As corporate merger mania marches on, companies across a range of industries are acquiring and reconfiguring in pursuit of that elusive corporate buzzword: synergy. And the commercial gas industry is no exception. More than a year ago Airgas, North America’s leading supplier of industrial, medical and specialty gases and related equipment, embarked on an ambitious program of concentration and integration aimed at winnowing the company’s 40 far-flung subsidiaries into 16 well-oiled regional companies.
You’ll find the Airgas product line, including such gases as oxygen, nitrogen and argon, in an array of applications, including medical oxygen for respiratory patients, nitrous oxide for anesthesia, industrial oxygen for cutting metal and inert gases for product packaging. According to Airgas VP of sales and marketing Pat Visintainer, the corporate reorganization comes as the next logical step following 15 years spent acquiring peripheral businesses to complement the company’s existing product lines.
“As we investigated our customer base we found that many industrial gas and welding supply customers also purchase large quantities of safety supplies,” Visintainer says. “In response we’ve acquired safety companies to offer these options to our customers. We’ve also acquired wholesale tool distribution companies. Industrial tools are used in metal fabrication, so where customers are buying industrial gases and welding supplies from us, they’re also likely to buy tools.
As customers look to reduce their overall costs of procurement and reduce the number of suppliers, Airgas is horizontally and vertically integrating our products and services to satisfy those needs.”
THE BIGGEST “SMALL” COMPANY
From the sales standpoint, Visintainer says, Airgas seeks that happy medium between taking advantage of the resources of a large company and maximizing the responsiveness of a local operation.
“We’ve acquired some pretty good companies,” he says, “so it’s been effective to let them operate with virtual autonomy. That’s because the industrial gas business is dependent on local conditions. We respect the local market differences, and that’s what has made us a successful company. So what we’re trying to do now with the repositioning is to maintain that decentralized business environment, yet make available additional national resources and capabilities to these local businesses so they can still be flexible and operate like small to medium-size companies. We want to be the biggest small company around.”
Visintainer says that a great deal of that flexibility involves remaining true to the shifting demands of a diverse customer base. So how do you find out what your customers want today? Visintainer offers a revolutionary concept: just ask. Tackling the 16 companies a few at a time, Airgas has been steadily interviewing a representative sampling of its customer base about the company’s customer service efforts, order fulfillment practices, and production and distribution practices. According to Visintainer, the results of these surveys have directly driven company innovations and policies.
“What we found out from our customers was three things,” he says. “They want to be billed properly, they want to be serviced on time and they want us to ship complete orders. So based on that, we’re repositioning our organizations around the customer’s expectations. Now, for example, when a customer calls in to one of our operations, we’re going to make sure they get an answer to whatever their concern is on that first call. And that’s just one example of something that has come directly out of the interviews – something customers want us to give them.”
SOLICITING GOOD COUNCIL
Customers aren’t the only interested parties affected by the company’s new corporate makeover. Many Airgas sales representatives expressed concern that by becoming a Wall Street conglomerate, Airgas would in fact become less responsive to local needs and institute a top-down, micromanaging corporate structure. To counter this fear, Visintainer says, Airgas has created strategic councils composed of experts from diverse levels, regions and divisions of the company, charged with providing valuable input and moving the company forward in different product areas. He maintains that the councils’ success depends on the variety of perspectives they represent.
“Each council has a regional company president on it,” Visintainer says. “Then there might be two or three account managers from a regional company with no particular expertise except that they are top salespeople. Then there might also be product specialists in the council. In such a diverse group, reflecting a wide expertise and experience, you get everyone’s viewpoint. So the regional president might have an idea, and the salesperson can provide input on it. ‘Is this going to work in Peoria, IL? What about Los Angeles? Or Tampa, FL? How realistic is our approach to supporting these people as they go out and try to sell this particular product?’
“For example, safety equipment is new to most of our regional companies. Questions the council might address include: ‘How are we going to be effective selling safety equipment?’ ‘What safety products can we be effective selling?’ and ‘How are we going to make our sales organization sell these products and make sure we have high fulfillment and an excellent service rate as customers order safety equipment?’ So the councils come up with ideas to improve the quality of our sales efforts and drive positive change within the company.”
Visintainer says that in eight areas ranging from safety products to scientific gases the strategic councils have generated realistic, practical approaches to improving the company’s presence. Besides finding new ideas for selling the company’s existing products, Airgas is also actively pursuing ways to leverage the company’s strength in its conventional business to generate sales from new divisions.
“Airgas is a $1.5 billion company,” Visintainer says, “and about $1.2 billion of that comes from our traditional and core businesses in the regional distribution networks – industrial gases and welding supplies. The other $300 million comes from the acquired product line companies, like safety and tool products. But we have the most extensive distribution network of any company in our industry. Now we’re trying to cross-pollinate that expertise to leverage the regional distribution network and add the new products and services we can offer our customers.”
EXPANDING THE SELLING SCOPE
If talk of cross-pollination and leveraging regional distribution networks sounds like so much executive-speak, not to worry. Visintainer clarifies by illustrating what this initiative means on the front lines for the company’s salespeople.
“I want all 950 salespeople to recognize every business opportunity that Airgas can and should participate in,” he explains. “If it’s a metal fabrication account, if it’s a health care account, if it’s a research and development account, that sales rep should stop at that facility and effectively convey the capabilities, products and service offerings of Airgas to that particular market sector.”
In essence, Visintainer says, Airgas would like the company’s salespeople to stop thinking of themselves as merely selling an individual product line or service and instead consider the whole scope of opportunities within accounts for all the products and services Airgas offers.
“With our distribution capabilities we’ve got more feet on the street than any other industrial gas company in North America. And we don’t think it’s asking too much to expect all 950 of those salespeople to talk the Airgas talk, which means recognizing every business opportunity that Airgas can and should participate in and clearly and professionally sharing with the customer all the value our numerous products and services can bring to that customer.
“This is what it means to be a sales professional. They become relationship managers, rather than just sales reps hawking a product. Of course we understand that they may not be able to provide all of the expertise necessary, that not everyone can be proficient in CO2 beverage applications, in ethylene oxide steryline gas, in sterilizing hospital instruments and in sulfur hexafluoride. But within every regional company there are product specialists in all of these areas, so the salesperson’s job is to identify the opportunity, then Airgas can redeploy the right specialist who can exploit the opportunity. It becomes a true team sales approach.”
RESTOCKING THE SKILLS INVENTORY
Though fulsome in his praise of the Airgas sales force, Visintainer acknowledges that this shift to a more team-oriented, company-wide approach to the sales process requires different skills than the company’s salespeople may be used to. For this reason he has made performance improvement, skills training and clear career path development an integral part of the transition schedule.
“Right now,” he says, “with the company’s director of training, we’re in the process of assessing our salespeople’s skills sets and analyzing their strengths and weaknesses. From that we’re developing a performance improvement process so that each salesperson will have a specific skills inventory. That way every member of the sales force will have a performance improvement process mapped out for them that they will be expected to adhere to.
“So what will result from all this is that we will be able to distinguish ourselves from our competition in two ways: We will have a more diversified product to offer, and we will have better skilled people in front of the customer. Today, product differences in most industries are negligible, but in our industry they’re nonexistent.
We can’t exactly go into a customer’s office and say, ‘Our oxygen is better than our competitor’s oxygen’ because it’s not. That’s a lie. But we can offer better selling skills and become more of a one-stop shopping service for those customers who can take advantage of our broad product line.”
Visintainer also recognizes the essential role the company’s sales managers will play in this transformation. They not only need to buy into the changes, he says, but like the salespeople they manage, the managers must also learn a new set of skills.
“The sales manager’s job does change,” Visintainer explains. “They have to be good coaches and they have to be sales leaders. Unlike in the past, the sales manager will no longer have all the expertise. So rather than having more product knowledge than anyone around, the sales manager needs to be a good team leader and a good communicator.
They have to oversee the relationship builders and the specialists so that everyone is selling Airgas to customers in each of the market sectors where we do business. They have to be running their sales team so that everyone in the organization knows the best way to access the right expertise to make sure the entire operation runs smoothly. So at the same time as we’re looking into new skills for our salespeople, we’re also highlighting a new skills set in assessing the training we have in place for managers.”
UNDERSTANDING PEORIA
In coming back to managers with ideas from the strategic councils, Visintainer emphasizes that the company is merely providing a suggested framework that has to be adapted to meet regional needs. This, he says, helps reinforce the idea that Airgas is not forcing iron-clad global policies on local markets.
“Let’s take the example of safety products,” Visintainer says. “In some cases we provided a framework of plans or guidelines. We would say, ‘Here are the people you need to talk to. Here’s what the market potential is in this area of the country. Here are the products and services that you can be most effective selling to this customer segment.’ So we say ‘Here, take the pieces of the national plan that you know are going to work for you, implement them in your business and we’ll give you all the support you need.’
“But I’ve had people call me and say, ‘Pat, you told us to do X, but we haven’t seen any results.’ But they have to put some time and effort into it themselves. They’re going to get out of it whatever they put into it. I can’t go to Peoria and say, ‘OK, I understand your market. Here’s exactly how you can be effective selling these products and services.’ I don’t understand Peoria, but they do. They have to adapt what we give them. That’s the essence of taking advantage of the vast resources of a large company while remaining true to the needs of that local market.”
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