To say there is a lot going on in Chuck Fandos’ life this year would be an understatement. As CEO of both Top 40 distributor GatewayCDI and The Facilis Group, Chuck engineered the acquisition of GatewayCDI by Europe’s largest distributor, Brand Addition. The revenue numbers for this global partnership are impressive – GatewayCDI has annual sales of $28 million, Brand Addition is at $120 million, and more than 100 partners at Facilis that represent over $500 million in sales. Chuck continues on with Brand Addition as U.S. CEO/general manager. Chuck is recognized both as a visionary, and a guy who genuinely enjoys what he does. We sat down with him to catch up, and take a glance into the future of the industry.
You have been quoted frequently as being bullish on the future of the industry, but at the same time, recognize that significant changes are coming. While many companies remain committed to the traditional supplier/distributor/end-user model, others are throwing significant resources to online efforts. How is all of this really going to shake out?
Fandos: I think the model is going to change, but what is not going to change is that those distributors who add value to their customers will survive, thrive, and grow. I see the traditional model of relationships between distributors and end-users continuing, but with changes, and I think technology will play a larger role. I also see the traditional sales rep on a 50/50 compensation split becoming less prominent. Moving forward, it will be important to look at your business from both your customers’ and employees’ respective points of view, then success will be predicated on your ability to build a model that works for both.
Having GatewayCDI acquired by Brand Addition created more than just a global partnership. A European-based concern is more likely to maintain much of your staff. But is this not also part of a succession plan for you, and something that you have suggested for other distributor principals?
Fandos: I think all distributor principals should always be asking the question of "what's next?" What's next for my employees, what's next for my customers and very importantly, what's next for me? If selling is one of those options, then you spend time getting ready to sell and think like a buyer. But in any case, to prepare for the future and the “what’s next?” you need to ask yourself the hard questions, things like:
• What do I want to do going forward?
• How involved do I want to be in this business or another one?
• What is the true value of my company today?
• What can I do to improve it?
• How can I grow the people I work with so they can take over for me whether I sell or not?
Growing your business, growing your employees, and growing your profits are all good business – no matter what the circumstances. At the end of the day, they provide you with the flexibility to take different paths. Check your emotion at the door, don’t be afraid to ask the hard questions and be committed when it comes to getting to the answers, and be open to what may come up as a result.
With a global view, the already challenging horizon for product safety in the promotional products industry becomes even more so. We see constant change, and new regulations and policies popping up daily. From your perspective, what are some of the general trends you are seeing right now?
Fandos: Well, the first trend is that product safety is here to stay and safety will keep becoming a more complex issue. If you haven't yet jumped in, you need to do so NOW! Focusing on product safety means that you are protecting your business, your clients, and your employees. The general trends I see right now are more state and local regulations that you need to be aware of in this country, while also keeping track with regulations in many other countries, and make no mistake – it is very confusing! It’s critical for companies to invest resources in this area. Period. The days of flying by the seat of your pants, especially when it comes to product safety, are long behind us.
Having had the opportunity to visit you and your business partner, Conrad Franey, at your St. Louis facility, I experienced the culture that you have worked for a long time to develop. As the industry, and your company, continues to evolve, what advice would you give those interested in keeping up?
Fandos: I can sum up our culture in one word: Relationships. You need to have strong relationships with your employees (we call them team members), with your clients, and with your suppliers. And relationships are a lot more than just saying “hi” to people. It means getting to know people, sharing ideas, debating, collaborating, and having fun together. All the strategy in the world doesn't work if you don't have the culture right. And our culture is personified by our relationships – we see it every day. It has been fun to merge the Brand Addition culture with the former GatewayCDI culture – they match so well and we work on it! I can’t say enough about the importance of great relationships and a strong commitment to corporate culture – they are the magic formula for business success.
There's a saying in sales: “People like to do business with people they like.” You have focused on developing relationships in an industry driven all too frequently by price. What's the ROI of relationships, in your mind?
Fandos: I think the long term ROI on relationships is long term customers and happy customers. Really making a commitment to and an investment in knowing a customer’s brand, and understanding their goals, then helping them every day makes for long term relationships. That being said, the world has changed. Large clients have procurement departments who set up contracts for their programs and often go to RFP on a regular basis. In some cases, price takes a really large role in determining if they stay with a distributor or try someone else. It has made things tougher, but you can still build relationships while realizing that you must ALWAYS be looking for new business, because even with great relationships, things can change.
There you have it. Many thanks to Chuck for sharing his insights, and I hope you’ve found them valuable when it comes to answering the questions you might have about the current trends in the promotional products industry, as well as some business advice you might be able to put to use in your organization. But, are there other burning questions about the future of the industry that you would like answers to? Drop us a line, and we’ll do the best we can to get them answered.
Jeff Jacobs has been an expert in building brands and brand stewardship for more than 35 years, working in commercial television, Hollywood film and home video, publishing, and promotional brand merchandise. He’s a staunch advocate of consumer product safety and has a deep passion and belief regarding the issues surrounding compliance and corporate social responsibility. He recently retired as executive director of Quality Certification Alliance, the only non-profit dedicated to helping suppliers provide safe and compliant promotional products. Before that, he was director of brand merchandise for Michelin. As a recovering end-user client, he can’t help but continue to consult Fortune 500 consumer brands on promo product safety when asked. You can also find him working as a volunteer Guardian ad Litem, traveling the world with his lovely wife, or enjoying a cigar at his favorite local cigar shop. Follow Jeff on Twitter, or reach out to him at jacobs.jeffreyp@gmail.com.