Strategic Program 12-22

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Agenda

Understanding Each Other’s Business

1. Discuss and Review 2011

2. Discuss your Company’s 2012 Growth Strategies

3. Discuss LPS’ 2012 Growth Strategies

4. Introduce LPS’ 2012 Strategic Advantage Partnership Program

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2011 Business Review

• 2011 Sales to 2010

• 2011 Events (Product Training, Vendor Show, etc.)

• What was good? What could be better?

• LPS MRO Audits / Opportunities

• How many were completed? How many were presented?

• How many were sold, lost, and are still pending?

• Other End-user Notable Sales Results

• New Product Sales

• What could we have done better in our “pull-through” sales strategy?

• 2011 Promotions

• What was successful? How can we do better?

3

Distributor’s 2012 Strategy

• Salesforce

• How are you strategically structuring your salesforce? (Inside & Outside)

• Do you plan on adding to your salesforce head count?

• How are you incentivizing your salesforce for growth? (Commission, Gross Margin)

• Sales Strategies

• Do you have a defined sales process? What is it?

• What new markets and sales channels are you planning to enter?

• Are you using any new sales enablement tools? (CRM)

• Markets and Accounts

• What new accounts are you targeting?

• Are you noticing any specific “emerging markets” in your operating area?

• How do you differentiate yourself from your competitors – Local, Regional, and National.

4

LPS Market Position

• Rank in Sales / Market Share

• Where does LPS rank in terms of your MRO Chemical Sales?

• If we are not your #1 MRO Chemical supplier, which Companies are ahead of us?

• What is LPS’ approximate Market Share percentage of the MRO Chemicals you sell?

• How can we increase our Market Share with you?

• Margins

• How does LPS’ Gross Margin percentage compare to your other MRO Chemical lines?

• How does LPS’ Gross Margin percentage compare against other MRO suppliers?

• LPS

• How can we better serve you as a supplier?

• What do we do well?

• Are there things we can improve upon?

• What are your Best Suppliers doing that LPS is not doing?

5

LPS 2012 Strategy

• Organic Growth*

• Innovation & New Product Development

• LPS and all ITW companies are getting closer to the customer

• What are the unmet needs of the End User?

• What are the unmet needs of the Distributor?

• Employee Development

• Investing in Training

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*Note: Organic Growth for the Distributor may not be Organic Growth for LPS

LPS 2012 Strategic Advantage Program

Distributor Commitments:

• Aggressive Growth Plan

• Information and Resource Sharing

• MRO Chemical Conversions

• Quarterly Review Meetings - LPS Regional Sales Manager & Distributor Principals

Benefits:

• Preferred Partner Status

• Flat Pricing

• Aggressive Marketing Performance Fund

• LPS Sales Training

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LPS Commitment

• Flat Pricing – Any Quantity (15% off) • Distribution Center Shipments • Branch Shipments: 15 cases = 15% off and Freight Paid • Drum Drop Ship Program to End Users = 5% off (1st Column Pricing)

and Freight Paid

• Selective Discounts• Competitive Opportunities• Volume Business• High Profile End User Accounts

• Special Terms: 2% 30, Net 31

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9

Advantage Program to Strategic Program

• Strategy – a plan, method, or series of maneuvers for obtaining a specific goal or result

• Partnership – the state or condition of being a partner; participation; association; joint interest.

• Incentive – something that incites or tends to incite to action or greater effort, as a reward offered for increased productivity

LPS Sales and Marketing Support

Sales Training

• Minimum of 3 Training Sessions are Required to Qualify for Flat Pricing• Inside Sales People - 1 Session• Outside Sales People - 2 Sessions • 1 Training Session for Q1 will be Determined by Sign-up • Additional 2 Training Sessions will be Scheduled by Q1 Review

Marketing Performance Funds – 3% of 2011 Purchases

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• LPS pays out 100%

(Not 50%/50% Co-Op)

• Customized Growth Incentive Programs (SPIFFs)

• Pre-approval by the LPS Regional Sales Manager is Required

• Flyers

• Trade Shows

• Open Houses

• Displays

• Catalogs

• Headers

• Point of Purchase

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GROWTH AND REBATE* INCENTIVES

TO QUALIFY PURCHASES MUST EXCEED 2011 PURCHASES BY 8.0%

*Rebates back to $1

% GROWTH OVER 2011 % REBATE

8.0% - 11.99% 1%

12.0% - 15.99% 2%

16.0% + 3%

Distributor’s “Who Bought LPS” Reports = 1%

• Discuss the Purchase of LPS Products

• Identify Opportunities for Growth

• Potential to Go “Wider and Deeper” and Sell more LPS to Existing LPS End Users

• Provide Quarterly with End Users, SKUs, and Distributor Sales Person Information

• Above information for Q1, Q2, and Q3 in the Excel File and Format Provided by LPS

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Strategic Incentives


Competitive “Who Bought What” MRO Chemical Reports = 1%

1. What other MRO Chemical Lines are you purchasing with combined purchases over $5,000?

2. Provide in Q1 and Update in Q3 with End Users, SKUs, Selling Prices, and Distributor Sales Person Information in and

Excel File and Format Provided by LPS

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Convert Competitive Chemical Product(s) to LPS = 1%

• At the Distributor’s Inventory Level

• Must be over $5,000

• Must be Pre-Approved by the LPS Regional Sales Manager

• Competitive Product Line Target will be Identified on Sign-up Sheet

• Line must also be Reported on “Who Bought What” reports to Verify Opportunity

Note: This is a contingent upon completing a Competitive “Who Bought What” Report.

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Convert 4 New Target End Users to LPS = 1%

• Each End User must be over $5,000 (Distributor Sales Volume)

• List of End User Targets must be Submitted during Sign-up in the Format Provided by LPS

• Each Must be Pre-Approved by the LPS Regional Sales Manager

• A List of 10+ Targets must be Provided by March 1st in the Format Provided by LPS

Note: Competitive Chemical Products and Target End Users must be Independent of each other. No Double Dipping.

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Promote LPS Products in 2012 = 1%

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A. Must do at least 2 promotions in 2012B. You can only promote the products that are shown here. No Exceptions.C. All items promoted must be stocked prior to the start of the promotion or training.D. Distributors must provide proof of promotion and utilization of marketing funds.

2012 National Advertising

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Coordinated Media Schedule

• IMPO – Industrial Maintenance and Plant Operations• NED – New Equipment Digest • Industrial Supply – Industrial Supply Magazine

New LPS Market Expansion Products = 1%

Stock and Support all New LPS Products introduced in 2010, 2011 & 2012. Minimum 2 cases per product.

• Guaranteed Sales – LPS “Pull-Through” Sales Strategy

• 2 cases of each product must be purchased by the end of Q1 (even if purchased in 2011)

• For additional product launches, distributor must purchase 2 cases within quarter launched

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• Clear Penetrating Grease(06716)

• Food Grade Anti Seize (06508, 06510)

• KB 88 Ultimate Penetrant (trigger) (02322)

• SA-X X-Treme Degreaser (06828, 06801, 06805, 06855)

• T-91® Non-Solvent Degreaser

(06328, 06301, 06305, 06355)

• ThermaPlex® Bio Green™ Bearing Grease(70714, 70706)

• ThermaPlex® CS Moly Bearing Grease (70814, 70806)

LPS Product Approval = $$

1. Secure an LPS Product Certification, Specification, or Approval at a Major End User

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• Automotive

• Aviation

• Food

• Military

• Railroad

•Transit Authority

• Utilities

2. Assist LPS in securing an industry recognized certification, specification or approval and LPS will incentivize up to 5%

of the total volume of the approved product. (Must be Pre-Approved by LPS Sales Management)

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*Rebates back to $1

% GROWTH OVER 2011

% REBATE

Level 1 8.0% - 11.99% 1%

Level 2 12.0% - 15.99% 2%

Level 3 16.0% + 3%

LPS 2012 Strategic Advantage ProgramIncentives Summary

Discounts and Rebates Percentage

Flat Pricing 15%

Special Terms 2%

Aggressive Marketing Funds 3%

Growth Rebate 1%, 2%, or 3%

Strategic Incentives Percentage

Distributor’s “Who Bought LPS” Reports 1%

Competitive “Who Bought What” MRO Chemical Reports

1%

Convert Competitive Chemical Product(s) to LPS 1%

Convert 4 New Target End Users to LPS 1%

Promote LPS Products 1%

New LPS Market Expansion Products 1%

Secure Specifications, Certifications, or Approvals TBD

Total Strategic Incentives Potential 6%+

Grand Total Potential Incentives 29%+21

Strategic Program 12-22

Documents

purchases lps

lps reports

lps rank

lps toexisting lps end

mro chemical sales

sales strategy

sales people

purchase of lps products