Possibly the hardest decision a rep organization has to make is to resign a line. “How did we get to this point?” is often asked by a successful rep owner faced with this decision. A tremendous amount of effort goes into finding, marketing and growing a profitable manufacturer for the line card. So what can go wrong in the relationship?
- Declining sales due to poor delivery or non-competitiveness in the marketplace.
- Contract changes such as reduced commissions, termination clauses and territory.
- A change in principal management.
- A lack of investment in the business to keep current with technology.
- The addition of a product line that competes with another current principal.
- Customer base is not the right fit with principal’s products.
- Inconsistent sales efforts.
All of these reasons and more can contribute to a poor relationship between rep and principal. But how can we avoid getting to this point? The typical rep does their due diligence while interviewing and contracting with a new line, but what then? An annual line review is a must to determine where your principals fit into your business. We all know who our largest principals are, but are they also our most profitable? A thorough review of each principal based on factors critical to your business can be quite an eye-opener. I review my principals based on a matrix comparing the following criteria:
- Sales dollars
- Commission rate
- Product quality
- Delivery performance
- Financial stability
- Commission payment
- New sales opportunities
- Marketing program
- Lead generation
- Technical ability
- Customer service
A detailed analysis can reveal areas of improvement and opportunity for both the rep and principal. Lines with little contribution to the bottom line are candidates for review and resignation. Are we giving our best efforts to the lines with the most opportunity for growth and agency profitability? Our principals expect our best efforts to promote and sell their products, and today’s professional sales agencies should be providing that service for the right principals.