EPISODE 41 – TOPIC SUMMARY AND GUEST:
It’s particularly interesting to talk with experts in our industry who are responsible for educational programs that drive business sales, but don’t have their roots in HR or training. They’re always thinking creatively and uniquely about how to do things better and improve results. Their business-focused progress and practices drive the whole industry forward, especially when it comes to working with channel partners.
So today, I’m thrilled to talk with one of those expert “doers.” My guest is Rob Moe, President and CEO of Sphere 1, a supply chain cooperative in the tool, fastener and concrete accessory business. Rob boasts a long and successful history in the construction and tool business, and brings that front-line, practical expertise to Sphere 1.
One of his organization’s core strengths is its university, which brings together industry channel partners in a thriving educational ecosystem of hundreds of suppliers and distributors.
Today, we talk about why and how product education is so integral to the success of Sphere 1 and its network. We also look at the co-op’s relationship with BlueVolt, the learning systems vendor that powers Sphere 1 University.
- Bringing suppliers and distributors together in a cooperative industry network creates significant business value for all involved. Active members gain the most. In this case, it translates into a +15% increase in annual sales.
- Training is more than just educating channel partners about product features. It’s also about teaching people how to sell, how to relate, how to advise and how to provide value to those that ultimately buy and use products.
- Gamification and incentives can be highly effective ways to engage channel partners in training programs. They can also be surprisingly cost-efficient.
Welcome, Rob. For construction professionals, Sphere 1 is a household name. But for those who aren’t familiar, could you share some background?
Sure. Sphere 1 is a 22-year-old construction supply co-operative with more than 160 members and more than 120 suppliers that service those members. And in the spirit of a co-operative, Sphere 1 is member-owned.
That means each of our members owns a common share of stock in the organization, and that entitles them to have a say in everything we do.
And what’s the benefit for distributors and suppliers?
By fostering agreements with our preferred supplier network, we give members opportunities to separate themselves in the construction supply world from the big boxes and the mass distribution entities.
It basically gives them a leg-up in jump-ball situations, when being even a couple of inches taller can make a difference – whether they’re up against a monster or just another distributor in their particular market.
It also holds true for our suppliers, because they know that members have an obligation to support the organization through our preferred supplier network whenever it makes sense for them.
Of course, it’s not a free pass. Suppliers and members have to demonstrate value to each other. But our co-op gives them a leg up by bringing them together and increasing mutual understanding.
That can come through our annual meetings, through social media, through our annual planning platform, or through our training platform. And ultimately, working together, members and suppliers can create synergies and build on those connections to be even more successful in the long run.
Could you tell us about some suppliers in your co-op?
Anything that a contractor needs, our distributors sell. And suppliers provide distributors with those products.
For instance, in the power tools space, our suppliers include Makita, Milwaukee and DEWALT. These companies are monsters in power tools, but each also offers accessories and other offshoots of their business.
And what are examples of distributors?
Our distributors serve four key vertical markets:
- Fastening – everything that fastens wood-to-wood for things like furniture and housing.
- Concrete and restoration – whatever is needed for things like pouring a house foundation slab, a bridge deck or road repair.
- Power tools and fasteners – perhaps 60-75% of our members are also members of the Specialty Tool and Fastener Distributors Association or STAFDA. It’s a wonderful trade association that serves this vertical with networking and training, but not with rebate programs like ours.
- Industrial fasteners – including nuts, bolts and screws used for plant maintenance and similar needs.
How important is training to members and suppliers? And how does Sphere 1 University play into this?
From a supplier standpoint, an online platform like Sphere 1 University is a valuable opportunity to reach members, capture mindshare and market their products.
That’s important. Because typically in this industry, the bigger the distributor, the lower the margins. And that leaves smaller distributors out in the cold. So it comes back to that jump ball situation.
This is where our university comes in. It gives our suppliers an opportunity to train our members not only on features and benefits, but also on the soft skills of their products. So they learn how to go to market with an educated representative that you’ll never find at The Home Depot.
Most contractors will pick a hammer drill off the shelf because the price is attractive. But when a Sphere 1 distributor, salesperson or counter person is there, they’ll walk people through not just the nuances of that drill, but the accessories that fit into it. They’ll ask a contractor how they’ll be using that tool.
And if the customer is drilling holes to install anchors, the natural response is, “Really? Because I sell anchors, too.”
Then the next-level question is, “You’re going to install those anchors overhead? Well, I have ladders to help you reach that height.”
And maybe even further, “If you’re working six feet above ground, you may need some fall protection equipment, as well. We have that…”
So training brings suppliers together with a distributor and teaches them their products, as well as the soft skills they need to sell more of their products more profitably. That supplier is there to support them.
And in turn, our members are motivated to buy products from those suppliers. They’re in it together. So the conduit runs in both directions.
Definitely. Now, with all these suppliers, there must be a boatload of content. How do channel partners know what training to take?
We work with an exceptional learning systems company called BlueVolt. From the beginning, they’ve helped us build this into one of the largest online universities in North America. We’re very proud of that, but we wouldn’t be here without them.
So BlueVolt has helped us build-out training tracks that help our members choose the right content paths for their salespeople, counter people, office people and purchasing people. So these tracks steer people to the specific content they need.
Where does the content come from and who sets it up in the system?
The suppliers provide it. Typically, their training has focused on features and benefits of products or groups of products. And they build-out that content in-house. Sometimes BlueVolt will help if a supplier doesn’t have the capabilities. But the content can be anything from a PowerPoint deck followed by a Q&A section, or now more increasingly, video content.
These modules can be as short as 5 minutes or as long as 30 minutes. Some are even built as a series that takes people through various steps. Content ideas sometimes come from member suggestions. Or distributors may ask suppliers to produce something that fits a particular product or product category. But all that content comes from the suppliers.
And how does the content go from suppliers into your ecosystem? Does Sphere 1 manage that for them?
Their training teams work with BlueVolt to handle all of that. The big three – DEWALT, Makita, Milwaukee – provide more content than anyone, as you can imagine. They provide hundreds of modules. And our university has north of 1000 modules, in total.
These multi-organization dynamics are great. How do you measure the business value of Sphere 1 University?
Every year, we provide a report card showing the value of university participation – as well as the consequences of not taking advantage of it. And the results are presented from the perspective of members as well as suppliers.
We have software that tracks the consumption of content provided by suppliers. And we map that data to the members whose employees took training.
We just finished our 2020 report. And interestingly, even with Covid, members that consumed supplier training – as well as suppliers that provided that content – grew more than 11% last year, combined. And 2020 was the worst year in history!
Typically, the annual growth rate is 15-18%.
Of course, it’s not a perfect world. Not every supplier provides us with content for the university. And I’d love to say that every member uses the platform to its full potential. But they don’t.
So for that very very small percentage of suppliers and members that don’t participate, they typically grow. But that growth is only about 1/3 of active suppliers and members.
So the value is there. Your members and suppliers can see potential to grow 10, 11, 15, 18%…
Training provides insight. But it’s also really the greatest opportunity to market your product.
Nevertheless, you can’t rely on face-to-face training alone. Certainly, in the last year, we’ve all found that virtual training is essential. But typically you want to blend it. Face-to-face when applicable, coupled with online.
And in reality, people are busy, so they probably don’t have a lot of time for training…
Going online and taking a 5 or 10-minute module during a break is easy. Plus, your distributor owner is incentivizing you to do so with a little extra nudge. It makes a lot of sense, instead of waiting for somebody to come in and try to teach you everything in a classroom. Especially during Covid, that’s not happening.
Your organization is one of the first I’ve found that uses gamification to drive training engagement. You call that program BlueBucks. How is that working?
When learners complete supplier content, they take a quiz. And if they succeed, the supplier rewards them with BlueBucks as an incentive.
The BlueVolt system tracks these completions and tells the supplier that X number of learners from Sphere 1 completed the content. Boom. Dewalt dumps all the related BlueBucks funds into BlueVolt.
Then BlueVolt disperses all those awards into their respective member accounts. And the value of BlueBucks is paid in gift cards.
So learners who accumulate BlueBucks can go online anytime and select whatever gift cards they want from the rewards menu. Restaurants and retail stores, Bass Pro Shops, you name it.
When I started here six years ago, the most in BlueBucks that had ever been paid out to Sphere 1 in any year was about $35,000. But since then, we’ve never had a year where suppliers paid our member learners less than $150,000.
And then last year, people weren’t going out because of Covid, so our distributor owners were pushing their folks to use the university. And overall in 2020, their learners completed 125,000 courses in 2020. So our suppliers paid out almost $260,000 in BlueBucks!
And it’s one of the longest-living education incentive examples in the industry.
Right. Now, what does that $260,000 mean to a supplier? Compared to the supplier’s overall annual marketing budget, it’s nothing. It is the most inexpensive way to create value.
Just think about it. Most BlueBucks rewards are about $3 per module. Some are higher. For example, if a supplier wants to promote a new product, maybe they’ll incentivize a learner with a $5 or $10 in BlueBucks. But on average it’s about $3 per reward.
That doesn’t seem like a lot. But for member learners, it’s a great opportunity to show that they have a completion. And some member learners earn thousands of dollars in BlueBucks every year.
So it works. And it’s an essential part of being successful in this industry.
Well, I buy into it 100%. As you look back over your years at Sphere 1, is there anything you wish you’d known when you started this program…?