Line Portfolio Analysis

1. Line Portfolio Analysis Scott E. Lindberg, CPMR Director of Sales Microsemi – Power Products Group Phone: 303-805-1674 slindberg@microsemi.com Scott Lindberg

2. As a rep…The Rocky Mountain Territory... • Electronics Representative Association • Rocky Mountain territory • 25% of the continental United States • 4% of the U.S. population • 2-3% of the electronic U.S. market share • 65% of designs manufactured out of area • Territory Coverage • Four/Eight outside salespeople • One outside distributor manager • Two/Four inside salessupport personnel • 20 Years in the Rep Industry Scott Lindberg

3. As a Principal…The West & the Central Areas... • APT – Advanced Power Technology • Western Regional Sales Manger • Microsemi Corporation • Director of Sales – PPG Division • Central Area Sales Manager • Responsibilities • Managing the Reps • Managing RSM’s • Working with Distribution • Key Accounts • Growing Sales • Over Communicating • 3 Years as a Manufacturer Scott Lindberg

4. 6 Divisions • Military & Commercial • Diverse End Markets Scott Lindberg

5. Issues that you are facing… Survey of CPMR 201 • Increased Expectations of the Rep • Meetings, Reports, Data Entry, Cust Service • Commission Reductions • Fewer Customers in the territory • Asia Manufacturing • Mergers of Manufactures and Distributors • Overly Synergistic Lines • Time Management • Not Enough Time Selling… Scott Lindberg

6. Agenda • Line Evaluation Criteria • Measuring Line Profitability • Company Profitability • Profitability Improvements • Data Mining Scott Lindberg

7. The Test • The Goal is for you to take something home with you that will help you improve • Jot down your ideas • All of the Answers are here • Don’t Worry, Be Happy... Scott Lindberg

8. In the next five minutes, please write in below the lines you represent, the percentage of your rep firms income as well as the % of your time you have spent on each of these lines. Your first impression Is all that is needed and it is not important for the percentage to add up to 100 percent.The “Adj % of Time Spent” is the % of time divided by the “Total Time Spent.” Scott Lindberg

9. Introduction • Our subject is......”Line Profitability Evaluation” • Current lines • Prospective lines Scott Lindberg

10. Black White Line Profitability Evaluation is... • Measuring the profitability of your firm’s lines • Measuring the value of each line to the firm • This is not Black or White • Other factors to take into consideration • Future potential • Door opener • Synergy Scott Lindberg

11. Why do it??? • Determine if/where you are making a profit • Look at the future potential • Evaluate a prospective new line • Determine if a line fits your long term plan • Increase your knowledge of what your lines represent to your firm • Get your salespeople to sell what is profitable for the firm and for themselves Scott Lindberg

12. Evaluation Criteria • Products • Market • Sales support • Ease of doing business • Advertising • Sales/commissions • Internet Scott Lindberg

13. Products-Salability • How compatible are their products with your customers needs? • Who (and where) is the competition? • How do the products stand up? • What is the TAM? • Is the customer base broad? • Sales support - Competitive price & delivery Scott Lindberg

14. Products - Quality • Do they have a quality product? • Are they ISO9000 approved? • What is the warranty? • How many returns/RMA’s per month? • Quality • Delivery or service • MTBF/warranty repair rate figures available? Scott Lindberg

15. Products-New Introduction • New product development and keeping ahead of the customer’s needs • Number of new products per year • Did anyone ask the customer? Scott Lindberg

16. Market • What market are their current customers in? • How well does it fit your market? • Synergistic? • Do you see potential for their products? Scott Lindberg

17. Timeliness to Market • Pre-announcing/paper tigers • Schedule track record • Can they hit the “windows”? Scott Lindberg

18. Sales Support • Field • Response to field problems • Are the field support people empowered • Engineering • Response to problems and opportunities • Is technical support “housebroken” • Inside Sales • How confident are you that your sales staff or customers can get help if you are unavailable Scott Lindberg

19. Training • Is there any? • Is it useful? • Are there multiple levels? • 101 • 201 • 301 • Is Internet Training available or in the plans? Scott Lindberg

20. Ease of Doing Business • Timely identification & resolution of problems? • Responsiveness to letters, fax, phone calls • Flexibility • “Reasonable” credit people? • Accuracy of delivery promises • How accurate and timely are acknowledgments and invoices? Scott Lindberg

21. Cost of Doing Business • Number of calls before sale • Is repeat business likely? • Few post-sale problems • Few “useless” visits from factory personnel • Few “away” meetings/training sessions. • Is special equipment required? • Do they have a toll free number? • Reports, Reports, Reports... Scott Lindberg

22. Integrity • Does the principal… • Show “long-term” commitment to Reps • Have a good reputation in the field • Talk to: • Customers • Current reps • Former reps • Do they walk the talk? Scott Lindberg

23. Advertising • Do they advertise? • Print and/or Internet • Are you embarrassed or impressed? • Are they in the right periodicals? • Quality mailers/mail list? • Quality web-site download material • Internet information Scott Lindberg

24. Lead Quality & Quantity • Number of leads • Many, but poor • Few, but good • How do they handle Website leads? • Are they tracked • Play “customer” -- test the system Scott Lindberg

25. Literature Quality • Polished look or Xerox-of-a-Xerox? • Tiered structure? • Short form • Long form • Individual data sheets • Tech Manuals • Availability? • What does your customer think? Scott Lindberg

26. Trade Show Participation • Is there any • Show selection • “Best of Show” • Proper personnel in attendance Scott Lindberg

27. Image to Customers • Technical leadership • Longevity • Financial stability • Perception is reality... • Do you make them look good? • Do they make you look bad? • Do they make you look good? • Do you make them look bad? Scott Lindberg

28. Overall Ease to Work With • Accessibility of the key people • End of the month crunch • “We won one” -- “You lost one” • PITA factor Scott Lindberg

29. Sales • Worldwide sales • Last year’s • This year’s • Territory sales • Last year’s • This year’s • Know your territory percentage... • What is their five year plan? Scott Lindberg

30. Electronic DTAM Map Scott Lindberg

31. Commissions • What is their commission rate • Is it competitive? • Commissions paid on time • Commission incentive program • How do they pay? • On Shipment • On receipt of payment Scott Lindberg

32. Internet • E-Mail • Web-Page • Access to daily Information needs • Dial up capabilities • On Line capabilities • Data Warehouse Are they keeping up with the changes in technology and will they be here tomorrow.… Scott Lindberg

33. Principal Evaluation Scott Lindberg

34. Methods for Evaluation • Several methods for evaluation • Easy to difficult • Evaluation of a Principal Overall • Current Principal • Prospective Principal • Evaluation for profit • Current Principal • Prospective Principal Scott Lindberg

35. ABC Rep Inc. Year End Sales Dollars2008 vs. 2009 Sales InMillions 2008 = $17.7 Million in Sales2009 = $20.2 Million in Sales Principal Scott Lindberg

36. ABC Rep Inc. Year End Commission Dollars2008 vs. 2009 Comm. InThousands 2008 = $743 Thousand2009 = $891 Thousand 2.5% Principal Scott Lindberg

37. ABC Rep Inc. Year End Income Percentage2008 vs. 2009 Income % 2008 = $743 Thousand2009 = $891 Thousand Principal Scott Lindberg

38. ABC Rep Inc. 2008,2009 Sales Dollarsvs. 2010 Forecast Sales InMillions 2008 = $17.7 Million in Sales2009 = $20.2 Million in Sales 2010FC = $23.8 Million in Sales Principal Scott Lindberg

39. ABC Rep Inc. 2008,2009 Commission Rcvd.vs. 2010 Forecast Comm. InThousands 2008 = $743 Thousand2009 = $891 Thousand 2010FC = $1,051 Thousand 2.5% Principal Scott Lindberg

40. ABC Rep Inc. 2008,2009 Income Percentage Rcvd.vs. 2010 Forecast Income % 2008 = $743 Thousand2009 = $891 Thousand 2010FC = $1,051 Thousand Principal Scott Lindberg

41. ABC Rep Inc. 2009 Income Percentage Rcvd. Scott Lindberg

42. ABC Rep Inc. 2008, 2009, vs. 2010 Forecast • Sales Dollars are more important to our principals… • Income Percentage is one factor of the overall health of your company… • The key is Commission Income Dollars... Scott Lindberg

43. PrincipalEvaluation (Continued) Scott Lindberg

44. Line Awareness Charts • Green Lines = The top 80% of the income producing lines on your line card • Blue Lines = These are your second tier lines that you are trying to groom into future Green Lines • Gold Lines = New lines on your line card that your firm feels have a promising future and can be grown into Blue and Green lines • Red Lines = Any line that for some reason may be of concern. i.e... Perception, sales, communications, relationship, acquisition, etc.. Scott Lindberg

45. Ideal Rep Inc. Year End Commission Income Chart Income % Principal Scott Lindberg

46. ABC Rep Inc.Year End Commission Income Chart-2009 Income % Principal Scott Lindberg

47. ABC Rep Inc. - John Smith Year End Commission Income Chart-2009 Income % Principal Scott Lindberg

48. Commissions & Trends

49. Actual Commission Trend Lines XYZ Principal Commission Dollars Month/Year Scott Lindberg

50. Actual 6 Month Avg. 12 Month Avg. Commission Trend Lines XYZ Principal Commission Dollars Month/Year Scott Lindberg