DISC’s Data Has Predicted Electrical Sales for 40 Years—Chris Sokoll Breaks It Down

[00:00:00] Welcome everybody to another episode of Flowing Sales. We have Chris Sokoll with us. He is the president of Disk Corporation and I'll let him explain what he does. Really interesting data forecasting for the electrical industry, for reps and distributors and so forth. So super happy to have him on. He's been in the industry for a long time and I think there's a lot that we can learn from his experience. So Chris, I'll let you take it away and just introduce yourself, introduce Disk and let's talk about it.

[00:00:30] Great, thanks Curtis. I appreciate it man. I started in the electrical distribution industry in probably 1979, working the counters at a distributor based out of Seattle, Washington. I was actually in a branch office in Spokane. But I spent my whole career in the electrical distribution industry and along the way I became vice president of business development and found out about the disk tools and became a

[00:01:00] client of disk. I became a client of disk for quite a few years. And along that time I got to know the owner, Herm Eisenstein. We became good friends. Herm was definitely beyond retirement age when I asked him the question, Herm, what are you going to do with this? As an industry, we can't afford to lose the resources that disk provides. So that conversation sparked some purchase decisions and I wound up buying disk in July of 2019.

[00:01:27] And I've been working at providing information ever since. And I really like it. I think it's very key for the industry overall. Initially, when we got started, we were very distributor centric. And since that time, I've grown the distribution side, but also included a lot of manufacturers. And now we've been very excited about the agent community and we're involved in Nemra and NAD. We look forward to continuing this trek and helping people understand their market.

[00:01:58] That's awesome. So about five years then you've been running the show over there and it sounds like you've been expanding and doing a lot of interesting stuff. Yeah. Been more trying to get there, Curtis. Change is never easy, but it is coming. That's great. Yeah. I mean, business takes time and to do it right. So that's it. Well, let's talk about some of the things that disk does.

[00:02:20] I know you guys have a product called Data Search, so maybe we can start there and just let's really dig into what it is, what the value is, how people actually use it to make decisions and to improve their business. I'd love to hear some of those details. All right. So really, when we look at individual tools, we have to talk to them or talk about them in concept of the entire package and what we do.

[00:02:45] So, DISC, our mission really is to answer four questions. What's the size of the market that you're participating in? What is your percentage of market share? Where am I missing out? Where can I go for opportunities? And do I have the resources aligned or in place to go after that gap? So Data Search was developed to provide information nationally at a state and a county level.

[00:03:12] That tool provides custom territories, product market sizing, and the ability to remove inflation from your analysis if you want to do that. But that's really the data search tool answers the first two questions. What's the size of my market and what's my percentage of market share? It allows members of the community to measure their performance and plan for the future. That's kind of data search in a nutshell.

[00:03:39] Got it. So to get that, so the size of the market comes and that's broken down, like you said, by lots of, you can get pretty granular with it, right? Like down to the county, down to the state, FIPS codes, NAICS codes, is that right? The NAICS codes piece falls in the market track. And market track provides insights into dollar spends by end user industry. As I mentioned, we look at the industry in four verticals, construction, industrial, institutional, and utility.

[00:04:08] And each one of those verticals is comprised of NAICS codes. That's North American industry classification systems. We track a thousand plus NAICS codes. And each one falls into one of those buckets. Let's just do a few things. You can get an understanding of the opportunity by industry because we're forecasting individual NAICS codes.

[00:04:32] And we can use clustering, what's called economic clustering, to look at NAICS codes within a specific area. Let me just give you a quick example. If I'm in the automotive stuff, if I'm selling light bulbs and wiring cable to automotive producers, all of a sudden, maybe I should be thinking about people that make trailers, boat trailers, trailers for cars, semi-tractor trailers, mobile homes, all that kind of stuff.

[00:05:02] Because the NAICS codes are all going to start with the same two digits. So that's economic clustering. I've already got the market knowledge for the area I'm servicing. So if I use the disk data, the NAICS data, I'm able to retarget my efforts into areas where I already have expertise that I may not have awareness of what exactly the industry sizing is. With not only the market potential, it also gives you a market track,

[00:05:29] it gives you a count of the industries and a count of the employees in those NAICS codes. So you really know. So if I'm in Chicago, this is a good example, and I decide that I want to chase the food products processing industry because I've got a couple of customers in there. I can look in disk and I can see that there's over 1,000 companies in Illinois alone that do food products processing and over 100,000 employees.

[00:05:57] Do I have the salespeople to go chase that? Yeah, maybe not. Maybe there's some other way I want to market to that. Maybe there's a mail campaign or telemarketing campaign to qualify some leads and move forward. That's really the two big tools that we have. We also have some metro tools that do very similar things, but at a higher frequency rating. Got it. Okay. So just to recap then, these are really strategic tools, right?

[00:06:27] So you can come in and you can say, hey, here's the market overall. Here's my share of the market. I'm assuming they have to maybe mix their sales data. Yeah. Then what their share is, and then they can see how much they captured, right? But then so they know, you know, did we get all that we wanted? Is there more opportunity? But what you said then was really interesting because then you can not only the, I guess, the NAICS categories or places where you're already looking at, but if I understand right,

[00:06:55] then you can also then see things that are very similar to those things in those territories you have that maybe you haven't thought of or you haven't gone after. And you can say, hey, there's like a big opportunity there. Lots of companies, lots of revenue that we could gain. And we're not even thinking about that. So plan that out. Yeah, that's absolutely correct. And those things become very valuable in sales planning.

[00:07:20] And the other thing that I talk about with these two applications is that data searches is often executive level up. What's the size of the market? What's our percentage of share? And then the market track data works for sales planning. So sales managers down. Where are we going to target our effort? What makes sense? And it's very helpful for manufacturers that have specific end user targets in mind. Where is that opportunity for us?

[00:07:50] Yeah. Okay. And then you mentioned that's a good breakdown. So you kind of got both of those items there. And then you mentioned some other products like the monthly flash updates you have and maybe some other things. Let's dig into those a little bit. The monthly flash is just that. It's a flash report of economic monthly quarterly. Flash report, forecast of key economic indicators, centered on the electrical distribution community.

[00:08:19] The backbone of that is really distributor sales and helping them understand, you know, or helping the community understand what the sales potential is. We look at that by the certain markets that we talked about. So industrial, construction, institutional, and utility. And then we break those down a little bit further. Construction is obviously residential and non-residential. So we look at what's going on in those. Maybe what's happening in the infrastructure market,

[00:08:44] in the industrial side, where there might be some opportunity or talk about maybe some changes are happening. Tariffs will be a subject on the industrial side coming up, I'm sure. The instant market, surprising after the down, after COVID, we talked about obviously office vacancies. But then during the recovery, we saw a very large uptick.

[00:09:11] And we talked about this in sports arenas, theaters, all of this stuff that we're rushing to upgrade their systems and prepare for recovery. So we talk about all these opportunities and changes. And maybe there's some black swan events that happen in the industry. Hurricane can come through an area or the fires in LA will be a topic of conversation in the flash.

[00:09:39] We also provide a lot of the government key indicators in producer price indexes, copper, census data on construction starts and all that kind of stuff. And they're invaluable for business performance reviews, talking to staff, maybe board meetings, and they're widely read in the industry. Got it.

[00:10:04] So these are more like a report type of a product that goes over what's been happening this past month. What are the highlights? What do you need to pay attention to? And maybe that serves to your point. You have the executive level planning. You have the sales manager level planning. But then these flash reports can come in and say, hey, you may need to tweak your strategy a little bit because there's new information, right? That's exactly right.

[00:10:31] Oftentimes, when we start looking at economic data, we consider as we're planning our year and then as we're reviewing our year. And we forget to take a quick look at some of the things that have happened between those two spans of time. Got it. Got it. Okay. Got it. And then you also do, right? That's sort of like in the moment, but you do have a forecast that goes out. Was it four or five years that you kind of project what that's going to be? The metro databases.

[00:11:01] We cover 150 MSAs, metropolitan service areas. Those forecasts cover about 85 to 87% of the total national forecast. And those are quarterly. So they're high frequency. The Metro Pulse database is actually updated monthly. So it is a high frequency database. And that allows you to see quarterly growth projections.

[00:11:30] What are we doing from quarter to quarter? If you've got some big cities in your territory or big MSAs, it's a very great tool to understand what's happening in the industry. And, you know, just it's good stuff. We like it. Good stuff. It sounds, I'm a data guy, so I love it. It sounds really interesting. So kind of a five-year forecast and that kind of, again, that's like executive level planning, right? Where they'd say, you know, maybe we need to start moving into another state or maybe we

[00:12:00] need to really start bringing on some other lines that deal in some of these things that are projected to grow quickly. You know, are those kind of the use cases that people do here? When we look at the long-term planning, when you start to talk about four, five, six, seven years out, really one of the strongest use cases for that is in the acquisitions market. This company I'm looking at, what does their market look like? Not just this year, next year, following year.

[00:12:28] How quickly am I going to recover from making that investment? And the other thing is to look at industry trends, right? We start to talk about what's going on with the data center market, what's going on with the energy storage market. And we need to understand what those look like long-term before we dump in a bunch of resources and inventory. And it just helps us make better decisions.

[00:12:56] Yeah, that's interesting. And you mentioned one case, I guess, specific case where someone used this data. Do you have any other, I don't know, interesting stories or specific use cases you could share? Maybe not sharing any names or anything, but just so we can really understand in concrete terms how someone has used this information and got a result from it? That's a very complex question. We've been doing this since 1985.

[00:13:24] And when we started, as I mentioned, we were very distributor-centric. All of the major electrical distributors use our data. And I can mention them. We run them on our website. Graybar, Wesco, Sonopar, Rexel, CED, Crescent, many other large distribution companies, super regionals, locals. They use it. Now, how they use it is, it varies from customer.

[00:13:50] We talk through all this stuff, but I know that for the most part, they're using it to understand what their market size is, what their share is, and where potential is. Are we moving up and down against the market? Are we exceeding the market growth? We can look at this and measure performance by a company, by a region, by a branch, by a salesperson.

[00:14:14] If you want to build out the data in such a way, it becomes a useful performance benchmarking and coaching tool. That's probably the best use case I can think about for the data itself. Got it. Okay. Yeah, so the benchmarking and then, you know, I guess it helps you understand one thing that maybe comes to mind.

[00:14:39] And correct me if this isn't in line with what you were talking about, but perhaps, you know, one way to measure a rep's effectiveness is just volume of sales, right? But then if you can actually compare sales rep in the context of the market that they're operating in, maybe someone has a really poor market, you know, and someone has a really killer market. And so then maybe they have the same sales numbers, but one person had a really bad situation, right? The environment for sales was more difficult.

[00:15:09] And so you wouldn't want to ding that person as opposed to the other guy who had a bunch of wind behind his sails, right? Is that? That is very true. And we can talk about this in terms of the pandemic. We had a terrible year. And then we had what appeared to be a fantastic recovery year. The election was 17 or 18% of that number. When people were touting, I've grown my business by 15.

[00:15:35] Well, you're 2% behind the market growth, right? And that's true of anywhere you look. And when you can look at those numbers, those numbers are really at the county level is how granular we get with that. So you can see that next year, California will probably be outpacing on the construction side because of the rebuild, right? And we'll probably see some growth in reshoring and onshoring in the industrial side.

[00:16:04] So you're absolutely right. It's important to understand where we're looking and what's going on and how to take out the effects of inflation in our numbers so we can better see our performance. Got it. Yeah, and you guys, you mentioned you do that, right? So when your clients are looking at their numbers, it's adjusted for inflation.

[00:16:27] So they can see really like five years ago, 10 years ago versus now in real equivalent dollars, however, right? Yeah, we talk about current dollars, which are today's dollars, and then nominal dollars, which are inflation adjusted. And we index to the government. So currently we're indexing to 2017 non-inflated dollars or nominal dollars.

[00:16:51] Talking about distribution and the reps and manufacturing industry in general in the electrical space coming into 2025 here, do you see headwinds, tailwinds? Generally speaking, from what you're seeing in all the data, what should we expect in 2025? We should expect to be relatively flat to 2024 because changes take time. And we're going to see a shift away from a lot of the green energy policies.

[00:17:21] I don't think they're going to completely evaporate. Certainly we'll go back to a more fossil fuel centric environment. The one thing that will not change is the need for power for data centers. We're already running short on electricity, and this is going to be a big thing to watch and especially for our industry. How are we going to tackle this? Are we going to add on to existing plants? Are we going to build more solar, more wind?

[00:17:52] Are we going to look at, there's been some speculation about small nuclear plants and bringing some of these back online. Keeping our pulse on the, or our fingers on the pulse of what's going on is going to be very important. For making the transition from one set of rules to a new set of rules, right? Yeah, that's fair.

[00:18:16] What would you say, if you could summarize, do you see maybe what's the biggest opportunity versus biggest challenge you think the electrical industry is going to face? I don't really, I haven't gotten quite that granular yet. It's so new. Certainly we have some forecasts out there. We talked about potential changes.

[00:18:37] But until we settle in for about another probably six or eight weeks, we're going to be riding the same waves, the same tailwinds as we were coming in to the new administration. But it's going to come about midway through the year. We should have a better feel for exactly what's going to change.

[00:19:03] And it really starts with the follow the money thing, right? And even if we were to completely change fiscal policy today, for us in the electrical distribution industry, we don't see an impact for that for at least six months. If I decide to build a plant today, I've got to get funding. I've got to get through the environmental. I've got to dig a hole. I've got to put up some walls. And then I start to bring in the electrical.

[00:19:29] For us, it takes a little bit of time before these changes really materialize. Got it. Fair enough. That's why people need your market watch, right? Your flash updates. Yeah. In six months from now. Exactly. Awesome. Well, I know we're coming up on time. Anything just interesting where you talked about you've been in the business for, I guess, about five years now that you've been running DISC. Where's DISC going next? Are you going to get into other industries?

[00:19:58] Are you focused on electrical? Any new innovations you're thinking of? Just what's going on at DISC? Right now, we're excited very much to partner with some like-minded companies like Flow. We are looking for people who want to leverage the solutions into their applications, into a broader base perspective. We've started to look at air conditioning and heating. We've started to look at industrial.

[00:20:23] I work a lot with David Gordon and the channel marketing group to facilitate some of these things. We want to enhance our products and our manufacturer-specific forecasts. And we'd also like to include some new AI and visualization to make our tools easier to use. That's what I see for DISC. That's it. That's exciting stuff. I mean, I'm excited to work with you guys. You know, we've talked about some cool partnership stuff we could do. So that's pretty cool. So, well, awesome.

[00:20:52] Well, thank you for taking some time here. Is there anything that you want to end on that I missed? I always want to ask that question. I just want to thank you for inviting me today. And I look forward to the changes in our electrical economy because it is going to be fun. And it always is, even the bad times. When we can make the best times out of the worst of times, that's exciting to me. And the only way we're ever going to do that, the only way you're ever going to win is with information.

[00:21:23] And especially in today's world, everybody's looking at it and using it. And DISC is quickly becoming the voice of the industry from a market sizing perspective. I'm here for anybody who needs it. Awesome. All right. Well, people can reach out, I'm assuming, on LinkedIn. Absolutely. We can find you there. We can find your website. We'll put that in the show notes. Yep. And there'll be a Nemra here in a couple of days. We'll be there too. So that'll be fun. I'm really looking forward to the Nemra show. Yeah. Nemra's going to be great. It'll be great.

[00:21:53] So, all right, Chris. Well, thank you. Really informative. We appreciate it. And we'll hopefully get you on again a little bit down the road and see how things are going. Great. Curtis, thanks again, man. All right. Yeah, I appreciate it.