Positioned for Growth: Sales Channel Optimization Mike Molinini President & CEO

Transcription

1 Positioned for Growth: Sales Channel Optimization Mike Molinini President & CEO

2 Airgas Approach to Customer Engagement (2012) Airgas Unique Advantages Market-segmented offerings Strategic Accounts team Field product & market specialists Supply chain management Strategic Accounts Attributes Multi-location High-Volume / High-Touch Products Advanced Technical Support Sales Relationship: Face-to-Face Market-Focused Field Accounts Core Field Accounts Attributes Standard Products, Route Delivery, Store Pick-up Basic technical support Sales Relationship: Face-to-face Market-Segmented with National or Strategic Account Managers Assigned Field Product and Market Specialist Support Field Account Managers Assigned Branch Accounts Attributes Sales Relationship: Store Walk-in, Phone, fax Airgas Branches 95

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4 Airgas Safety (Telesales) Background In 1996 IPCO Safety, a national safety distributor, was acquired by Airgas and became the foundation of Airgas Safety (Telesales) Today, Airgas Safety (Telesales) is a $235M/year safety products business, that generates all sales via a 200 person telesales force (175 sales representatives & 25 Sales Managers), directly shipping Safety Products from 6 regional Distribution Centers Approximately 80,000 safety only telesales customers generate average annual purchases of approximately $3,000/year per customer Today each Telesales sales representative adds an average of 70+ new accounts/year or 12,000+ accounts/year in total Approximately 35% of Airgas Safety (Telesales) customers generate revenue in the range of $1,000 to $12,000/year which is referred to as the Sweet Spot for this business model Defined the Sweet Spot because this group of customers has the size and buying frequency to be effectively sold through proactive sales communication, but are generally too small to receive sales coverage from any distributor field sales force Airgas Safety (Telesales) has a proven business model to profitably sell safety products to a wide range of customers 97

5 Airgas Safety (Telesales) Background (cont d) From Airgas Safety (Telesales) achieved a 9%+ sales CAGR which can be attributed to its efficient, personable, and low-cost business model: Single Point of Contact: The Airgas Safety (Telesales) Representative manages the sales process from RFQ through cash collection, providing seamless service Order Fulfillment: 99+% of all orders are shipped to the customer same day, with a majority received next business day Efficiency: Airgas Safety (Telesales) Representatives make 70 sales calls/day (out-bound and in-bound to existing and new customers), and also receive 8 hours/month of ongoing product training (after 120 hrs of initial training), and 4 hrs/month of one-on-one feedback consultation from their manager Significant Pipeline: Airgas Safety (Telesales) has developed a significant potential customer pipeline by honing its use of leads and external databases to selected customer profiles Pricing: Due to its scale and low cost model, Airgas Safety (Telesales) can provide competitive pricing to all customers from the small user to a multi-facility national account 98

6 to the Country s Leading Supplier of Gases, Welding & Safety Products Airgas Total Access was developed on the successful business platform of Safety Telesales, with expansion into: Gases Welding hardgoods Immediate areas of growth 1. Increased penetration of core manufacturing and construction regional small accounts 2. New/competitor-serviced manufacturing and construction small accounts 3. Small sites of Airgas Strategic Accounts not currently penetrated by the field sales force 99

7 Airgas Opportunity ~ $3B of competitive account opportunity 750,000+ potential existing/new customers Very profitable, under-served customer group Extension of Airgas field sales force 70 sales calls/day-rep Completely aligned with Airgas branches and field sales A channel and distribution model that would be extremely difficult and expensive for packaged gases competitors to replicate Best trained representatives in the industry Complemented with in-house and manufacturers technical support 100

8 Total Access Telesales Account Manager Transformation Training Supply Chain Skill Set Constituencies Traditional Safety Telesales Information systems Safety products Sales skills Distribution Center direct-tocustomer Vendor direct-to-customer Knowledge of safety products / applications Professional sales approach Organized Focused Customers Safety vendors Manager Airgas Total Access Information systems Safety products Gas / gas applications Welding hardgoods Sales skills Regional operations Regional competitors and local markets Distribution Center direct-to-customer Vendor direct-to-customer Region / branch supply Knowledge of safety, welding and gas products / applications Professional sales approach Organized Focused Collaborative with field sales force Customers Safety vendors / welding vendors Manager Regional sales team Regional operations / branch teams Note: Bold italics denotes new knowledge base acquired 101

9 Total Access Training with Welding Vendors 102

10 Telesales Channel Employee Resources # of Employees Includes ebusiness support Customer Service Technical Service & Training Total Access Legacy Telesales 50 0 Jan-11 Jan-12 Jan

11 Call Centers Aligned with Airgas Regions Nor Pac Nor Pac Intermountain NCN West North Central Mid South Great Lakes Mid America Nat l Welders Northeast East West Southwest South Telesales Call Center 104

12 Total Access Call Center One of Airgas five telesales call centers 105

13 Channel Collaboration Changing the Culture The Total Access program has been strongly embraced by regional leadership, field sales, and branch teams Quick recognition of the competitive advantage Total Access provides to their local market Total Access Specialists have become an extension of the field sales force Participate equally and actively in all local sales strategy discussions Numerous success stories of Total Access Specialists gaining access to customers where the traditional approach had never been able to get past the receptionist 106

14 Total Access Customer Success Stories Customer A Total Access Specialist called Customer A and landed Lincoln Electric welding machines & equipment order of $160K The Total Access Specialist engaged Field Sales Account Manager to assist with this account that resulted in follow up order of $53K Total Access Specialist and Field Sales Account Manager are now mutually pursuing gas and other opportunities within Customer A to further penetrate Airgas core products Customer B Field sales and Telesales had both previously pursued Customer B separately with no success Field Sales Account Manager went in to Customer B and presented the Total Access Solution which convinced the customer to give us an opportunity Total Access Specialist and Field Sales Account Manager collaborated on proposal which resulted in first orders within several weeks After being serviced through Total Access for several months, Customer B has recently committed to giving us the safety, welding hardgoods and cylinder gas business, which is estimated to be $300K for this 200 employee metal fabrication company Customer C Customer C was a service challenge for the branch model and customer was frustrated with service level Branch manager brought in Total Access to support the customer Sales are up 51% to ~$150K for the year Customer is now serviced direct from an Airgas regional distribution center Product returns and administrative errors have been reduced by over 90% in less than 12 months 107

15 Total Access Results To-Date 30,000+ customers currently being managed by our Total Access team Overall sales growth rate 30%+ Welding hardgoods and safety products growth outpacing gases growth Gases growth outpacing overall Airgas gas growth Recently began utilizing the Total Access team to sell to smaller sites of Strategic Accounts that have been underpenetrated by field sales organization Approximately 2,400 sites Annualized sales growth from $5.5M to $8.5M 108

16 Total Access Focus on Gas Total Access teams are now well-trained on safety and welding hardgoods Confident and capable in selling these products Rapidly developing the same level of expertise with gas/gas applications Full time trainer deployed Branch and plant visits to understand gas business & supply chain Collaboration with field to understand the local business of gas Pricing/supply/costs/competitive landscape are unique to the regional and local level 109

17 Total Access Next 12 Months 9 of 12 Airgas regions will be supported by Total Access by the end of CY2012 Remaining 3 will be on-line the first half of CY2013 Approximately 2/3 of the customer opportunity resides in the industrial markets Manufacturing Construction Basic Materials Energy & Chemicals Remaining 1/3 of the customer opportunity resides in the service markets, where the telesales model is in development Life Sciences/Healthcare Food, Beverage and Retail 110

18 ebusiness

19 The History of Airgas.com Airgas.com was developed 12 years ago Underlying technology has not been updated Virtually no user experience changes made since 2007 Meanwhile, there have been many cultural, technological and economic changes that impact our customers The adoption of technology tied to the Internet has skyrocketed amongst our B2B customers Mobile devices are now constantly linked to the Internet and provide a useable interface for research Social media has arrived and it is considered a future influencer in the buying process Future professionals grew up with digital and it is their preferred method of interaction and research According to the CEB: 57% of a customer s buying process has been completed on-line before they actually contact a supplier 112

20 Online Retail Trends in the U.S. 113

21 ebusiness is Becoming a Key Transaction Enabler to All Airgas Customer Types Fortune 150 Company Global healthcare products manufacturer connects to our website via 3 rd party software to research products and place purchase orders directly into our system Top 50 Research University This leader in medical and life science research has over 100 active users and averages over 300 visits and 200 orders a month on Airgas.com for specialty and research gases Small Welding Service Business This Louisiana-based welding service has one user that connects on Airgas.com every few weeks to find products and place orders ($5K over the last 12 months) 114

22 Airgas ebusiness Platform Overlaying a digital platform across 3 major operating systems and 20 independent databases was not practical for Airgas until now Our investment in SAP creates the foundation on which to build a consistent ebusiness platform across all customer touch points 115

23 New ebusiness Platform Design and Execution Timeline CY2012 CY2013 CY2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Strategy Development & Planning Software Evaluations & Selection ebusiness System Design ebusiness System Implementation & Testing Go Live Airgas.com Renovation Project Completed the Strategy and Planning phase in early October Currently engaged in the ebusiness systems design process and new software evaluation and selection Projected launch date of new Airgas ebusiness Platform is Q1 CY2014 Simultaneously implementing Airgas.com Renovation project which is focused on improved user experience on existing software platform 116

24 Airgas.com Renovation Project Completing enhancements to existing website in early CY2013 while new website in development (new website to go live CY2014) Providing a bridge for customers in terms of the user experience and creating relative, personalized content for them Project to focus on improving the on-line buying experience, as well as building market relevant content to the most important segments 117

25 Benefits of the New Airgas.com Platform Industry has experienced significantly higher retention rates for customers engaged through ebusiness platforms Large industrial hardgoods distributors report online transaction rates of 25% to 35% One large, well-known industrial distributor last week cited that 34% of its sales are transacted over the web, and they expect that figure to grow to 50% Current Airgas experience: less than 5% of transactions conducted online Up-sell/cross-sell: large industrial hardgoods distributors report an average of 10% lift in sales to ebusiness customers in the year following implementation, with continued meaningful increases in the years thereafter New customer/sales benefits: creating a robust online experience supports finding new customers (both digital and traditional) 118

26 Benefits of the New Airgas.com (cont d) Order processing Industry average per order processing costs are approximately $5.00 by phone and less than $0.50 via Airgas.com Airgas processes approximately 13.5 million orders per year Invoicing Airgas can save approximately $0.50 for each invoice processed electronically vs. paper Airgas issues approximately 15 million paper invoices per year Customer Service Customers generally prefer accessing routine customer service issues online Airgas services millions of customer service inbound calls per year Infrastructure build underway to enable benefits A robust state of the art ebusiness platform will effectively support all sales channels and put Airgas in a leadership position in the rapidly evolving digital transaction space among its primary competitors 119

27 Sales Channel Development Summary Strategic Accounts Market-focused National Accounts Managers pursuing the leading customers in their markets Supply chain optimization Market-specific process improvement Core Accounts Market-focused migration in geographic areas of high customer density Targeting key suppliers and sub-suppliers of significant strategic accounts Telesales Effective offensive weapon to grow share in the most fragmented, underserved and profitable customer group ebusiness New robust platform will provide a more efficient and effective way to connect to and service our varied customers, enhancing the Airgas experience 120

28 Airgas Approach to Customer Engagement (Future) Airgas Unique Advantages Market-segmented offerings Strategic Accounts team Field product & market specialists Supply chain management Nationwide telesales team Robust ebusiness platform Strategic Accounts Attributes Multi-location High-Volume / High-Touch Products Advanced Technical Support Sales Relationship: Face-to-Face Market-Focused Field Accounts Segmented Sales & Marketing Program with National/Strategic/Regional Field Sales Person Assigned Field Product and Market Specialist Support Field Account Managers Assigned Core Field Accounts Attributes Standard Products, Route Delivery, Store Pick-up, DC direct Basic technical support Sales Relationship: Face-to-face Total Access Accounts Attributes Standard Products, Route Delivery, Store Pick-up, DC direct Basic technical support Sales Relationship: Phone Telesales Rep Assigned Airgas Branches Branch Accounts Attributes Standard Products, Store Pick-up, DC direct Sales Relationship: ebusiness, Phone 121

29 Opportunities Abound

30 Sales & Gross Profit Expansion Implications Relative Opportunity* Increased Gases Production $ Market Segment Focus $$ Strategic Accounts Program $$ Supply Chain Management Solutions $ Strategic Pricing Capabilities $$$ Total Access Program $$$ ebusiness Solutions $$ * Dollar signs ($, $$, and $$$) are used as directional indicators of the relative order of magnitude of contribution of each area toward the Company s mid-term financial goals. They do not and are not intended to represent precise relative proportions. 123

31 Operating Efficiency Implications Relative Opportunity* Bulk gases supply chain and logistics $ Improved transaction accuracy (SAP) $$$ Cylinder gases supply chain and logistics $ Cylinder utilization $$ Hardgoods supply chain and logistics $$ ebusiness solutions $$ * Dollar signs ($, $$, and $$$) are used as directional indicators of the relative order of magnitude of contribution of each area toward the Company s mid-term financial goals. They do not and are not intended to represent precise relative proportions. 124

32 Summary Sales and marketing as well as operating efficiency improvement efforts have been significantly hampered for the last 18 months due to the size and complexity of the SAP implementation Although SAP is not yet complete we are quickly exiting the tunnel with every month better than the previous one During this period We continued to add Strategic Account resources and specialists to the segments offering the strongest growth potential We continued to build out the physical and human infrastructure needed to execute the Total Access telesales strategy We initiated development of the technical and human resources to create and deploy a state of the art ebusiness platform fully interfaced with SAP to support sales growth and an improved customer experience across all sales channels and customer segments 125

33 Summary (cont d) During this period (cont d) We adopted a more strategic approach to pricing with positive results and more fields to plow Studies well underway on areas of potential additional operating efficiencies and have a clear path on what to work on next We completed one new merchant ASU, have announced a second and continue to evaluate others We developed and are implementing a new cost-effective proprietary telemetry system to feed real time consumption data to a new bulk gases dynamic routing system currently in beta test Although much of our public commentary has been about the status of the SAP implementation and realization of initial benefits, much more has been underway in spite of the challenges of SAP The foundation we have built is strong, and development of the programs to further leverage our foundation for long-term growth and enhanced profitability is well down the road to completion 126