The paucity of information — or perhaps it’s an unwillingness to even address the subject — concerning manufacturers’ use of independent manufacturers’ representatives is illustrated in a new book entitled, The Sales Force.

In it, author Wayne Thomas notes that one of the most important steps that must be taken by any chief sales officer is a “review of existing partner relationships, or whether some (additional) segment of the sales program ought to be effectively outsourced to indirect channels. These independent companies perform the selling function primarily by extending your company’s reach into segments familiar to them and not you.”

He continues by saying, “This subject is a book in itself and beyond the scope of this book, which focuses on the direct sales force.”

On the one hand, perhaps manufacturers and reps ought to be grateful that the book offers acknowledgement — as little as it is — of the rep function. On the other hand, perhaps we should be grateful for the efforts of rep associations like MANA for fully exploring the benefits and efficiencies of going to market with reps. Certainly more on this subject can be learned by attending MANA seminars.

Never Giving Up

When one manufacturer was asked why so many of his reps cited him as the kind of manufacturer they truly enjoyed working with, he responded that if he had any attributes, the strongest was his ability to respond to the needs of his reps.

“Let me give you an example of what I’m referring to,” he stated. “I can recall a number of occasions when one of my reps would let me know they were having a problem with a certain customer. Instead of just letting the situation drop, I got back to him immediately and offered suggestions on altering his approach. If that alternative didn’t work, I’d keep open the dialog until we came up with something that would result in getting the business.

“What I’m talking about here is that a manufacturer can’t let his rep stand naked in the territory. Since the rep would show a willingness to come to me with a problem, it would be inexcusable for me not to offer my assistance. In addition, I’ve found that this willingness on my part to help the rep has been returned in kind by the reps. So, if they compliment me for the way I work with them, I’d like to return the feeling. They make me look good in front of their customers.”

Finding Something of Value in the Past

A manufacturer brought to our attention something he learned from MANA years ago. “When I first joined MANA, and I’ve been a member for more than 20 years now, I called someone at association headquarters seeking advice concerning how to maximize my relationships with what was a brand-new rep network. I was told that paying commissions on time — all the time — was of paramount importance, but there’s more to the relationship. A few of the additional functions I should be sure to perform for my reps were to provide:

• A steady stream of qualified sales leads and complete customer histories for the territory.
• A sales manual that would serve as a collection of all the sales tools that the manufacturer has available.
• A supply of current literature, product samples and product demonstration capability.
• Current and understandable price lists.
• Accurate delivery information.
• Assistance in handling order questions, problems and requests for quotations.

“I’ve let this advice serve as my bible over the years — and it’s served me very well.”

Turning Around a Negative Rep Council

When one manufacturer described his rep council experience as being nothing more than an “opportunity for reps to jump all over me,” another manufacturer offered some advice:

• “Make sure they know you’re in charge of the meeting — not them. You as the manufacturer must take it upon yourself to set and follow the agenda and prevent them from veering off course.”
• “Be careful of overpopulating the council with ‘negative’ influences. Not every one of your reps is unhappy. Find the happy ones and place some of them on the council.”
• “Don’t be afraid or shy away from what might appear to be a negative conversation. If someone is offering constructive criticism, often a workable and acceptable solution to a problem can be agreed upon.”

Listening, Then Acting

The national sales manager for one company explained that he was proud of his reputation for always getting commissions in the hands of his reps accurately and on time. Having said that, he admits he was a little taken aback by what he heard from some of his reps during a national sales meeting.

“Our goal for the next year was to double our business. Having stated that I asked my reps how we were going to get the job done. What I wasn’t prepared for was their answer: ‘Double our commissions.’

“When I first heard this I figured it was just a humorous response to what I thought was a serious question. However, by the end of the weekend, I’ll admit they were wearing me down as I heard this time and again. Finally I let them know I could hardly double their commissions, but I’d be able to up it by a sizeable percentage if they felt that would assist or motivate them in their efforts.

“As I look back at the past year’s performance, we didn’t double our business, we tripled it. My point here is not to emphasize that this approach will always work. What I learned was that it’s critical to listen to what my reps are telling me. And if they’re telling me that I can get more attention in certain cases by increasing their compensation, then I had better listen to them.”

Breaking the Discounting Habit

According to the latest newsletter from the Industrial Performance Group, Northfield, Illinois, declining profit margins are a major concern for most businesses. Despite this concern, most sales managers truly believe their salespeople — including reps — are selling value rather than price.

Price discounting is the primary cause of profit margin erosion. The question at the front of everyone’s mind is this: “If our salespeople are selling value, why do they need to offer discounts and extras to get sales?”

Discounting is a habit. What is a habit? A habit is something we do automatically in response to a specific situation. Habits are acquired over time and can be difficult to break.

For example, when a customer demands lower pricing, there are basically two things a salesperson can do. They can provide the customer with a dollars-and-cents reason to pay more, or they can discount the price.

The majority of salespeople cannot provide customers with a dollars-and-cents reason to pay more for their products — not because they lack the desire, but rather because they simply don’t know how to do it.

Extraordinary time, energy and dollars have been spent training salespeople to sell features and benefits. But if customers are not aware of the dollars-and-cents value they’ll gain from these features and benefits, they will view this product as just another commodity. Once a product takes on the commodity status, customers will do everything they can to reduce the price.

When a salesperson lacks the ability to overcome this downward price pressure, they experience fear whenever they encounter it. This fear stems from their sense that they will lose the sale unless they do something. The typical knee-jerk reaction is to discount the price and throw in a few extras to sweeten the deal.

If this results in getting the sale, offering price discounts and throwing in a few extras quickly becomes a routine the salesperson performs automatically whenever they encounter price pressure. Over time, this routine develops into a bad habit that the salesperson is largely unaware of.

In addition to shrinking your profit margins, price discounting creates a false perception in the customer’s mind about what your product is really worth.

Breaking the discounting habit. Salespeople develop the discounting habit when they don’t know how to respond to downward price pressure.

In order to break this habit, salespeople need to learn how to overcome price pressure by giving customers a dollars-and-cents reason to pay more for their product.

A dollars-and-cents reason to pay more. Customers have been hearing the promise of added value from advertisers and salespeople for the past 20 years. Yet in reality, this promise is rarely delivered on in a measurable way.

Telling the customer that you are a value-added supplier has absolutely no effect on price pressure. In fact, most value-added suppliers find that they are doing more for their customers and making less due to extended terms, additional services and deeper discounts.

There is only one form of value that can be used to overcome downward price pressure: dollars-and-cents value.

Dollars-and-cents value is delivered to customers by helping them improve their performance, reduce their costs and/or by reducing their exposure to risk and liability.

Dollars-and-cents value comes from your products, as well as from the information and services you provide.

The good news is you probably are delivering value to your customers. However, your salespeople need to know how to calculate and communicate the dollars-and-cents amount of this value.

Give your salespeople what they need.  Selling is hard and becoming more difficult due to customer consolidation and the ever-increasing power of purchasing departments. Price pressure is intense and shows no sign of letting up.

Everyday your salespeople fight a battle they may not be prepared for. Wouldn’t it be easier for them to defend your profit margins if they had the knowledge and skills they need?

Perhaps it’s time to make an investment in your sales force.