One MANA member, Dean Baum of Southrep, Inc., Newnan, Georgia, has been reading the series of articles in Agency Sales devoted to the Perfect Principal. After carefully following the series, he’s come away with some thoughts that he generously offers to principals.
“The words ‘Perfect Principal’ sound like something you might hear in a ‘pep rally,’ and maybe they are. In this case, maybe you — the principal — are our source of ‘pep.’
“Remember, the rep is out in the field or alone much of the time. He has a tendency to work more for those who communicate and show appreciation for his efforts and who give him the support he has to have to do the job.
“Good salespeople are personality types that are sensitive to how their efforts are appreciated. Most appreciate that without sales growth, their company would be in a ‘pretty pickle,’ meaning it would be in serious trouble. If you depend upon reps, then you need to regularly encourage them and respond to their needs.
“You know about the urgent need to respond to quotes, samples, etc. promptly, but what about the real need for regular communication to assure the rep that you are behind him and to find out what is new in the field and what he may need? It never ceases to amaze me how a manufacturer will respond to large customers promptly and even small ones when they ‘make a racket.’ But a rep, who may be responsible for the revenue of 100 customers and who can affect the future of a company, may not get regular attention or encouragement.
“Can the attitude of a manufacturer toward his rep sales force make a difference?
“Just one real-life example may provide an inkling. Here’s an example of a firm that was the leader in its field and the innovator of the technology needed by its customers. Even with extensive competition, they managed to maintain an easy 33 percent of their market. However, a buyout occurred and new management arrived. They were centered on profit because that is how their bonus was structured. First thing they attempted was to make some product available for multi-channel selling as they called it. The reps turned that down. Second thing they tried was to cut commissions on large sales, after the sale. That cost them a ‘pretty penny.’ Still trying, they took their largest rep and cut his territory without consulting him. He jumped ship. That cost them dearly. So, what do you imagine is their situation today? Serious loss of market share, which translates to millions in lost revenue. All because of lack of ‘appreciation’ of the value and power of their experienced rep sales force.
“The above is admittedly an egregious example. But the question here is do you fully appreciate and encourage your rep sales force? How can you more fully do so? Good examples are continually published in Agency Sales magazine under the ‘Perfect Principal’ series. Do you think these firms are stable and growing? Take a look at their ‘stats.’ What do they do to support their reps?
“Consider the following:
- How about a regular, at least once a quarter, newsletter to your reps? This newsletter gives you a chance to compliment their efforts. It need not be extensive. Develop standard sections — news about the field, the plant, the people, new products, new directions. You might find it will help collect your thoughts about how to grow.
- Have you established a rep council? Why should you? There are those words again — ‘communication,’ ‘appreciation’ and ‘understanding.’ If you don’t understand what is going on out in the field, you could have serious difficulty.
“You can take the lead and make a difference in the motivation of your valued sales team. Have you ever paid any rep an unexpected bonus for an exceptional job? Try it and publish it to all your reps. Does your commission schedule slide up or down with volume? Which do you expect better motivates a rep? Do you call the rep regularly, at least once a month, and just ask how things are going or what is new in the field or what you can do to help or if he is experiencing any issues at all that you can help with? Try it — it costs almost nothing, and it is enjoyable. See what a difference it will make. Who are your top reps? When is the last time you took the initiative to talk to them? Have you ever complimented a rep for a job well done? When is the last time you or your managers worked in the field with one of your reps?
“AT&T came out with a picture some years back. It had a bunch of people floating in balls up in space. Well, one ball had unfolded and was looking up at the other balls. The title of the picture was: ‘Communication is the beginning of understanding.’
“So, don’t float around in your own little ‘cocoon’ or ‘ball.’ Unfold, communicate, appreciate, understand, grow and prosper with your reps and find more enjoyment with your valuable rep force — after all, they are the keys to your continued growth.”
How Rep Consolidation Might Impact Manufacturers
While an article that appeared in the April 2006 issue of Electrical Wholesaling magazine focuses on the impact of rep consolidation on the electrical industry, chances are there’s much to be learned by taking the information and applying it to other industries. The fact is when a trend develops in one industry, it invariably crosses over into other areas.
Under the heading: “The Role of the Rep Evolves,” authors Allen Ray and David Gordon maintain that “a potential major ‘casualty’ of consolidation is the role of independent manufacturers’ sales reps. Many believe that reps will need to become better custodians of their markets. They will need to focus more time at the end-user, gain specs from influences, and generate demand. Expect increased rep consolidation due to the need for reps to offer more services.
“Large distributor relationships will be managed by national account managers with reps supporting initiatives in executing roles. Small distributors will be the domain of reps who will maintain their traditional roles of distributor developer, account manager, local marketer and demand creator with these customers.
“But with a significant percentage of the business being managed at a corporate level, and reps being relegated to implementers of strategy, many believe that the rep compensation model will change. It’s doubtful that it will be based 100 percent on volume. More likely, it will be a combination of marketplace volume, account profitability and demand-generation activities.
“A key for manufacturers will be determining the profile of the ‘right’ rep, identifying how to communicate with them and providing the tools they will need to achieve manufacturer-defined goals. Manufacturers will also need to strive to identify what the ‘right’ compensation model is. Perhaps piloting initiatives now would be appropriate.”
The authors follow with some advice for reps — but it’s advice that manufacturers ought to be aware of.
“If you’re a rep, evaluate your market. Where do you expect consolidation? How do you need to change your organization to deliver value-add to your manufacturers and distributors? What is the ‘right’ compensation model for you? How could you become a marketing engine for manufacturers or selected distributors?”
If your reps are asking these questions of themselves as they prepare for the future, doesn’t that show that they’re the marketing partners that believe in long-term relationships?
No Need to Reinvent the Wheel
An interesting and hopefully beneficial dialog took place prior to a MANA-sponsored manufacturer seminar earlier this year when one manufacturer that traditionally sold direct posed questions to three of his peers who were relatively new to working with independent manufacturers’ representatives. While admitting he was curious concerning what reps brought to the table, the first manufacturer was reluctant to give up on his historical manner of going to market. As the conversation progressed, however, he learned that many of the problems he currently faced with his direct sales force were what brought the other manufacturers to the decision to work with an outsourced sales force.
Among the concerns the first manufacturer was facing were:
- A pressing need for immediate access to new markets and/or customers.
- The constant demand from customers for a local presence.
- The growing cost of maintaining/supporting the direct sales force.
- An evolution in the marketplace that resulted in a diversity among markets and customers, thereby requiring an equally diverse sales force — in terms of sales skills — to meet their needs.
- The constant turnover among the direct sales force that commanded a growing amount of time to deal with.
- A requirement on the part of many customers that there be a local inventory presence, coupled with the fact that some distributors wouldn’t stock for them.
- An inability of some direct salespeople to get their “foot in the door,” given the fact that they represent just one line. At the same time the rep can boast of a synergistic approach, thereby maximizing the salesman’s time in front of the customer.
- The need for an objective business advisor in the territory. Or as one of the manufacturers described the rep, “He’s someone who knows the territory and the decision makers at each of the major customers. He knows what they need and he’s at the ready to provide solutions to their problems.”