Shared Territory Development Costs

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Candid Advice for Manufacturers

As a manufacturer, one of the best things about using manufacturers’ reps is that you only pay for success. We generally preach this as a key benefit, but there is a scenario where it is not entirely true. The exception occurs when you have an arrangement to pay a shared territory development or pioneering fee to the rep.

Trust me — this is a good thing to do, and it will result in success if you create clear expectations and a mutually agreed upon plan for the pioneering territory. And, as a manufacturer, it is important to accept the fact that the rep selection process cannot be a whiz-bang ‘shoot from the hip’ type of deal.

To start, manufacturers need to carefully review all potential reps in a territory. From there, narrow the choices down so that there are 4-8 rep companies remaining. Then, get on an airplane and go interview each of the companies at their rep offices. Hiring a new rep to be your outsourced field sales force should be regarded in the same light as hiring a key executive for your company. Be sure that your interview plan includes meeting all employees, understanding the company’s business philosophy, examining their line card for synergy and leverage opportunities, and reviewing their customer base for compatibility. And most importantly, be sure that your plan will accommodate you in getting a good feel for them… the chemistry.

If you want really good reps, you may have to share the operational costs necessary to develop business for your products in their territory. If you find yourself in this scenario, agree upon a monthly shared territory development fee to be offset by any current commissions coming in, and set a fixed period of time for which the fee will be paid (usually 1-2 years). Also, set in writing the expectations that you have of each other. Determine what the rep will do for the fees, and what the rep will need from you, the manufacturer, to cultivate new business and grow sales. Communication and teamwork are the keys.

If everyone does their job effectively, sales from the newly acquired customers will result in commissions that offset the need for the fee. Reps are willing to work hard to launch a new line, and the best reps do it well.

Be open to the options and remember — a direct sales force would cost a bundle!

Why Should You Be a MANA Member?

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In the early days of my business as I was looking for information on how to become a successful manufacturers’ representative, I came across a copy of Agency Sales magazine. I was impressed with the information it provided and joined MANA. That was thirty-eight years ago.

As a board member, I have had the pleasure of speaking with many of my constituents. One of the many questions I’m asked is “Why belong to MANA?” A very leading question! If you go to the MANA website we have twenty outstanding reasons which include: rep protection acts, contract guidelines, legal resources, line … Read the rest

Shared Territory Development Fees

It was just 12 months ago that Agency Sales magazine took aim at the subject of shared territory development fees. That article and the follow up, which appeared in the April issue, was hardly the end of the discussion.

Comments contributed earlier this year on the newly instituted MANA blog indicate that reps, principals and consultants alike have lost none of their fire when it comes to this subject. Based on the posted comments, it appears that more and more reps are requiring new or prospective principals to pay a fee for the rep to conduct marketing and sales efforts … Read the rest

Up-selling Brings Additional Revenue with Relatively Low Expense and Effort

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While you may not have recognized it, the last time you ordered from a fast food restaurant or went to the post office, there is a good chance you experienced some form of cross-selling or up-selling. Cross-selling and up-selling are well-established and highly effective marketing practices used by a wide variety of industries.

What is cross-selling? It is a proactive, ongoing sales process designed to provide your customers with a full spectrum of your company’s products and services. The good news is cross-selling is one of the most profitable and least risky endeavors a sales rep can undertake. My first … Read the rest

Fine-Tune Your Balancing Act to Weather the Stormy Climate

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Good economic times make it easy to sell. It isn’t just that the money is flowing freely. That’s part of it, of course. Mostly, however, it’s the buyers’ upbeat, positive, “we’re invincible” attitude that gets the orders. In a word, they are ready to buy! But that was then. What about now? The clouds are dark. Customers are going inside and closing the drapes. They’re hunkering down, and are anything but interested in seeing salespeople.

Because of all this, it’s easy to fall victim to the prevailing mood and decide we should “do something” to generate more business.

It’s then … Read the rest

There’s no Winning Without a Successful Coach

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In today’s tough business environment independent manufacturers’ reps, manufacturers and distributors can’t afford anything less than outstanding performance. In order to obtain this level of performance your managers must do a good job coaching your people and know how to get the most out of them.

Business coaching uses some of the same principles as sports coaching. When we think of the best coaches in sports history — the Green Bay Packers’ Vince Lombardi, Alabama’s Bear Bryant, UCLA’s John Wooden, Indiana’s Bobby Knight, the New England Patriots’ Bill Belichick, USC’s Pete Carroll and Duke’s and the U.S. Olympic basketball team’s … Read the rest

The Golden Thread That Ties Key Leadership Functions Together

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You hear it all the time… aspiring managers or other executives want to know the most important key to an esteemed business leader’s success. Thinking the answer must be something like inspiring leadership, technological innovation, savvy marketing or far-sighted financial planning — all of which are important — their jaws drop when they learn the truth.

Generally, a savvy leader’s success is directly tied to his or her ability to focus on the business fundamentals — the daily blocking and tackling that every company must master to be a winner in its field. Strong, effective leaders stress fundamentals like discipline, … Read the rest

The Face-to-Face Connection

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Principals and reps agree that being able to put a face to the voice you hear over the phone can be critical in a business relationship. That’s why one principal reports that among the first steps he takes after signing on a new rep is to arrange face-to-face meetings with not only his company’s management team and inside support staff, but with the other independent reps that work with the manufacturer. “Before I joined this company,” the manufacturer reports, “I spent close to 20 years in the field as a rep. If I learned nothing else in all those years, … Read the rest

Increasing Your iPhone’s Life

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Those of us who use Apple’s iPhone find it increasingly useful for many applications. I use mine for phone calls (of course) along with checking my email messages more frequently and on a more regular basis. I can get a lot done from just about anywhere I am using it.

However, my objection to the iPhone initially was battery life. If I use it for listening to music, surfing the internet, reading books, etc., the battery tends to drain quickly. And if that happens, making those late-in-the-day phone calls when I can’t get near a charger (think airplane rides and … Read the rest

Tax Tips, Year-End 2008

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While these tips apply to 2008 tax returns (both calendar and fiscal year), some suggestions must actually be implemented before the year-end, while others can be done next year, when your actual tax return is being prepared. So don’t just use this to line a bird-cage when December 31st rolls around….

Overview

Tax planning primarily concerns the timing and the method by which income is reported and deductions and credits are claimed. The basic strategy for all year-end tax plans is to time your income so that it will be taxed at a lower rate — and to time your … Read the rest

How to Keep Your Financial and Personal Records Safe

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Hurricanes, floods, fires, terrorist attacks — the list of possible disasters is endless. Should something catastrophic and unforeseen happen to your home, are your financial records and personal information safe? For most people, the answer is “no.”

Think about all the things you could lose in something as common as a house fire: Your tax returns, your passport, your birth certificate, your computer, your check book, your bank statements, your credit cards, your insurance paperwork, and even your cash. But without all these things, how will pay your bills, buy food and clothing, or even rebuild your finances and your … Read the rest