Hmmmmm… it’s an age-old question and a continuing debate. As the largest association of manufacturers’ reps in North America, I’m guessing you might already know MANA’s position on this issue. I think there are situations when a direct sales force makes more sense, so I would like to point out some benefits of using manufacturers’ reps, and also correct some of the misconceptions people have about reps.
Why reps? Why would a manufacturer choose to outsource the field sales function? Two major reasons:
- Cost is the obvious and first thought: entry into a market, no direct fixed costs, easy.
- Reps’ IP is less obvious: the Intellectual Property of a manufacturer’s rep is the knowledge of, and the relationship withthe customer. This is why reps create great success.
Why not Reps? Without a more complete understanding of reps, many manufacturers fall prey to a few myths. The following three myths are borrowed from my good friend Bob Trinkle, former rep, consultant, speaker and author of Outsourcing the Sales Function: the Real Costs of Field Sales:
- Myth #1: “Reps are a channel.” Wrong! Reps are neither an additional nor an intermediary part of the channel. They are an alternative to or a substitute for direct sales. You must have salespeople.
- Myth #2:“There is a break-even point of commissions to go direct.” Manufacturers sometimes think when commission levels reach a certain point, it makes sense to go direct. My first question is, “who developed the business and grew it to these new high levels?” There are so many costs that are not considered when these conversations start brewing between the CFO and the CEO (and in some cases, the CEO of today was the CFO yesterday).
- Myth #3: “Getting increased mind share from the rep results in sales growth.” I think some manufacturers view the other product lines that reps carry as their competitors for the rep’s time. Manufacturers should recognize that they actually get more leverage from the other synergistic and complementary lines that reps have. And, it’s not about how much time a rep spends selling a line. All reps are measured by one thing — how much they sell. Activity does not always equal productivity and we don’t measure efforts, we measure results.
So, are all reps great? No, and it’s about alignment and communication. The manufacturer-representative “marriage” needs to have lots of time in the pre-selection, interview and hiring phases, much like hiring a very high-level key employee. Elements include an evaluation of complementary lines, an accurate matching of customer base and targets, a matching of company philosophies, and that overall “feel good” chemistry.
Strive for great communication and for the reps and manufacturers’ sales departments working together to knock down obstacles and barriers to maximize potential success at new business opportunities. Everyone should focus on the opportunities with the highest dollar potential and highest confidence that they will close in the next 30-60-90 days. Clear the way to make it happen. Manufacturers can become the emotional favorite of their reps by being very responsive and saying “yes, we can.”
The best reps are communication experts and ultra-multitaskers. Reps are the most performance-driven animal in the business jungle of today — they only get paid for success. Good reps know the market, the industry trends and their competition.
Growing with reps has resulted in many outstanding track records, and success with reps can be fun!
Going from Direct Sales to Contracted Outside Sales Reps
The theme of Agency Sales magazine this month focuses on manufacturers who switch from a Direct Sales Force to contracted outside Sales Reps. While there have been hundreds of pages in books dedicated to this very topic, I’d like to highlight some of the more important points.
First, manufacturers — be certain you are making this sales philosophy change for the right reasons, such as:
- Lower total cost of sales and lower internal “soft” costs.
- More predictable sales costs that go up or down with sales.
- Long-term sales rep commitment
… Read the rest
In describing how his company goes to market, vice president of sales, Bob Bukowsky, notes that Ideal Industries, Inc. has been working with rep firms for a very long time. The tenure the company has with its reps ranges from three years all the way up to 70+ years; many of these reps have worked with the company for more than two decades. To explain how his company arrived at the point they’re at today — about three-quarters direct and one-quarter rep sales force — he refers to some early company history.
Ideal Industries, Inc. of Sycamore, Illinois, manufactures a … Read the rest
One manufacturer’s written words last year sounded like music to the ears of manufacturers’ reps. Kendrick W. Reaves is a firm believer in going to market with reps, and he got right to that point when he penned a letter to MANA and AIM/R.
Reaves, national sales and marketing manager for Cash Acme, Cullan, Alabama, voiced his enthusiasm for working with AIM/R, “In reviewing Cash Acme’s recent successes — and they have been numerous — it became evident that our manufacturers’ reps have been key. Without the dedication and professionalism of our rep team, Cash Acme would not have enjoyed … Read the rest
I recently received an e-mail from a young salesperson who described his most pressing challenge — the sales roller coaster. When things go well, he’s up emotionally; when things don’t go well, he’s down. These swings from up to down were really beginning to wear on him and he wanted some advice on how to proceed. The basis of his question is one that every salesperson must confront and successfully resolve: How do I manage myself in order to keep my emotions up and my energy high?
I’ve often thought that this is a fundamental challenge for a salesperson. It’s … Read the rest
Loyalty. It’s a great idea — customers who appreciate you for what you do, and who wouldn’t think of retaining someone else to do that type of work for them. It’s kind of a quaint notion. But loyalty is mostly dead.
Let’s check this out: are you loyal? Think of the people who provide services to you; do you continue to patronize them, without even thinking about it? Or do you “shop around?”
America — and much of the rest of the world, too — has evolved into a culture that shops. People are always looking — for a better … Read the rest
You walk out of the office, shoulders slumped and head hanging low. The meeting did not go the way you had hoped. Shoving through the glass doors and exiting the building you heave a sigh, the words of your prospect still ringing in your ears, “No, we’re going to pass.” Motivation is dwindling fast. For a moment, you think about blowing off your last appointment of the day and heading back to the office, in favor of catching up on paperwork.
But what if it didn’t have to be this way? Imagine getting a “no” from a prospect and then … Read the rest
You have a huge account you want to win — but one of your competitors is already servicing the account. Dislodging your competitor is going to be a long-term, strategic process that requires persistence, patience and more than a little creativity.
And once you win the account, you’ll have to work hard to retain it — eventually someone is going to try to dislodge you too.
If you really want to win an account away from your competitor, you can. Let’s take a look at some strategies that can help you get these hard-to-win accounts and keep them.
First, the … Read the rest
During the NEMRA Annual Conference last month in Washington, D.C., attendees were brought up-to-date on a number of initiatives taken by manufacturers and their independent manufacturers’ reps to improve their mutual performance. While what was accomplished pertains specifically to the electrical industry, it’s not a stretch to imagine that similar efforts could have a positive effect in other industries.
Learning From Industries Besides Our Own
When NEMRA’s Manufacturers Group (NMG) took beginning steps to identify and eliminate wasteful practices in the channel, one of its stated goals was to produce a white paper that did much more than just sit … Read the rest
Remaining Profitable in a Consumer-Driven World
Here’s a recent experience I had that may serve as a tool for determining how your customers will respond when faced with a similar challenge. Learn how you can profit from thinking this way for a new world and a new way of doing business.
Maybe something like this has happened to you on an unsuspecting day. So there I was, just minding my own business when suddenly it happened. I wasn’t thinking about much of anything when I suddenly had the desire to hear a particular song. The song started going through my … Read the rest
“Under the English legal system you are innocent until you are shown to be Irish.” — Ted Whitehead
Audit Information and Misinformation
Many taxpayers seem to believe that if the IRS doesn’t call them in for an audit within six months after their return is filed, they are home free. WRONG!
- The IRS has, at least, three years from the date your return was filed or due, whichever is later, to audit your return.
- If you omit more than 25% of the gross income from your return, the statute of limitations is raised to six years.
- There is a further
… Read the rest
Many investors can quickly recall their annual income, the value of their home and other measures of how they are doing financially. But when it comes to knowing their net worth, the same investors may be scratching their heads. It’s important to know your net worth — and monitor it periodically — because net worth is the most important gauge of whether you are building wealth over time.
A Quick Tally
Your net worth is what’s left over when you add up your financial assets and subtract your financial liabilities. Your assets may include money in bank accounts, stocks, bonds, … Read the rest
The End of the “Blue Light Special”
Declining profit margins are a major concern for most businesses. Despite this concern, many sales managers truly believe their salespeople are selling value rather than price. However, price discounting remains the primary cause of profit margin erosion.
An issue of the newsletter published by the Industrial Performance Group, Northfield, Illinois, took aim at the subject of salesmen’s habit of discounting in order to get the order. The article maintained that only by training will a salesperson learn to live without this (discounting) tactic.
A habit is something we do automatically in … Read the rest