“Is My Rep Getting Too Rich Off This Order?”

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It’s a question I hear all too often.*

“I’m the sales manager for a manufacturer, and my boss thinks our rep is getting too rich off a new order. I don’t know for sure whether I agree with my boss or not,” said the sales manager.

“I can see the argument that the rep should be rewarded for bringing in a huge order that took five years to close, but the rep’s check last month was bigger than my boss’ check — that is not sitting too well.”

My reply?

The sales manager made the most obvious argument himself. The rep worked for five years before any commission was earned. Now the rep is being compensated for the five years of unpaid work leading up to the order he or she earned for your company. Each commission payment the rep receives covers both payment for that month’s shipments and an installment payment toward reimbursing the rep for all the unpaid work during the past five years.

But there is more to it than that. It will be easier to explain if I use an example.

Let’s say you invested in 50 risky stocks five years ago. Most of the companies went out of business. Some of them earned you a modest profit, and one of them was a big winner.

What was your five-year profit?

Is the gain on the big winner your five-year profit? Of course not. You calculate your net profit by totaling all your losses and all your gains.

Consider that the rep had many losses on prospects in which he or she invested time and effort that never returned a cent of commission.

These losses, which are an expected and normal part of being in the rep business, come from pursuing prospects where the rep’s principal ultimately can’t meet the prospects’ price, delivery, or performance standards.

Reps don’t expect their principals to be an ideal fit for every prospect. Quite the contrary. They expect that only a modest percentage of prospects will be a good fit for their principals and use the commission from the orders they do receive to offset the cost of making calls on prospects that turn out not to be good candidates for their principals’ products.

“Pursuing five to eight prospects for each order that eventually closes is part of the rep business,” explained one rep. “I came into this business with my eyes open. But when I do make a big win, I have to be sure to remind my principals that the commission I receive on each closed order has to cover my cost pursuing that order, and five to eight that didn’t close.”

* This article combines conversations with a number of MANA members. Their comments have been edited for clarity and brevity.

Why Should a Manufacturer Be a Member of MANA?

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“I’m a manufacturer, not a rep agency. Why should my company join MANA?”

I hear this all the time. It’s a legitimate question, really. After all, the name of the organization is Manufacturers’ Agents National Association — MANA, for short. Seems like it’s an association just for reps. While that may have been its foundation, MANA is much, much more. It’s a terrific organization for manufacturers, whether you’re just exploring the strategy of utilizing reps as your sales channel or have been working with reps for decades.

Our company, Eriez Magnetics, has enjoyed the benefits of selling through independent reps … Read the rest

Adopting 3Rs When Vetting Prospective Lines

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In the simplest terms Doris Harkness’ process for vetting a prospective or new line may be defined by three words — let’s call them the 3Rs: Responsive, Resourceful and Respected. If a manufacturer can show it possesses those three attributes, chances are they can find a home with Harkness’ agency.

Harkness, who heads the Pace Company, Richmond, Virginia, maintains that any manufacturer that desires to be represented by her agency had “better be clear about the type of company they are. We are the most resourceful, respected and responsive bulk handling rep in Virginia. Any manufacturer that we partner with … Read the rest

Making the Most of MANA Membership

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It happens more times than not that in the course of an interview with a MANA member, the member will offer a compliment about the association’s services.

For instance:

  • Elsewhere in this issue of Agency Sales, one rep notes, “What’s been very helpful to us is that in its wealth of information about how reps can become more professional, the association offers valuable information on how to effectively evaluate the performance of principals via line productivity analysis.”
  • It’s commonplace for reps to note that they’ve been very successful in locating new lines or having prospective principals find them via
  • Read the rest

Solving Your Leadership Gap

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Tips for Developing New Leaders

“For the third year in a row, leadership soared to become one of the most pressing talent challenges faced by global organizations. Nearly 9 out of 10 global HR and business leaders (86 percent) cited leadership as a top issue. Fully 50 percent of respondents in our survey rated their leadership shortfalls as ‘very important.’” — Global Human Capital Trends 2015, Deloitte University Press

One of the most alarming current global business trends points to one of the most tantalizing business opportunities.

As Baby Boomers retire, the ranks of managers and supervisors are being depleted. … Read the rest

Making Your Sales Proposal a Winner

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What to do before, during and after presenting.

To put the importance of proposals in proper perspective, they are far more than a vehicle for conveying your message. They are your message. Sadly, proposals that could be winners are often rejected. They may be filled with information, but the message gets lost and they fail to capture the recipient’s imagination.

To make sure your proposals get the attention they deserve, it helps to view them in three phases, before, during and after the presentation. Each one plays a part in moving your proposal closer to winning the business.

Preparing Your Read the rest

Does Being a Strong Qualifier Correlate to Having a Strong Pipeline?

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My latest data mining project reveals that the answer to this question is a partial correlation.

Check out tables 1 and 2 in this article and you’ll see just what I mean.

All of the data in this article comes from Objective Management Group’s (OMG) evaluations and assessments of nearly 1.8 million salespeople.

The first table shows the percentage of salespeople that have the Qualifier competency as a strength. Look at the difference between elite salespeople where 93 percent have it as a strength versus weak salespeople where only 9 percent have it as a strength. Also notice that the … Read the rest

What Is a Rep Salesperson?

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How do you create Self-Managed Sales Professionals?

I have worked with rep firms for many years. Recently, it has become very apparent that one of the biggest problems the rep managers have is getting real productivity from the rep salespeople. This article and future articles will address this situation and make suggestions for improving individual rep firm results.

Selling for an independent rep firm is different than other sales jobs. Measuring a salesperson working for a rep firm is done by a different standard — commission income generated by the salesperson. That is the only measure that counts.

If salespeople … Read the rest

The Sales Force — Working With Reps

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This is the third in a number of articles serializing The Sales Force — Working With Reps by Charles Cohon, MANA’s president and CEO. The entire book may be found in the member area of MANA’s website.

Interrupted only by the arrival of box lunches at noon, the council worked straight through until 4 p.m., when Jim arrived to receive the group’s recommendations. Maria had been chosen to present the group’s findings and was standing next to the overhead projector when he walked into the conference room. Jim sat down in the front row, but Maria made no move to … Read the rest

Sales Managers’ Common Mistake #2: Lack of Direction

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In most organizations, sales managers are the essential bridge between the company’s sales goals and the realization of those goals. The gritty day-to-day interactions between the salespeople and their customers are frequently filtered through the perspective of a sales manager on their way up the ladder. The aspirations and strategies of the company’s management must be imprinted by the realism of the sales manager as they come down from above. Sales managers are the conductors who carefully orchestrate the tentative entanglement of the salespeople with their management.

It’s an incredibly important and difficult job. Unfortunately, it is often the most … Read the rest

The Religion of Empowerment

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I have such a passion for taking any company and introducing them to the power of delivering awesome customer service. It’s the focus of every one of my books. I have been passionate about it and continue to preach on the subject. It is my guide to delivering exemplary service to every person that walks through your doors resulting in overall corporate success in terms of customer retention, new sales (via word of mouth), market share, financial vitality, and positive reputation in your community.

Have you ever heard of Disney World’s reputation for exceptional customer service? Empowerment is a religion … Read the rest

Rep Councils: Two Are Better Than One

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Here’s how one manufacturer described his company’s experience with rep councils:

“We have 22 reps on our team. Early on we started a rep council and learned that it was a very effective way to build the cooperative links that have made us successful. However, we soon discovered that the work of the rep council was diverse and often time-consuming. It seemed to us that we were often asking the council members to do too much for us, although none of them ever complained. However, we thought a lot about this and came up with the idea of having two … Read the rest

Ways to Make Smart Use of Technology — Without Losing the Personal Touch

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Technology does a lot, but it can’t do everything. Sometimes we forget that. We can get so dependent on e-mail and social media that we lose sight of what people really need from us — especially in business. Yes, clients expect to connect with us in various high-tech ways, but they also crave the deep and meaningful connections that can only come from face-to-face (or at least voice-to-voice) connections. It can be tricky to walk that line.

Too little tech and you’ll seem out of touch, too much and you’ll lose the personal touch that keeps customers loyal and engaged. … Read the rest

The Principal’s Standard Contract vs. MANA’s Model Contract

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MANA members, principals and representatives can access the Manual for the Creation of a Rep‑Principal Agreement on the MANA website (MANAonline.org). Much thought has gone into this document, and it is a useful tool. This document has been generated by a team of MANA member lawyers who have represented both manufacturers and representatives.

Likewise, a good number of principals have a standard representative contract generated at significant cost and through years of favorable experience with other sales representatives.

So, which one should be used as a starting point? The answer, I suggest, is neither and both.

Too often a principal … Read the rest

Fire the Coach!

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“Fire Hue Jackson!”

The calls are flooding into the airwaves of 1480AM, WHBC in Canton, Ohio. Hosts Kenny “The Roadman” Roda and Jeff “J.T.” Turk are getting an earful from frustrated and angry fans. The Cleveland Browns are again in the basement of the AFC North and the overwhelming call is to fire the coach.

The team definitely needs to shake things up and send a message, but does firing the manager or coach really have any significant effect on a team’s overall performance?

The answer is a decisive, not really.

John Charles Bradbury of Kennesaw State University published a … Read the rest

A.O. Smith’s Margoni Receives Golden Eagle Award From AIM/R

One of the highlights each year during the AIM/R Annual Conference is the presentation of the Golden Eagle Award — one of the most respected honors in the plumbing industry and particularly within the Association of Independent Manufacturers’ Representatives. The name of the winner is not revealed in advance, leading to even more anticipation. Last month, at the Awards Lunch for the 46th Annual Conference in Napa, California, AIM/R Board member Brian Morgan of The Morgan Group had the pleasure of announcing A.O. Smith Water Products’ Senior Vice President of Sales Jim Margoni as recipient of the 2018 Golden Eagle … Read the rest