The benefits of sharing the wealth….
Manufacturers’ representatives are quick to let principals know one of the most effective means of getting their attention when it comes to selling a new product or promoting a new program — “Show me the money!” By that they mean some form of incentive (e.g., an additional percentage added to the commission for a period of time) is the best first step toward getting their attention — and their action.
One rep who agrees with that approach takes it a step further, however, when it comes to “incenting” his own salespeople to cooperate/participate in such ventures. “I don’t know if this would work for others,” he explains, “but here’s what I do: Whenever the principal agrees to ‘encourage’ us by adding on to the normal commission, I generally pass on the added money above the base commission to our field salespeople. That only makes sense to me since they’re the ones who make it work in the first place. From the first time we followed this approach, we’ve been astounded at the response from the field. To say there’s been a ‘buy-in’ is an understatement. This approach has benefited the agency as a whole in that the additional business our salespeople generate will often result in more money just on the base commission.”
Doing the math….
A rep reports that he’s had some fairly consistent luck when it comes to resisting efforts by principals to cut commissions. “Basically we’ve employed a dual approach when there’s an effort at commission cutting. First, we’ll do the math, and if our figures let us know we’re on firm ground, we’ll inform the principal that we’re willing to walk away from the business. If our efforts at selling result in a less-than-desired ROI, we’ll communicate in a professional manner that perhaps our goals and the goals of the principal don’t necessarily mesh, and perhaps it’s best if we part ways. I’ll admit, however, that before doing this we’ve also completed our work at locating potential substitutes for the principal in question.
“Second, if we determine the principal is insistent in his commission-cutting effort, we’ll counter by suggesting incentives or even higher commission rates for a variety of creative, customized programs that might include:
- Sales over quota.
- Sales of new products.
- Sales to new accounts.
“I’ll admit, this dual approach hasn’t worked all the time, but it’s been effective enough that we know we have a workable plan available if the occasion presents itself.”
Following a profitable business path….
After a successful career as a sales manager with a manufacturing company, a recent correspondent to Agency Sales decided to strike out on his own and become a manufacturers’ representative. Boasting years of experience with reps, he felt he was on fairly solid ground when he began his venture five years ago. Among the caveats for partnering with principals that he decided to follow when he opened his doors for business were:
- “Will the principals I work with allow me to focus on products, markets, programs that possess the highest levels of sales-dollar potential?
- “Will I be allowed to concentrate my sales efforts on a sufficient number of prospects/customers that I will be able to maximize my ability to develop relationships with the true decision-makers? Or, will I be required to make the maximum number of calls on the maximum number of prospects, simply to show activity?
- “Will my principal demonstrate to me that I am, in fact, a partner in business looking out for the mutual benefit of them and my agency?”
He continued that this is a path he began following from the very beginning, and if any evidence is needed that it’s worked well for him, he notes that he’s still profiting in business and looking forward to a profitable future.
A secure way to grow….
As the business and the demands of the territory continued to grow, one rep was faced with a decision of whether to add to the number of people in his agency. On the one hand he realized since he was a single-man operation, that growth was his only way to enjoy continued success. But on the other hand, he didn’t quite know the correct manner to grow. Fortunately, this was a rep who had been meeting informally for breakfast on a monthly basis with a group of his peers. One morning he described his dilemma, and before he finished his orange juice, one of his friends offered a possible solution. “What he told me was that he had faced the same predicament a couple of years ago. The first place he looked was at the manufacturing company he worked for before deciding to become a rep. He took early retirement from his position, and as he thought about it, he remembered that many of his co-workers in sales and marketing had done the same thing. After a couple of phone calls he re-connected with a few of his friends and took them on part-time. They’ve worked out their schedules so all the needs of the customers in the territory and the principals they serve are taken care of. No one is overworked, and they’re doing what they enjoy.
“I decided to follow a similar course. I realize it’s a slow — but certain — way to grow. I’ve already hired one friend who admits he retired too early, and an looking to add one more.”
Creating a principal’s “report card”….
When several reps were queried concerning what they appreciated or didn’t appreciate in principals with whom they’ve conducted business over the years, the results were interesting. Here are some of the results of those conversations:
- “I always look forward to working with the principal that isn’t afraid to delegate the responsibility, especially those responsibilities that we’ve come to expect should reside with the agency. By the very fact that they don’t have to control every aspect of the relationship, they show me how secure they are in making the decision to work with reps.”
- “I’m more than a little apprehensive about the manufacturer that makes a big deal about any mistakes I may have made — especially when they’re talking to others about me. Doing things right and even committing the occasional mistake are two-way streets. We all should share credit or take responsibility when things go wrong. Nothing is served by talking to others.”
- “Communication is especially important, and I’ve grown wary of the principal who won’t listen to me or to his customers. An individual who conducts business in that manner shows me that they are intolerant of others’ ideas — even when those ideas can better a situation.”
- “I like the principal who has rules and lives by them. There’s no changing the rules depending upon the circumstances. If he alters the rules, even if it benefits me, there’s going to come a time when we both regret it.”
The value of working “smarter”….
A MANA member who has made it a habit to attend local rep chapter meetings related a conversation he had with a long-standing friend and fellow rep. “His whole conversation revolved around how difficult it was to sell today compared to 15 years ago. As I continued to listen to his story, it occurred to me that what he was really driving at was that his customers and the markets he serves have changed a lot over that decade-and-a-half. At the same time, however, he was still conducting business as he always had and he expected doors to sales to open as easily as they had at one time.
“In comparison, I thought about my own experience during that same period of time. When I began as a rep I’ve got to admit that I was selling lines then that are almost totally different from what I carry today. During that time, I’ve never lost a line, but what I did do was to add lines to what I already had. My criterion for adding lines was that anything new should show potential in view of the changing times. At the same time, I dropped lines that didn’t show a similar potential.
“What I said to my friend was that we as reps have to change as our world changes. Even after I went over all of this with him, he still held on to the belief that if he worked harder, those sales doors would begin to open for him. I’ll always maintain it’s better to work smarter — that’s the way to open doors.”