National Safety Council Annual Conference Orlando October 20, 2012

1. National Safety Council Annual Conference Orlando October 20, 2012

2. Introduction • Frank Lynn & Associates is an international marketing consulting firm specializing in ‘go to market’ strategies designed to improve the efficiency and effectiveness of the supplier and the ‘channel’ relationship. • Our role: Bring third party perspective on definitions of B2B relationships and the role of the Chapter.

3. Agenda • We strongly believe that functions should drive definition of roles, so we will talk about the functions of • Advocacy, Growth, and Fulfillment • Where are you strong? • What do you need in your network relationship? • What do you need from your channels? • Share thinking in a B2B context • Importance of Channels and Channel Diversity • Functions and Roles • Effective Territory Coverage

4. CHANNEL importance and channel diversity

5. The B2B Market Delivery System • The Market Delivery System • Defines what is needed for successful coverage of opportunities within an industry structure • Provides a disciplined diagnostic approach to balancing supplier and channel roles against customers needs Economics SupplierNSC Channel Chapter CustomerSatisfaction TargetMarketing End UserCustomer/Member

6. Market Delivery Definition Customer -- the end user of a product/service or the decision maker who impacts whether a brand is chosen Channel -- anything that moves goods or services, communication and money between an organization and its end users Supplier SpecialtyDistributor Direct Sales Chapter Dealer Retailer Catalog Value Added Reseller Website Mfr Rep Service Provider Exporter End User

7. Why End Users Buy from Indirect Channels? • End users buy from indirect channels because they add value to the sales experience. • One-stop shop • Bundling of products • Logistics and technical support • Ease of doing business Channel End User

8. Why End Users Buy from Indirect Channels? Channels perform a unique role in the marketplace and, from the end user’s perspective, are not an alternative to the field sales force, manufacturer reps or sales agents.

9. Economic Role of Channels Value Transfer • Marketing costs • Experienced resources • Local network development • Events • Media SUPPLIER $ Channel Cost Transfer $ • Buyers costs • Education • Logistics • Network END USER

10. Working With Indirect Channels is Different Than Selling Direct INDIRECT CHANNELS DIRECT CHANNELS Control Mindset Results Objective Perspective Culture High Customer is right Event-driven Revenue More is better Sales Low Channel may be right Market- and process-driven Growth Less may be better Marketing And a channel is not an ‘end user’ or a ‘customer’.

11. Market Coverage Basics Open Distribution • Any channel that wants it, gets it Selective Distribution • Only channels that agree to certain standards and meet established criteria • Overlap is “managed” Exclusive Distribution • Only one channel per geographic area • Organization may require/restrict some business practices

12. Market Coverage Basics The need for a range of channel partners grows as the marketplace matures. If all channels were full service, it would be simpler to provide coverage across all needs. But all customers are not the same, and coverage requires diversity. Developing Growing Maturing $ Managing Growth and Coverage Customized Solutions MATURITY time

13. Selling Effectively Across Diverse Markets Ideally, the channel structure covers the range of functions needed by different segments of customers. This helps to manage coverage and potential conflict in the market. Growing Developing Maturing Distributor Specialized Selling Value Added Reseller Marketplace Issues time Market segments become critical to understanding coverage needs. Competition intensifies. Broaden the offering. And begin to grow the customer base. Develop and introduce products. IndustrySales $

14. Can Channel Conflict be Eliminated? It can’t. Organizations seeking share and revenue growth typically have to expand the types and numbers of channels marketing their products. • As organizations expand channels, they achieve greater market coverage, and have to manage the conflict it creates.

15. Channel Conflict? Managing Diversity!

16. Supplier All Have Channel Challenges Resolutions Margin sharing, penalties or negotiated selling space Pricing analysis, sell value, reassess pricing structures Sales training, or R&D to fill gaps Structured roles and rewards for assertive sales efforts Differentiate support based on channel alignment Top 5 ‘B2B Issues’ • Channel conflict—crossing boundaries/territories • Product pricing— “too high for the local market” • Competition—need more differentiated products • Need for more proactive selling • Focus on product portfolio

17. Points to Remember . . . • End-User needs drive channel usage • Those “end-users” using an indirect channel often choose the channel before their “content” • A little conflict is a good thing -- it means you have market coverage • All participants should have a economically sustainable financial relationship -- relating to the specific fulfilment of the agreed upon role

18. Principle 1 – Strategy for Success Do what it takes to serve the customer and pay the channel that does the work

19. Functions and roles

20. Distributor Role An entity that • Buys and resells to end users • Keeps inventory ‘on the shelf’ • Carries noncompeting lines • Its value is defined by the ‘portfolio’ offered to its customers • One-stop shop, convenience • Bundling of products • Ease of doing business • Logistical support A distributor’s key value is ‘servicing a defined market’.

21. Value Added Reseller Role An entity that • Sells solutions and ‘customized’ products • Aligns with suppliers that fit its vertical or application • Grows its customer base by being less focused on logistics and more on problem solving • Works by referrals, outbound selling A VAR’s key value is broadening the available market.

22. Partner Role • A partner is defined by what they do, and their commitment to perform functions that differentiate them from any other relationships. • Uses their relationships to create leverage in delivering the mission’s message at the local level • Agrees to strategic alignment and compatible growth paths • Services, sells and grows the market A partner’s key value is expanding the potential market.

23. Chapter Role According to the ASAE standards, chapters are charged with • Carrying out the mission of the national group within a specified geography • Providing members with the opportunity to network and grow their businesses or professional skills • Carrying out local events to promote grassroots messages, share information and educate • Supporting community organizations willing to promote mission • Adopting key elements of the brand. At the highest level, an organization and all its chapters would look like one cohesive organization. Source: ASAE, The Center for Association Leadership

24. Chapter Role • In our discussions, a chapter.. • Runs a business with sound management, and a sound, experienced board • Has similar mission, vision, flies the brand flag • Supports the training agenda and delivers quality product • Knows the local market, has personal relationships • Educate and foster messages on safety through conferences, mailings, other local marketing efforts • Get people involved locally • Interact with local safety agencies to move safe community messages forward • Participate in legislative action as appropriate • Mutual input into key decisions

25. Chapter Role In combination, we have a very comprehensive list. It is not very consistent across territories.

26. Three Components of a Chapter’s Mission • A Chapter does all three to successfully carry out the mission on the territory level. CHAPTER Advocacy Growth Fulfillment Promotes mission and strategy through establishing a strong local network Knows the local market Supports the training agenda and delivers quality product Promotes accessibility Provides feedback to improve the value of the product to the user Supports the marketing initiatives and promote safe communities, safe driving, safe workplace Leverages those relationships to promote saving lives, and living safely Promotes membership growth, local conferences and events, mailings, other local efforts • Interacts with local safety agencies to move safe community messages forward Two-way communication with plans for growth

27. Coverage of Roles in the Territory • Coverage of each role in needed in every territory. A chapter takes responsibility for each role, and finds the appropriate channel in their network to connect to the customer.That is the role of a territory partner. Advocacy Growth Fulfillment “Broadening the available market” “Servicing a defined market” “Carrying out the mission” Advocate Role Value Add Role Distributor Role Value Add Role Value Add Role Advocate Role Distributor Role

28. Effective Territory coverage

29. Effective Territory Coverage • Effective chapters build and use a channel “network” to increase community presence, spread the message and reach the customers through… • What does your channel network look like? Media Community Leaders Regulators Complimentary Training Alliances (Colleges) Complimentary Service Providers Consultants, Advisors, Board Members Other Associations Linked Websites

30. Territory Effectiveness • Advocacy, Growth, and Fulfillment • Where are you strong? • What do you need in your network relationship? • What do you need from your channels?

31. Role Coverage—Your Territory Perspective • What is in your network? Channel Coverage Option? Needs Work Areas of Strength Community Leaders Media Coverage Regulators Complimentary Service Providers Consultants/Advisors Board Members Complimentary Training Alliances Web linkages Other Associations, ________, __________, ____________