SESCO was a somewhat familiar company as your humble editor had worked a job with them about a decade ago where we relit Publix Super Markets using electronic HID. It was a 12,000-piece order—and I worked close with Marshall Graham to close this very profitable deal. This is when I first learned that SESCO was no ordinary manufacturer’s rep.
Last week, SESCO invited me to their open house where I toured their new facility and witnessed their rebranding launch. It was quite a bit more than just the new logo and a new website. It is a complete reimaging of the company. Over 800 distributors, contractors, employees and other guests attended the open house. The event was right up my alley as it had an open bar, plenty of prime rib, and even a band. Key manufacturers also attended the event: Philips Lighting, HE Williams, Contech/Intense (Leviton) Finelite, Watt Stopper, Visionaire and Beghelli along with several others.
John Palk, VP of Sales and Marketing, was my primary host. He set a meeting with Todd Langner President, CEO, as well as Marshall Graham, Chairman of the Board. The facility is first rate, impressive, and simply extraordinary, as it features an open and collaborative footprint.
There were many pleasantries and then we jumped into business. SESCO is the largest manufacturer’s rep in our industry and I wanted to find out why.
First, I asked for details about the Philips relationship. Marshall reminded me that I had pinged him a few times about three years ago looking for information about Philips and their previous supply-chain issues. He explained, “Those were not fun times and that is why I did not answer your emails, but today, Philips is vastly improved.” We discussed quality, deliveries, and overall attention from Philips and SESCO is very happy. Specifically we were told that both quality and service from Philips is exceptional. Philips Lighting Americas CEO, Amy Huntington, has recently visited them as well as Eric Rondolat, Philips CEO and Chairman of the Board. At this time, none of us had news of Amy’s impending departure, but SESCO could not have been more complimentary towards Amy and the improvements that she has made.
In addition, they discussed Philips new ‘Light to Go’ brand of products that are competitively priced. Later, I checked it out on the web and it is an impressive line, which seemingly competes with RAB Lighting and MaxLite. It was interesting that I learned of this new launch from a Philips agent and not from Philips; somehow, I missed their product launch. Acuity, Eaton, Hubbell all have these stock and flow commodity products, so SESCO is very excited that Philips will now compete in this segment.
Another key question was how does an agency support such companies that strongly compete against each other. Specifically I asked how they are able to carry both Philips Roadway and LeoTek? On the controls side, they represent, LeGrand, ETC, and Crestron. How do they keep everyone happy?
Marshall told me that they never take on a line unless they are sure they can be successful. He said, “We do what we say we will do and we meet our numbers.” He went on to explain that a lot of detailed planning occurs prior to signing the line and as such has created a new model of manufacturer analysis to both improve performance and strengthen partnerships. He also explained that sometimes an existing manufacturer will buy another company, leading them to inherit lines. He did caution me by saying, “We do have a large footprint and that scares some manufacturers, but we can cover markets and offer services within those markets that other reps cannot. This is just one of the many reasons we have been able to maintain a long standing relationship with so many manufacturers over the years as we have expanded. And we have been fortunate to have so many partners expand with us and mutually share in that growth.”
SESCO has sales of approximately $300M in lighting and they want to grow to $500M in the next five years. With their strategic growth model, they have plans to grow well beyond that in the future. These are huge numbers for our industry. Before discussing the five-year $500M goal, I wanted to better understand how they got to $300M.
First, they have their well known “SESCO” guarantee. This guarantee states clearly that “If there is a problem with a SESCO product that you specified or purchased, we will fix it…PERIOD.” SESCO spends a lot of their own money quickly resolving issues regardless of fault with the goal to solve the problem first and figure out the rest later.
Second, is a simple commission structure. Each salesperson, after a period of time, becomes a 100% commission employee and their income is uncapped. They proudly explained that the highest compensated employee in the company was in Sales and not Management. (More companies should do this!)
Third is an ESOP and the company is completely employee owned. The ESOP was originally funded through profits and the value of the ESOP has tripled since 2009. It was a great vehicle to allow the founders an exit, while giving employees a huge incentive. Every SESCO employee that I spoke with is an owner.
Fourth is Culture, and training is a huge component of that culture. SESCO recruits great people and treats them very well. To ensure their success, the employees attend Luminary U. in Buckhead (Atlanta), managed by a director of training. In addition, there is SESCO University, an online platform that offers customers and employees creative ways to stay current on CEUs as well as engage in product training. Additionally they have two full time educators on staff that are licensed electrical engineers with many years of industry experience. Incidentally Mike Segal, the founder of the company, serves as the Director of Training. That speaks volumes.
These four tools seem to be deeply ingrained in the employees that I spoke with. Their culture seems very strong and I could feel the sense of employee ownership, fresh and engaging leadership and ultimately a company who’s employee-owners are driven to create solutions for customers, just like they did years ago when I had the opportunity to work with Marshall on the eHID project. John summarized the culture, “There are no shortcuts to success at SESCO. We’re a company that gives you the tools of a SESCO Guarantee, unlimited caps on earnings and ownership as well as industry leading training programs. If you’re willing to work, do what you say you’ll do, and focus on creating solutions for our customers, the sky is the limit at SESCO.”
But how will they grow from $300M to $500M with LED prices still in decline?
SESCO has implemented diverse programs to meet this goal. One plan involves moving out of their comfort zone and selling products that may not be in lighting, but touch on lighting such as low voltage wiring, communications and new opportunities such as Audio Visual. In addition, they are conducting more of their own commissioning and even providing turnkey solutions for key jobs. Controls are important to SESCO and they believe as lighting and controls enter other arenas, they plan on being prepared to offer solutions there as well.
Further, SESCO continues to look at more geographical growth, which will likely be contiguous to existing territories. For example, when Philips has issues in a certain market, they call on SESCO to gauge their interest in expanding into that area. There seems to be a great and interdependent relationship between the two companies as it is very helpful for Philips to have a known-entity enter a market and it is helpful to SESCO to have an established brand as an anchor as they invest in the territory.
One issue they have, and this keeps them up at night, is recruiting. Admittedly, they simply cannot find the talented people to grow their business as quick as they want. One technique is to recruit potential employees from the Northeast in the dead of winter and convince people to join the Florida sunshine. They also have had strong success with on-campus recruiting as well as internships. John explained that the college recruits work in all departments, which gives them a tremendous background as they move through the ranks of the company.
Another successful tool is all of their Resource Divisions, which, as the name implies, provides resources to each branch. These resources groups are National Accounts, Distributor Solutions, Energy, Public Sector, Lighting Controls, Industrial and Hospitality. Each sales location is focused on internal growth but is also supported by these Divisions, offering solutions to customers in each of these different segments. The “Whole Market” approach really captures the attitude at SESCO, “If it’s lighting, it’s SESCO”. So there is a real sense of teamwork within the company to offer one another support to grow each market.
In June, SESCO threw a party and invited employees and their families for a three-day weekend at Disney. Over 700 attended and you can watch a short video here hosted by founder Mike Segal.