Eitel: Simmons better
CEO says sales staff more effective
By David Perry -- Furniture Today, January 1, 2006
Atlanta — The newly streamlined sales organization at Simmons replaces an ineffective model developed in the 1960s and will enable the bedding major to better meet its dealers' needs. It is a sophisticated model that probably will be copied by other companies.
That is the assessment of Charlie Eitel, chairman and CEO of the bedding major.
In an interview with Furniture/Today, Eitel acknowledged that he made mistakes in 2005, admitted that Simmons had "an arrogance about us," and asserted that the company is proceeding with a spirit of humility, confidence, passion, unity and performance.
He also said that, despite months of sales declines in 2005, "we have gained our momentum back." Simmons had "a tough first half," Eitel said, but is wrapping up "a phenomenal second half."
He said the company's research revealed that Simmons sales representatives were spending less than 20% of their time in front of customers. He termed that finding "embarrassing." In the new structure, which Simmons recently announced, the company's sales representatives will spend 60% of their time in front of customers, Eitel said.
The new structure has resulted in the departure of almost 30% of the sales force, according to a sales representative who lost his job in the restructuring. Another sales rep who left Simmons said that a total of 52 people left the company, including some regional, divisional and national account reps.
Eitel said the departures were "not a designed layoff," but resulted from a carefully researched and developed new way to conduct business.
He declined to disclose how many members of the sales force were released, saying it was "not in Simmons' best interests" to do so, noting that competitors could use that figure to suggest Simmons will provide less service to its dealers.
He also declined to reveal what kind of cost savings Simmons would realize from the new structure. Cutting costs has been a major effort at Simmons, Eitel has said on a number of occasions. But he said in the interview with Furniture/Today that only about 15% of the cost savings that Simmons will realize in 2005 "had to do with people."
He said the number of people who have left Simmons this year, in departures at mid-year and in the sales force reorganization now, "is rather low." But he declined to give a specific number.
Simmons is now operating "as lean or leaner" as the company was when Eitel arrived in 2000, he said.
The new sales force structure includes a toll-free phone number and a centralized service team for small retailers.
"We won't be going to their locations as often," Eitel said, adding that the company would see those dealers at furniture markets and other venues.
But he said the centralized support center will enable the smaller retailers to deal with the same person. The new model is a more cost-effective way to serve smaller retailers, Eitel said.
The new structure establishes a senior vice president of sales, Gary Pleasant, with responsibility for the sales force in the field. Eight vice presidents report to him. Reporting to each of the vice presidents are strategic account managers, retail sales managers and retail account managers. Also, Simmons has established a sales support team.
Eitel said the former structure had too many levels of sales management and included too many people in the decision-making process. Now, he said, decision-making has been streamlined and pushed down closer to the customers.
He said the new structure also enables Simmons to better serve retail sales associates. Retail account managers are responsible for the day-to-day contact and training of retail salespeople.
Eitel said Simmons did not fully realize the importance and value of the retail sales associates. "It is perfectly clear to me that they are monumentally important in driving sales," he said.
The previous sales team at Simmons did well in 2004, when sales grew 9.6%, the second-strongest showing of any Big Four producer, according to Furniture/Today's research. In 2003, Simmons had a 12.2% sales gain, tops among the Big Four.
But sales in 2005 slumped at Simmons. For the first nine months of 2005, conventional bedding unit volume declined by 10.1%, primarily from reduced sales at lower retail price points. New higher-priced bedding models introduced in the first quarter of 2005 were not as successful as previous product lines, according to Eitel.
Eitel added that the new sales structure "took the lid off" compensation, placing no limit on what the sales representatives can make.
He noted that almost 99% of the people Simmons invited to remain with the company elected to do so. That is a good indication of "how they feel about this company," he said.
On the product side, Eitel said that early in 2006 Simmons will discontinue its Olympic Queen bedding, which is larger than conventional queen-sized bedding but smaller than king. That product caused "indigestion" in the manufacturing process, he said.
He also admitted that dealers felt the company had "forced" Olympic Queen and Health-Smart bedding on them. HealthSmart, which features a removable, washable mattress top, suffered from "multiple mistakes," he said. Simmons relied too heavily on consumer research that indicated the bed would be successfully received. But there is a difference between what consumers say they will do and what they actually do, Eitel observed.
HealthSmart will continue to be part of Simmons' bedding lines, he said.
In the future, Simmons will do more research and "may not be quite as fast" to bring out new products, he said — although he added that retailers "love the fact that we take risks. We will continue to be viewed as the industry innovator."
Eitel said Simmons will aggressively compete "at all price points" with its new product.
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Eitel comments on the changes at Simmons
Dec 20, 2005 -
Eitel comments on changes at Simmons
Dec 21, 2005
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