With this article we’re introducing a new contributor – Frank Hurtte from River Heights Consulting. Frank is known for his industrial sales expertise and has written two books on industrial sales – The Distributor Specialist: Customer Champion, Profit Generator and The New Sales Guy Project.

Frank and I talk regularly, and we’ve collaborated on some projects together. Now he’s going to write a monthly column for Industrial Supply Trends called Frankly Industrial.

His first article is on something near and dear to manufacturers – new products. Many have a goal of new products representing 30% of sales over a three-year period. And some measure distributors on it, even if they don’t share the results with you. Some distributors are proactive about this. Frank shares why this is important to manufacturers and distributors and how it differentiates distributors.

New Product Vitality: The Metric That Separates Market Makers from Market Servers

Our industry spends a lot of time measuring how distributors perform. Maybe we’ve been measuring the wrong things. Every manufacturer I’ve ever known dreams of finding distributors who can create markets, not simply service the ones already in place. The trouble is that they aren’t always sure how to identify them.

Let’s start with the manufacturer’s side of the equation.

Long before a salesperson ever plunks a sample onto a customer’s desk, someone has already written a very large check.

Research and development, engineering, testing, UL and CSA certifications, tooling, packaging design, initial inventory, marketing, internal sales training, and finally a product launch all cost… “Mucho Dinero.” If you’ve ever sat through a product launch budget meeting, you know ‘Mucho Dinero’ is the polite version.

By the time a new product hits a distributor’s shelf, the manufacturer has already poured in millions of dollars and years of effort. And every month it sits there instead of generating revenue slows down the return on that investment.

Innovation isn’t cheap. Neither is waiting. The faster a manufacturer can begin harvesting revenue from a new product, the better the return on every engineering dollar invested.

That’s where distributors enter the picture.

Market Server or Market Maker?

Not all distributors play the same role. Some are Market Servers. Some are Market Makers.

A Market Server does exactly what the name implies. Customers ask for products. They quote them. They ship them. They answer the phone. They keep the lights on. There’s nothing wrong with that. The trouble is every competitor down the street does exactly the same thing.

Market Makers are different. They create demand where none existed before. They introduce products customers didn’t know they needed. This involves education, demonstration, and often proof of concept well before the sale. Most times, this means convincing a skeptical maintenance manager that replacing something that’s worked since Moby Dick was a Minnow might actually be a pretty good idea. Market Makers don’t wait for the phone to ring. They give customers a reason to pick it up!

All this is hard work. It requires the distributor team to hand hold on the first application and jump through flaming hula hoops. Solving application problems is tough, but it’s also where the money is.

When I was a young salesperson, I stumbled into this lesson almost by accident. I had a rural territory. It wasn’t Chicago, Detroit, or Boston. It had more corn than customers (after all it was Iowa), and I had already squeezed about all the growth I was going to get from my existing accounts. If I wanted management to notice me, I needed a different game.

One day I noticed that my new product sales activity always gained attention from headquarters. First, product managers started calling. Then the marketing folks. Then management noticed. Pretty soon, I was being asked for my opinion instead of excuses. Next thing I knew, I found myself featured in the company’s Annual Report.

None of this happened because sales were enormous on day one. It happened because they knew those sales represented tomorrow instead of yesterday. Selling new products became my version of punching above my weight class.

Introducing new products isn’t risk free.

Salespeople must learn new products, strange specifications, why the new thing is better, and sometimes whole new technologies. There can be inventory glitches, and really bad ones to boot.

The main challenge is that some customers will look at you like you’ve just asked them to replace their Chevy pickup with a unicycle. On rare occasions, the launch will flop. It’s important to use your judgment and experience to weed those out. But most become the next staple of the product line for the next twenty years.

That’s why distributors who consistently commercialize innovation become so valuable to manufacturers. Unfortunately, most distributors still try to impress suppliers with yesterday’s scorecard.

When they launch their ‘Supplier Pitch,’ it sounds more like a real estate brochure: We were founded back in 1954 by dear old Uncle Harry, have twenty branches, sixty outside salespeople, and $120 million in sales. The manufacturer is likely to think, ‘That’s nice, but so does the competition.’ Manufacturers don’t invest in square footage. They invest in growth. Let’s be realistic. Suppliers don’t care how many buildings you heat every January.

If a supplier is investing ten million dollars launching a new product, they don’t care how many buildings you own. Their thoughts are on how quickly this distributor can help recover that investment. And that, my friend, is a completely different conversation.

Manufacturers aren’t looking for the biggest distributor. Most already understand that the biggest guys are primarily in the demand fulfillment business. What they’re looking for is a distributor capable of accelerating market adoption as a Market Maker.

All this brings us back to a metric I think every distributor ought to track. Manufacturers have the New Product Vitality Index. Knowledge based distributors should have one as well.

What is Your New Product Vitality Index?

New Product Vitality Index: The percentage of company sales generated by products introduced within the past three to five years. It measures how successfully innovation becomes revenue.

This should include not only products or technologies recently introduced, but also products or technologies ‘new’ to the distributor. For example, a fluid power distributor that adds an established line of electrical sensors is still commercializing a new technology within its customer base. For that distributor and many of the customers, those products are new.

Armed with all this, you can have meaningful conversations with current and future suppliers. Just having these numbers will differentiate you from other distributors. The big guys bloviate about ‘priming the pump’ and ‘filling the funnel.’ You’ll have rock solid proof. And that trumps the other guys’ braggadocio about hundreds of locations and thousands of sellers.

Market Making Distributors don’t simply serve markets. They build them.

Here’s my prediction: Over the next decade, the distributors that win the most attractive supplier lines won’t necessarily be the biggest. They’ll be the ones who can prove they consistently turn engineering investments into customer adoption.

Anybody can cash checks on products customers have been buying for twenty years. Market Makers earn tomorrow’s profits before everyone else even learns the part number.

That’s a difference worth measuring.

How Do You Know If You’re Really a Market Maker?

The New Product Vitality Index is only the beginning.

The River Heights Consulting Market Maker Scorecard expands on the concepts introduced in this article with twelve practical measurements that help distributors evaluate how effectively they commercialize innovation—from product launch and salesperson engagement to customer adoption, repeat purchases, and long-term revenue growth.

Whether you’re benchmarking a single branch or your entire organization, the Scorecard provides a practical framework for understanding where innovation is thriving—and where it needs attention.

To receive a complimentary copy of the Market Maker Scorecard, simply email me with the subject line “Market Maker Scorecard.”

Frank Hurtte is the Founding Partner of River Heights Consulting. A former AHTD president with nearly 50 years in industrial distribution, he advises manufacturers and distributors on sales strategy, technology shifts, and channel performance. Through Frankly Industrial, he will be sharing ideas for the people building tomorrow’s industrial channel. He can be reached at frank@riverheightsconsulting.com