sounds like that kind of situation for you guys a little bit.

Kirk Reiniger: Yeah, we’ve got the same photography concept in our boardroom.

Adam Honig: Gotcha. There must be somebody who specializes in that, like their whole business is about doing the family portraits for family businesses or something like that. I don’t know. That sounds like a business we should invent if it doesn’t exist already.

Kirk Reiniger: Yeah, well, the original picture might have been a Polaroid, but I think the newer ones are better quality.

Adam Honig: Nice. Now as you’re leading the sales efforts at Ennis, I know one of the things that you guys really focus on is helping the sales team focus on your tier one accounts. So can you tell us a little bit about how you got to the notion of really segmenting your accounts and getting the team to focus on them?

Kirk Reiniger: Yeah, for sure. As I mentioned at the beginning, we’ve got quite a diverse customer base across multiple markets. And as the business grew, it was apparent that we had to understand the markets differently and we had to build business processes and product development strategies differently across different markets. So we started segmenting the customers 20 years ago. And I think we’re up to 40 or 45 different market segments from a customer segmentation perspective. Which adds challenge from a sales organization perspective because when the company was young, the sales team could essentially take care of all customers in all markets. 

As the business grew, we had no choice but to move into more specialization from a sales facing-perspective to ensure that our sales team were the product experts for our customers. And as sales territories grew, and just the business group, one of the challenges was ensuring that our call cycle was managed properly and we were covering all of our customers. And ensuring that we were talking to the right customers at the right time, depending on when they needed to see us. So using technology to help us measure, manage and monitor that call cycle approach, that ensured we were speaking to A: customers a certain number of weeks, and B: customers at different number of weeks and C: customers a different number of weeks was really important for us to assist the team because it became a bit difficult to manage on a spreadsheet.

Adam Honig: Yeah, for sure. And in talking to a lot of distributors, the notion of staying present with people who are potentially ordering products is really important, but of course, the sales team can’t be with everybody, as you said. So having that segmentation allows you to put the efforts in the right place. We did some work with this biotechnology company and they actually did a chart of how frequently their sales teams met with people and what the order cadence was. And there was typically a pretty strong relationship between the number of meetings and what the orders were gonna be in the future. Is that something that you guys have looked at at all? 

Kirk Reiniger: For sure. There’s no question that being present and top of mind from a customer-facing perspective is really important for us. We like to say we wanna be number one on the speed dial with our customers. So from a sales-facing perspective really important, but we also then built an internal infrastructure to support our customers because that sales reps are not always available and they can’t always stop, and drive across the city or whatever the case may be. So we’ve got an internal customer-facing group as well, that would handle the day-to-day activities with the customers. And allow my sales force to go through their cadence and present new products and wherever required troubleshooting, escalation of potential issues, and things of that nature. So we’ve taken an inside-outside field team approach, and that seems to have worked very well for us.

Adam Honig: Yeah, that makes total sense. I was thinking about a different customer that we were working with and when they mapped out the activities against orders, they found that a certain percentage of their sales team was spending a lot of time with customers who weren’t ordering almost at all. And when we really dug into the data, it turned out that they just really liked the people at those accounts. And so in sales, of course, building rapport is such an important thing, and getting to know people, building that trust and stuff like that, but sometimes it seems like it can go pretty wrong at the same time.

Kirk Reiniger: No question. So visibility and access to the information is obviously the key, and so that is a common problem. And in maybe an older school or more traditional sales model, whereas hey, just go make five calls a day and you make your five calls a day and everybody’s happy. But digging into what were the five calls and how often are you going to see the same person over and over and over again? When are you going to see that person 10 times a month kind of thing? So access to that information, and that data is critical for the proper management of the customer base and proper management of the call structure.

Adam Honig: Yeah, that, that makes total sense.  Now I know a lot of our customers have really shifted their sales model in the past couple of years, due to the pandemic and then due to the changes in technology and stuff like that. How has that experience been for you guys? Have you noticed any different changes in the way you’re running the sales team?

Kirk Reiniger: Yeah for sure, in fact, some of the bigger changes are how our customers are accepting communications, and selling activities. So obviously through the pandemic, a significant number of customers were either closed or very limited to people coming to see them. So from an internal perspective, our team had to shift, we were like go see the customers and follow your route and do your thing. But all of a sudden now customers said I don’t want you to come see me anymore. So that was a big mental shift for our sales team. You know, you’ve got stallions out on the road that you’ve gotta figure out how to put them in the stable, so to speak, and still keep them productive. So a lot of training and education and learning around video conferencing and even just simple telephone communications, now text messages, all the different ways that a customer can communicate with you; direct messaging and chats. And so we had to do a lot of training and education on those tools and investment in resources. But as difficult as it was, it was how do we get the messages that we want to get out to our customers when we can’t go see them?

So we had to really retrench from and accelerate, I guess, our digital marketing tactics and digital communication tactics with these customers. And some now are saying you know what, I really don’t need to see a salesperson quite as often as I thought I used to. And now my salespeople are also saying I don’t think I’ve gotta go see the customers quite as often as I used to and use technology to supplement that. So no question, it had a big change on us, but from an evolutionary perspective, probably at the end of the day makes us more efficient.

Adam Honig: Right, it’s really interesting. So we have a customer who makes these room-sized crushing machines, basically, if you want to take big boulders and make them into gravel, that’s what they sell. I don’t even know how much they weigh; multi-ton machines. And of course, when they sell them, they bring them to the customer side and demonstrate them. They were like how the heck are we gonna do that on Zoom? But they figured it out, they were like okay, we’re gonna do these videos and we’re gonna do this thing. And we’ll give you the sample of the output, like the crushed rock, and we’ll send you the quality of that. And so a lot of people have embraced the change that comes through to really revamp their sales process. It’s interesting, I wouldn’t have guessed that that was gonna be the outcome of this era, you know?

Kirk Reiniger: Well you know, it’s interesting because being a textile company, years ago we would’ve never thought somebody would’ve purchased a sofa online, or that somebody would’ve purchased clothing online. And everybody wanted to touch it, feel it, check it out and deliver it to my house. And the world would be commerce, and just the digital tactics that are out there now, you have no choice but to evolve or you’re gonna get left behind.

Adam Honig: Right. I was reading about this thing, especially in clothing purchases online, where a lot of people are ordering multiple sizes at once. It’s like I’m typically a size 9 sneaker, but I’ll buy the 8 and a half, the 9 and the 9 and a half all in one go, and I’ll just return two of them. And what I’ve been reading is a lot of companies, when they get an RMA back, they can’t actually resell it, so there’s quite a lot of waste going on. I imagine nothing like that happens in your business, but it’s interesting to think about all the different implications that come out of this change that we’re going through.

Kirk Reiniger: Yeah, obviously the giant in the room is an Amazon. And we have customers that are selling B2C e-commerce, and we do some blind ship drop ship of products and things of that nature. But if we had to deal with all the returns because of buyer’s remorse, or it’s not exactly the blue that I thought it was gonna be, we wouldn’t be doing it either. Yeah, from a distribution perspective, it would be a logistics nightmare. So I’m glad it’s their problem and not mine.

 Adam Honig:  For sure. And you guys don’t compete with Amazon in any way, I assume?

Kirk Reiniger: No, there are textile companies that sell on Amazon as an example, but we don’t compete directly with them. No, we’re a B2B wholesale company, so we’re not direct to the consumers.

Adam Honig:  I’ve been reading about something called the Amazon effect, which is sort of an expectation with customers about levels of service and delivery that people are getting from Amazon, do you feel like that’s in your customer base as well? Do you get that sense at all?

Kirk Reiniger: There’s no question it’s had an impact. Our business model has always been the speed of service. So if you order your product from us by 2:00 PM local time, depending on which distribution center, you get it tomorrow through a courier network. The reality is from our wholesale business, we’re experiencing a bit of the opposite through the pandemic and all the supply chain and logistical issues that are out there in the world today. Most don’t expect it tomorrow anymore because I can give it to a courier company and he might deliver it in four days, so it’s become so unreliable. So hospitality is the same way, you know, I’m back traveling, I’m on the road, and you can choose which day of the four or five days you’re gonna be there that you get your room made back up, or room service. Nope, you can’t have that, it’s Uber Eats. So just that service experience has definitely changed. And the pandemic’s changed it for the better or the worse, I don’t know yet. But that Amazon expectation, there’s no question that that instant gratification society makes it more and more challenging every to perform to the expectation.

Adam Honig:  Yeah, and the other big challenge that we’ve been hearing a lot about is because a lot of companies are supply challenged that they’re really limiting the number of new customers that they’re bringing on board. As a matter of fact, we have one customer in the electrical conduit business who flat out told me yeah, we’re not taking any new accounts, we’re doing everything we can to service our existing customers. And even then we had to drop the lowest tier off. We just couldn’t provide the products to them. How’s that going for your business?

Kirk Reiniger: We’ve actually taken the exact opposite approach. So through the 50 years history of the business, there’s been a few difficult times and some ups and downs and bumps, but we’ve always taken a philosophical approach. So when things get tough, we accelerate and are so fortunate to have a very very stable ownership, and a cash-positive company. So we actually used that stability as a sales strategy. We call it ‘use cash as a weapon’ in our industry. And we actually purchased more inventory than we wanted or needed and allowed us to be the company that if it wasn’t available somewhere else, you could call us and we had it, and we ship it. So we took a much more aggressive approach, we didn’t retrench at all, we accelerated.

Adam Honig: Gotcha. So kind of using inventory as your strategic advantage in that? 

Kirk Reiniger: A hundred percent. And when the supply chain is difficult, people that are less sophisticated from a supply chain management perspective struggle, and the people that are more sophisticated from a supply chain management perspective can grow and succeed. 

Adam Honig: Gotcha. And I know you have your own operation in mainland China, do you feel like that helps with the strategy or is that just the normal way you would do business anyhow? 

Kirk Reiniger: No, that for sure helped with the strategy. It helps with the strategy anyway, but we’ve had that operation for 25 years and the reality is the textile industry is heavily dominated somewhere in Asia. And so we took a position that we required our own operating company in mainland China, probably close to 25 years ago with our own employees, it’s our own company. And in order to do what we needed to do as a business, we had to manage the quality. Quality control, that’s always the biggest challenge, so we essentially created a quality control operation and a container consolidation operation to multiple distribution centers in North America.

Adam Honig: Gotcha. Well it sounds like using the inventory as a strategic weapon really lets you lean into a place where your competitors are not able to make those investments, so I think that’s really important. Probably if I had to think about the different things we talked about today, using the inventory as a strategic weapon, segmenting and really focusing on the customer needs as you build out that segmentation, that’s also a really great takeaway for people here today. So I think we’ve covered a lot of really good ground here Kirk, I really wanna thank you for joining us on the podcast.

Kirk Reiniger: Not a problem, glad that I could do it and call me anytime.

Adam Honig: All right, sounds good. Well listen, as a reminder for everybody who’s listening in here, you can find every episode of the Make it. Move it. Sell it. podcast at spiro.ai/podcast. And if you really wanna have some fun, you should try saying that three times. But in the meanwhile, if you’d like to subscribe, you can do so right on our website or on any of your favorite podcast platforms. And if you thought what Kirk and I were talking about was interesting today, why not give us a good rating. I know Kirk would appreciate that. You know, and if you’re looking for fabrics, I sure hope that you know Ennis Fabrics is the place to go. With that, I’d like to thank everybody for tuning in and we look forward to speaking to you in the next episode.