Druzak Mines Data

Edition: June 2003 - Vol 11 Number 06
Article#: 1552
Author: Repertoire

A customer asks, ?Are we using the correct sizes of incontinent briefs in our facility, and how many have I bought over the past 60 days??

A manufacturer asks, ?Which of my distributor reps are doing the best for me and my product??

A sales rep asks, ?How am I doing where my commission is concerned? Am I getting credit for my efforts??

The answers are out there. The problem is, they usually take some digging to uncover. And they might not be available until the end of the month or later.

For Jeff Druzak, that?s not good enough.

Druzak Medical is a long-term care distributor based in Ambridge, Pa. Considering that the company opened up its first Web-based e-shopping cart eight years ago, perhaps it?s not surprising that Druzak is still pushing the limits of Web-based information-gathering and information transfer. In fact, if ?transparency? refers to the state where information is easily accessible, then Druzak is becoming a veritable ghost, albeit a friendly one.

Jeff Druzak, his brother-in-law Len Kutzko, and a third partner, Janet Charland (who has since passed away) started Druzak Medical in 1990. Druzak started his sales career with Lanier-3M in Livonia, Mich., and then joined Medline Industries in 1983, first selling to hospitals, then to nursing homes. A couple of years later, Druzak joined Whitestone Corp., a manufacturer of adult incontinence products.

In 1989, he went to work for Valley Home Medical Equipment in Beaver Falls, Pa., and started Druzak Medical a year later.

Today the company?s annual sales exceed $20 million. The company?s nine reps cover the states of Pennsylvania, Ohio, Maryland, West Virginia, New Jersey and Virginia. Druzak Medical maintains three locations: Ambridge, Pa.; Pottstown, Pa.; and Springfield, Ohio.



Treetop Shopper

When the Internet was still a youngster, Druzak realized its potential as a selling tool. Though few of his long-term care customers were wired for the Web, he set up an on-line shopping tool in 1995 anyway. Called the Treetop Shopper(www.druzak.com), the site now accounts for roughly 10 percent of Druzak Medical?s sales. (A separate site for the dental/physician market is located at www.treetopshopper.com.) Considering that the long-term care market is just now getting up to speed with Internet purchasing, that percentage should climb steadily, says Druzak.

What?s more, the company is seeing the benefit of making Web-based purchasing easy and almost fun. In March 2003, for example, Web orders averaged seven lines more than orders placed over the phone.

Everything from the consumer-sounding name of the site and the photographs on its home page to its easy navigability screams ?user-friendly.? Pictures appear at the touch of an item and descriptions pop into view. Pie charts and graphs inside the reports offered are also common. More significantly, Druzak Medical has built the site to reinforce, not replace, the relationships that exist between its sales reps and their customers. So when customers place an order, a photograph of their sales rep and customer service rep appear.

And Druzak recently featured the company?s new trade show booth on the site, so customers could get familiar with the company?s new look. ?Potential customers can see it and have confidence in us as a viable distributor, and current customers are proud to be doing business with us,? says Druzak. In addition, ?our own representatives can see it and be proud of the company they work for.

?It?s just another small thing to do that?s fun and makes life exciting.?



More Than Shopping

Customers can order any of Druzak?s roughly 80,000 products through the Treetop Shopper. Each item is color-coded to indicate its availability (either in stock at the location nearest them, in stock at one of Druzak?s other two facilities or not in stock). Different colors denote whether the product is available on contract or not.

But many customers use the site for more than just shopping, says Druzak. Some use it to look up and learn about new products.

?Either way they use it, our customers are starting to educate themselves about what is important to negotiate pricing on, and what is best left to the vendor who services them the best,? he says.

Druzak Medical has worked particularly hard for the past several years building a site that can be a repository of valuable information for all its constituencies ? customers, vendors and employees.

Customers can log in and see a number of reports, including:

? Previous-order history, going back one year.

? Product purchases by category.

? Item ranking report (which includes the ability to add items to the preferred-items listing).

? Open invoices report.

? Per patient daily cost reports.

If they want to, customers can drill down to specific product categories. For example, they can view per-patient daily cost reports for incontinence products alone. They can also view swings in usage for specific products or categories of products.

?If our customers use the [Treetop Shopper] reports, they understand the benefits of buying everything from us,? says Druzak. The budget-by-product-category report is one example. ?They can set their own budgets, then monitor their progress in real time. This is great for managers of groups of nursing homes, who want to check on and manage their facilities? purchasing patterns and capture real-time information for accurate projections.? Managers of groups can also check to see if their facilities are buying on or off contract.

Customers can use their reports to watch out for excess waste and to create better projections for their budgets, adds Druzak.



Reports for Vendors

Over much of the past year, Druzak Medical has created a Web-based repository of information for its vendors. Depending on their relationship with the distributor, manufacturers can view Druzak sales by state, county, zip code, customer and distributor sales rep. (Information is given in terms of the manufacturer?s sell price.)

Such information helps manufacturers target areas of opportunity. It also helps them promptly figure out their own sales reps? commissions. ?We?re looking at information from the field [that is current] within seven seconds of the last customer transaction,? says Druzak.

It?s no secret that distributors are traditionally pretty close-to-the-vest with such information. No one is more aware of that than Druzak.

?By controlling [sales] information, distributors protect future decisions,? he says. For example, if a distributor gives customer-specific information to a manufacturer, but later decides to support another vendor, then the first vendor can try to recapture that business with a new distributor.

Here?s another scenario: Distributor A gives the manufacturer information on individual sales reps? performance on his products. Distributor B ? a competitor ? then makes a play to hire the manufacturer?s rep in that area, because the distributor knows that the rep knows who Distributor A?s customers are ? and how good they are.



Upside Outweighs the Risks

Nevertheless, the upside of sharing information with good, loyal manufacturers outweighs the risks, says Druzak.

?The largest upside is much greater support from the manufacturer sales representatives in the field,? he says. ?They know that they can identify sales tracings accurately and get their commissions on sales within their territory in real time. Getting credit for work performed is what every good sales program is about. ?Good to Great? doesn?t come without understanding where you are and what you need to do to improve, while motivating everyone around you to make it happen.

?These reports can also lead to the vendor representative helping our sales staff maintain business as well as identify a reduction of usage in an account. A reduction of usage sends a red flag, to see whether a trial of competing companies? products is taking place.

?The salesman report also allows the vendor to know who in our organization is supporting their product line and who may need either more help or more convincing. The vendor representative becomes a mini-sales manager for our company. They reward our representatives who are working their product line with perks, such as dinners, golf, performance incentives, etc., while calling on our sales representatives who aren?t doing as well and trying to turn them into presenting targets to work on together.?

Though Druzak releases most of these reports and information to manufacturers free of charge, it does so only after careful consideration. The amount and detail of information to which a manufacturer has access depends on a number of things, says Druzak:

? Does the manufacturer work with selective distribution partners, or with anyone and everyone? If the latter, ?this could lead to problems down the road, when, after the distributor has converted many customers, another distributor says, ?Me too, for a nickel less,?? says Druzak.

? How much turnover does the manufacturer experience among its own sales reps? ?If the manufacturer representatives aren?t around for more than a couple of years, this won?t help us build a good relationship with our staff and can open potentially damaging information to our competitors if they move on to jobs with competing companies,? says Druzak.

? Is the product line in question a commodity, which Druzak may convert in the future?

? What efforts has the manufacturer made to help protect the business it shares with Druzak? ?Have they ever proven themselves in the past to protect our business??



For the Reps

Druzak Medical has worked hard to make the Web a reliable source of information and support for its own reps. Reps have access to detailed sales information, allowing them to monitor their performance and commission on a real-time basis.

But the company has gone out of its way to encourage its reps to promote Web usage among their customers. The company gives a Treetop Shopper Award each year to the sales rep who had the most customers order via the Web. Last year?s winner was Joe Polce, who was recently promoted to vice president of regional accounts.

But the sales reps don?t need a lot of arm-twisting, says Druzak. Because of the wealth of information on the Web site, their customers can get immediate information on such things as shipping status and pricing, giving the rep more time to actually sell products and services.

When Druzak Medical began its venture into the Internet eight years ago, the company?s principals knew they were gearing up for the long haul. They weren?t expecting an immediate impact. ?We are now seeing the results of our initial planning for long-term success,? says Druzak. ?And it will only get better.?

Indeed, the company is looking forward to expanding the information available on the Web. For example, at press time, their programmer, Senthil Jagadeesan, was completing work on a fill rate report for vendors. The report will display manufacturers? performance to Druzak, and compare it with Druzak?s fill rates to its customers. ?It will show a direct correlation between our performances to the end user, and will indicate whether the manufacturer is helping us to achieve better results or hindering our efforts,? says Druzak.