It was interesting how quickly a consensus developed at a recent meeting of manufacturers’ representatives and many of their principals when the subject came up of manufacturers terminating their reps.
A rep started the conversation when he related how two manufacturers recently terminated him and several of his peers throughout the country. “With the first manufacturer,” he began, “a change in their sales management pointed them in the direction of going direct rather than staying with their rep network. We had heard of their decision early on via the industry grapevine. When we asked them about it midyear, they confirmed what we had heard. Instead of bailing immediately, we opted to stay with them without seeking an immediate replacement on our line card. We did that so we could continue to serve our distributor customers. We had a couple of goals in making this decision. First, we wanted to make sure our customers — to whom we sold plenty of other products — had no interruption in their supply of products and the service that would go with those products.
“Second, I’d like to think that this decision was simply a reflection of our professionalism and dedication to those we serve in the marketplace. We were fully confident that we’d be able to line up a replacement for this line. At the same time, any poorly thought out or quick decision by us would not reflect well on our organization.”
He continued that when the time came, a replacement was lined up with no delay and there was no interruption in the servicing of customers.
The second case was the one that got most of the attention from the reps and principals in the room. “With no warning and completely out of the blue we received a phone call from the principal. The regional manager got on the line and explained that he was reading a prepared message — ‘After I read the message, there will be no questions and I will hang up the phone.’ For all of the feedback we were allowed, this might as well have been a recorded message.”
While the group, including manufacturers, agreed that the first case was at least bearable, the second left a lot to be desired. Typical of the comments was the following: “As a manufacturer who has worked for years with reps, this was hardly the way to handle the situation. The level of unprofessional behavior was heightened by the fact that this was the same way they terminated other reps throughout the country. If they ever decide to go back to reps they’re going to have a heck of a time getting anyone to believe they want any type of long-term relationship.”
The group concurred that when it comes to implementing any decision, manufacturers should go out of their way to communicate — and allow for feedback — as well and as fully as possible with their marketing partners.
“We all understand that manufacturers can and do alter the way they go to market. Naturally reps want to be their partners in the marketplace. However, when a change occurs, there’s simply no excuse for not handling the decision in a professional manner.”
The Benefits of Networking
At the same meeting, a relatively small manufacturer emphasized how important it was for his company to belong to and to be a willing participant in his industry’s rep association. According to the manufacturer, “I’ve been attending these and other networking meetings with reps for about three years, and they are invaluable. There’s really not another venue where we can meet so informally and effectively with our reps. The feedback we’ve been able to provide each other has really firmed up our relationships.”
Learning More About Your Reps
MANA and Agency Sales magazine have long advocated the benefits of manufacturers making use of rep advisory councils. Let’s add something to the mix. One manufacturer let us know that his desire to learn more about what his reps are thinking has been taken to a higher level. “I’d point to the fact that improving the relationships with our reps is an integral part of our DNA. With that thought in mind we created a position in our company — let’s call it a channel process specialist. Part of that person’s job is to spend time in the field with all of our reps. Once there, she literally sits in every chair in the agency to learn how they do their jobs and what their concerns/problems are — especially in their dealings with us. This position has been in place for about 18 months now, and if anyone has job security in our company it’s this person. Not only has the communication between us and our reps improved because of changes we’ve implemented with our reps, but our reps have been freed up to spend more time selling in the field.”
Speeding up the Payment Process
After completing a good deal of research — primarily in the pages of past issues of Agency Sales — a manufacturer reported that his company has begun the process of paying his reps’ commissions via automatic deposit. “We started this a little over a year ago,“ he reported. “We’re not making it mandatory with our reps, but we’re taking steps ahead of time to educate them regarding how this is not only beneficial to us but also to them. For instance, with automatic deposit, the money is available to them immediately — there’s no waiting for the check to clear. Then there’s the fact they don’t have to make trips to the bank, and the accuracy of their checks is at a high level.”
He added that there were hardly any internal accounting changes that his company had to make, and “by and large this has been a win-win for all of us.”
A Strong Endorsement for Contracts
When a manufacturer heard a comment from an attorney concerning working with reps in the absence of a contract, here’s how he responded. “I can understand what the attorney was saying. He advised reps to be wary and to avoid contracts that were not fair to both sides. As a matter of fact, he stated his case quite succinctly when he said, ‘In the absence of a clearly worded contract that is fair to both the manufacturer and the rep, I’d advise the rep — if he really wants/needs the business — to go ahead without a written contract.’
“That’s well and good and I know where he’s coming from, but here’s my and my company’s attitude on the matter of contracts. We’ve always believed that it’s important to have our reps under contract. Our approach is that we choose our reps carefully. That means we spend a lot of time up front searching for the right reps, interviewing them, visiting them and requiring that they visit us at the plant in order to get to know our people. Our philosophy is that we want them to become a part of our family. As a result, when we have a contract in place, that ensures that both sides of the agreement are comfortable with the terms. If a rep ever approached me and indicated that a handshake type of arrangement was acceptable, I wouldn’t take him up on his offer. The contract remains the most effective means for formalizing the relationship — that’s important to us and should be to the rep.”
The Growth of an Evaluation Process
It took some time, but over the years one principal has finally reached the point where his company is quite comfortable with the effectiveness of its annual agency evaluation process. As he explained the process, “When we began doing this about 20 years ago, our review was pretty basic and consisted primarily of just looking at sales figures from the territory. Once we had the figures in hand, we’d match them up with our expectations. It took several years for us to move away from the numbers-only approach to judging how our reps were truly performing. We finally began taking other matters into consideration. For instance, we began to pay much more attention to our reps:
- Participating in trade shows.
- How they performed with new product introductions.
- How well they did when it came to training customers in the field.
- Their performance when it came to solving problems (e.g., product quality or delivery problems) and communicating to us on matters of importance.
“It was only when we threw these other considerations into the mix that we gained a true appreciation for how well our top-performing reps were representing us in the field.
“Bottom line, I’d recommend to other manufacturers to be aware of the fact that there’s more to consider than just how figures line up on the bottom line.”
Pay a Visit Any Time — With Notice
If a manufacturer ever doubted the benefits of traveling with his reps in the field, pay heed to what a couple of reps had to say to each other during an industry meeting late last year: “When the principal takes the time to travel with us, that’s a true indication of how interested he is in us. This shows our agency how much he cares about our problems and what we run into in the trenches. And, the benefits of such visits grow geometrically when they contact us well in advance to let us know they’re coming and tell us what they hope to accomplish. It’s hardly time wasted.”
