A manufacturer called recently to let us know he hit the jackpot with an agency he signed up a little over a year ago.
“This rep impressed us from the get-go, but we didn’t know how good he was until fairly recently. He hit the ground running from day one, but what really impressed us — in addition to his sales success — was his follow-up and grasp of everything that was going on in the territory. He insisted on regular meetings with us either by phone or in person. Basically, the agendas for these meetings were simply to keep us up-to-date with what was going on. To say he made an impression on us is an understatement. We’ve taken the relationship a step further recently. We’ve asked him to train some of our other rep firms when it comes to communication and reporting from the territory. Thankfully he’s agreed to do so — for a consultant’s fee — and some of the other firms we saw real potential with are beginning to realize that potential.”
Qualifying Sales Leads
In a room filled with manufacturers and reps, a manufacturer made a comment concerning qualifying sales leads that somewhat surprisingly was met with almost unanimous approval.
“I don’t qualify leads for my reps. Instead, I just pass along all the information I have concerning a prospect, and here’s why. The rep knows the territory much better than I do. After all, isn’t that why I work with the rep? Doesn’t he know the level of business activity and who the best contacts are? As a result, I trust him to take the proper action when I forward a lead to him. He may take no action whatsoever, or he may immediately follow up. I leave it to him. He’s my eyes and ears in the territory. If I tried to qualify and follow up, I’m sure I’d make a lot of wrong decisions.”
Interestingly, the reps in the room concurred with him and wished their manufacturers would act accordingly.
The Importance of Looking Long Term
A manufacturer that was speaking to a group of reps at a MANA meeting brought up one of his “war stories” illustrating how important it was to always look long term, instead of just trying to achieve short-term objectives.
“The manufacturer’s goal should always be aimed at achieving long-term goals. That’s the only way he’s going to stay in business for the duration. Looking back I can recall one time we didn’t do that, and we paid the price. In our goal to quickly get as many feet on the street as we could, we signed on a rep that looked good from the start. And our immediate impression was borne out when he brought in $13 million worth of business within the first 18 months of our relationship. What we didn’t realize at the time, however, was that in achieving that apparent level of success, he was beating a path of destruction that we had to pay for over the next couple of years. His communication to us and our customers was filled with errors and misstatements, and he almost seemed to go out of his way to alienate some of the more important decision-makers at some of our customers’ locations. As a result, some of our customers were driven away, and our reputation in that territory suffered. We didn’t realize our mistake until too late. We should have taken more care at the beginning to ensure we had partnered with a rep that truly appreciated what we were trying to accomplish in that territory.”
Experience Is a Good Teacher
A manufacturer recently related how the years he’s spent working with reps have allowed him to appreciate some of the benefits of working with an outsourced sales force. “When I started more than 30 years ago, there was a perception among many in my company that reps didn’t work all that hard. And what did they get in return for not working too hard? Nice, fat commission checks. As I look back over that period of time, however, I’ve come to the view that while reps were right for us then, they’re even better for us today. Today’s rep does much more for the customer and the principals than they ever did then. They perform at a higher level because they’re firmly entrenched in the high information era of the business. They detail their day-to-day activities, communicate with customers and us, they undergo product and sales training and constantly monitor their accounts. If anything, I’d say that we’re more in touch with what’s going on in the territory that we were in past years.”
Getting a Fair Share (or More) of the Rep’s Time
Conversations with a number of manufacturers concerning getting enough of a rep’s time have turned up a couple of interesting approaches:
- “For as long as I’ve been working with reps, I’ve made sure that my company’s sales manager has spent some time in the field as a salesperson. I do that because I feel he can then better appreciate the reps’ problems and needs.”
- Another manufacturer offered that he worked hard to encourage his sales manager to provide the rep with “more than enough room to make their own decisions to do what’s best given the fact that it’s the rep who’s actually out there in the field on a daily basis.”
- Finally, a sense of teamwork was advocated. “If the rep feels as if everyone is truly pulling together with just one goal in sight, there’s a much better chance that he’s going to be working constantly for you in the field.”
Rep vs. Direct Sales Force
When a mixed group of manufacturers and reps started talking about the problems that could occur when a rep regularly starts getting checks that are larger than those of the principal’s employees — not to mention executives — one manufacturer sales manager in attendance offered the following: “I know it happens, and I know it can impact the morale of the people who work for us, but what I’ve done in the past is to remind our people that reps:
- Create an immediate presence for us in the field.
- Provide us with more feet on the street than we could normally afford.
- Bring with them the customer contacts and a knowledge of the territory that would take us a long time to ramp up to.
- Get paid only when they make a sale.
- Are on their own. They pay their own expenses.
“Then I go on to contrast that with the fact the direct salesperson gets paid no matter what he does or how he performs. Naturally, if he doesn’t perform over a period of time — he’s gone. But, in the meantime he’s compensated for his time. We have to pay all their benefits and those benefits include the complete manufacturer support network. I finish my message by letting everyone know that whatever amount of compensation we send to the rep should be weighed against what the rep does for our company and then what he has to do for himself when it comes to running his own business.”
He concluded that with few exceptions this approach has worked.
Getting an Agency’s Attention
It’s not uncommon for MANA headquarters or Agency Sales to receive phone calls or other communication from manufacturers that are frustrated at getting reps’ attention. Typical is the following: “I’m a relatively small manufacturer and am having difficulty locating reps who do not already have a complete line card. What is it that these reps are looking for in a manufacturer?”
When we’ve bounced this problem off a couple of reps, here’s a typical response and some advice for such a manufacturer: “It’s hardly uncommon for a manufacturer such as yourself to have a problem getting the attention of a rep. Here are some suggestions that have been effective with us:
- Look for some of the newer, smaller agencies. Chances are they will be more likely to perform some pioneering work for you if your product or service complements the lines they currently represent.
- Make sure that you have solid marketing materials so potential reps will understand what benefits your product has compared to anything else in the marketplace.
- Communicate with some of your current customers in order to determine if they already have reps calling on them. There’s a chance these reps may also be a good fit for your product.
- Take the initiative and offer higher commissions or even a retainer for a specific period of time.”
When the subject of commission splits was raised at last fall’s MANA CAPSIG conference, it brought to mind a discussion on the subject that appeared in the pages of Agency Sales magazine several years ago. Reading the following and comparing it to some of the CAPSIG discussion, it seems as if nothing much has changed:
- “Commission ‘splits’ are quite common in engineered products. There are many different ways to fairly compensate all parties involved. The main thing to remember is that the compensation needs to be based on how much influence each agency has in the overall completion of the sale and the agency responsible for the effort at the point of ‘start-up.’ Other efforts that may deserve a portion of the commission would be the agency involved in the engineering of the project, training of personnel, etc.”
- “Normally we see commission split into a one-third, one-third, one-third scenario. One-third at point of origin, such as engineering; one-third at point of purchasing, potentially in the same location as engineering; one-third at ship-to location. This is not always the best scenario for retaining salespersons and maintaining motivation.”