Last updated on October 10th, 2019 at 02:11 pm
There was a time when most of the fans heading to a baseball game in Milwaukee might have known the Derse Inc. company name. After all, Derse was responsible for billboards all over town and painted signs on taverns for the likes of Miller, Pabst and Schiltz.
Today, however, nearly all of Derse’s business is outside of Wisconsin. The thousands of fans who drive past the company’s headquarters at West Canal Street and Selig Drive on their way into the Miller Park parking lots are likely unaware that Derse is one of the largest designers and builders of trade show exhibits in the country.
“Milwaukee’s not a hot trade show city for many reasons, but it’s been an ideal place for our headquarters to be because the workforce here is hardworking and grounded, down-to-earth people,” said Brett Haney, chief executive officer of Derse.
The company got its start in 1948 as a sign painting business operated from the Milwaukee garage of founder Jim Derse’s mother. Over the years, Derse moved into making billboards and exterior signage before eventually starting to build trade show exhibits. When Bill Haney, Brett’s father and company chairman, and his business partner Bill McNamara, currently Derse’s vice chairman, bought the company’s trade show business from the Derse family in 1989, annual revenue was around $8 million.
This year, the company expects to bring in around $170 million in revenue. It was named one of the winners of the Metropolitan Milwaukee Association of Commerce’s Council of Small Business Executives Future 50 Awards. The company has been named to the Deloitte Wisconsin 75 list of the state’s largest privately and closely held companies. Its workforce has grown to more than 500, including around 130 in the Milwaukee area. Derse also has divisions located in Chicago, Pittsburgh, Atlanta, Dallas and Las Vegas and is evaluating how to accommodate more growth in the future.
“We’ve got some real estate constraints right now because our warehouses, not just in Milwaukee but around the country, are pretty full,” Haney said. “That’s a good thing, but we’re right now looking at our long-term needs to grow and add space in some of the divisions.”
Haney, who took over from his father as CEO at the beginning of the year, said Derse saw strong growth from 2010 through 2015. Sales growth was a little bit stagnant in 2016 and 2017, but the company has returned to growth over the past two years.
“There were some things strategically that I think we missed that caused that,” Haney said. “Often times in a business the size of ours, you might make a decision this year and the end result of that decision doesn’t really play out in the sales numbers until three years later.”
Haney’s future wasn’t always expected to be at Derse. He joined the company in 2013. After graduating from the University of Wisconsin-Madison, he started his career in real estate development, first at then Brookfield-based NAI MLG Commercial and later as a principal at Brookfield-based HSI Development Partners.
“There was a calling,” said Haney, who grew up around the business. “I loved real estate, I loved what I was doing, but in the back of my mind, the opportunity to come back and maybe lead the company one day was appealing, working alongside my dad was an appealing thing.”
Haney’s transition to CEO was part of a multiyear succession planning process and Derse expects to name a new president to fill Haney’s former role in the near future. The company has also created an executive committee to help transition leadership of the company as the elder Haney and McNamara move closer to retirement.
“It’s a critical thing to think about many years in advance,” Haney said. “We also don’t just think about succession planning for the CEO position, that’s something that’s top of mind for many of our key management spots around the country.”
Haney acknowledged there have been pros and cons to having spent time away from the business.
“It would have been helpful had I had more experience in a few of the entry-level positions here like a project manager or even in sales,” he said.
At the same time, Haney said his real estate career gave him great experience in understanding finance and risk.
“I saw this huge real estate expansion where you couldn’t lose and everyone was making money and times were good,” Haney said. “Then in ’09 I saw the collapse and the devastation. That left a mark on me from a risk-taking perspective that will last forever.”
Derse’s growth has generally benefited from a strong economy, making it easier to compete in an environment where marketers increasingly look to digital options.
“Luckily, when the economy is good marketing budgets are pretty flush,” Haney said. “It’s been a good run for 10 years, but when recessions hit, and there will be another recession coming up, marketing budgets definitely get slashed and it’s more competitive for spend.”
Even with some turbulence in the economy and trade tensions increasing globally, Haney said he still is expecting strong growth for the company in 2020.
Competing for attention
Despite the growth of technology and digital options, Haney said he is also optimistic about the company’s future in face-to-face marketing. He pointed out Derse’s customers are usually working on multimillion dollar orders with their clients, creating a need for both parties to build a relationship and get comfortable with each other.
“Being face-to-face I think creates trust in relationships and as long as humans have that need to interact with each other, I think that will be good for us,” he said.
Derse’s bread and butter is in building exhibits and booths for customers to use at trade shows, but the company also provides services for events off the show floor and for the permanent environment at a customer’s facility. Customer exhibits are also stored in Derse warehouses and Sho-Link, a co-op business that Derse owns with several other exhibit houses, provides services at the actual trade show or convention.
Haney said Derse’s relationship with customers also extends beyond simply building the trade show exhibit. It starts with understanding what a customer is trying to achieve at a show and extends to helping execute on new leads after the show is over. It also includes studying the market to make sure a customer is going to the right trade shows.
“Oftentimes clients will come to us and say ‘We want to go to XYZ trade show’ and we ask ‘Why do you want to go to that?’” Haney said. “And the response is either ‘We’ve always done it’ or ‘Our competitors go there’ or ‘We think we should go.’ When you’re making a big investment in a trade show for the spend, it needs to be better than that.”
Bill Hanes, vice president of marketing and strategy for Lesaffre Yeast Corp., said Derse does a good job of helping his company understand what it is trying to achieve. Lesaffre makes the Red Star brand of yeast and has its U.S. headquarters in Milwaukee. The parent company is based in France.
“We just created a new booth. We had several meetings around our concept, our vision and they really helped us flesh out our vision for what we wanted our booth to represent and the messaging we wanted,” Hanes said, adding Derse also provided good digital tools to understand how well the booth performed after a show.
Deb Balderas, events manager at Brown Deer-based Badger Meter Inc., said her company switched to Derse at the start of the year because it could incorporate more technology into a new booth design.
Badger Meter was redesigning its booth for its top trade show, one where it is typically a top sponsor. All of the company’s executives and sales and marketing teams attend the event.
“It’s like picking up our corporate headquarters in Brown Deer and putting it in whatever city the show is at,” Balderas said.
The design process started with a sales, marketing and events team from Badger Meter meeting with Derse. Balderas said Derse helped the brainstorming process by going through a variety of designs beyond booths, including buildings and interiors. The Badger Meter team identified what they liked and Derse used that information to develop two concepts.
“It was really a cool experience as an event and trade show manager,” Balderas said.
Ultimately, Badger Meter decided to combine the two concepts while also asking Derse to build a booth that could expand from 20-by-40-feet this year to a 40-by-40-foot design next year.
“They’ve been right alongside us just going with what we’re looking for,” Balderas said. “Their style is very similar to ours, it’s very collaborative, they have a whole team of people we’re working with.”
Balderas and Hanes both said face-to-face marketing and trade shows are still a key part of how their companies interact with customers, even as digital offerings continue to grow.
Hanes noted that many Lesaffre customers are bakers and a personal interaction helps build trust in the product.
“It’s more of an older, old school kind of industry, so it’s slowly changing to digital, but slowly is the key word in that statement. It’s going to take a while,” Hanes said.
Balderas said trade shows offer an opportunity to meet with hundreds of prospective customers in a few days instead of over the course of months or years.
The challenge is that other exhibitors and competitors are also vying for the attention of trade show attendees.
“It’s vital for us to make that space as open, as warm, as welcoming and also useable by our sales team and our marketing team to be able to do what they need to do away from our corporate office,” Balderas said.
She said the average visit to a booth is often around just 90 seconds.
“You’ve got to be able to bring them in, get the right people in front of them, provide them with an experience they can walk away with and remember in a period of 90 seconds,” Balderas said. “It’s a unique kind of marketing, but it’s fun.”
Adding value for customers
Derse’s designing of exhibits also goes beyond the architecture of a booth to consider other experiential elements.
“What are the smells? What are the sounds? Basically everything outside of the architecture, what can we create to provide a better experience for their clients,” Haney said.
He pointed to one example in which Derse built a bus ride within a booth for a pharmaceutical client that simulated living with schizophrenia.
“Doctors were lined up for hours to have this experience at that booth,” Haney said.
Adding value through design, developing strategy before or after a show, or just understanding the return on investment helps Derse build a more consultative relationship with customers, Haney said. That relationship is important for the inevitable next economic downturn.
“When recessions do hit, we’ll have clients come to us and say ‘We need to basically accomplish the same things next year, but we’re going to have 25% less budget to do that,’” Haney said. “The only way to do that and perform for your clients is to be able to think outside the box and be consultative, so that’s a strength of ours.”
Haney said the company has also remained profitable every year, even during recessions, something he credited to a more conservative fiscal approach. His father is an accountant and Haney has a finance degree from UW-Madison.
“There’s a lot of businesses in our specific industry that are led by sales-minded people,” Haney said. “We think through what we do from a financial perspective, versus just what the hot thing sales-wise is at the moment.”
He also credited the company’s process and procedure for helping keep operations stable. In a competitive market, Haney said he expects cost to become an even more important factor moving forward.
“Twenty years ago when we would meet with a client, oftentimes the decision-maker at that client would be someone in the marketing department because with what we do, everything is custom and unique and usually has a creative component,” Haney said.
Over time, the procurement departments of many companies have become more involved in picking a firm to work with for trade show exhibits.
“What does procurement do?” Haney said. “They beat down the cost as low as they can get. I think companies in our space long-term that don’t have scale like we do, the mom-and-pop type players, will find it harder to compete than ever before.”
He also said that as a private company – the Haney family holds the majority of shares – Derse has an advantage over its competitors that are part of publicly-traded companies.
“The pressures on publicly-held businesses to make the number next quarter sometimes offset some of the long-term thinking that needs to happen,” Haney said. “We’re all in for 25, 30 years … my long-term vision for the company is that we have facilities like this in Europe and Asia as well.”
Derse already does some business internationally, but Haney’s vision would have the company building and servicing exhibits from overseas facilities. He noted that those markets have a number of differences from the U.S., where trade unions are heavily involved at many convention halls.
In Europe, Germany has traditionally been the heart of the trade show world and many of the largest convention spaces are located there. Millions of square feet of convention hall space are currently under construction in China, a market Haney described as like the “wild west.”
“Stats like that to me also give confidence to the future of our business,” he said of the new convention space in China.