Pelco Major Rep ShakeupBy: John Honovich, Published on Jun 02, 2014
Pelco has ended their relationship with 5 of 8 Noth American manufacturer representatives while bringing on 2 new firms.
These moves have caused significant concern and discussion amongst dealers. In this note, we examine them, including feedback from Pelco.
Pelco explained that:
"For the last few years, we have employed a hybrid go-to-market strategy using both reps and a direct sales force. As part of our annual review process, we evaluate this model and adjust accordingly. As such, we have decided to end our relationship with five rep firms. Two new firms are being brought in (an announcement will be made shortly) and the three other territories will be supported directly by dedicated Pelco Sales teams."
Besides the sheer number of firms that were let go, this continues to change the approach of Pelco, who once heavily used manufacturer representatives. Pelco noted that,
"We have had a direct sales force in place in the West and Pacific Northwest for a number of years. Working with reps has been and continues to be our preferred go-to-market strategy and the route we will choose when possible."
It is unclear to us why it is not 'possible' to use reps in those 3 regions, though presumably, given the rep options, Pelco believes they can execute better direct in those regions.
While no official list of reps impacted is available, Langbaum in the Northeast, Keith Parker [link no longer available] in the Midwest and Crockett in the Southcentral are confirmed out. A new firm has been founded by a former Keith Parker principal, Craig Jones [link no longer available]. For reference, see Pelco's list of all current reps here (not updated as of this publication).
For reps, losing a major line, like Pelco, can be devastating since they often generate a majority of revenue from that line (and are restricted from representing direct rivals simultaneously).
Increasing Direct Sales Force
Though many manufacturers use representative firms, Pelco's increasing use of its own direct sales force is not without precedent, especially among Pelco key competitors. For example, Axis uses no rep firms in the US. And Avigilon dropped their rep firms a number of years ago.
Rep firms typically provide the most advantage to smaller manufacturers or those only selling a single part of a system because reps are involved in many different deals. By contrast, larger manufacturers that offer their own end to end offering can more frequently leverage their own internal people in each region.
Pelco Coming Back?
Pelco themselves has admitted their troubles over the past few years in their recent 'Pelco is Back' assertion. Whether they are really back yet, the reality is that their position is clearly weakened since the Schneider acquisition.
From what we can tell, life as a Pelco manufacturer rep has been difficult because of the internal Pelco changes and the decline in their product's competition positioning.
Maybe Pelco needs a fresh start with new reps. Maybe Pelco can find more successful focusing more on their own internal sales team.
Either way, these changes are quite significant, showing the challenges that Pelco is facing.