Rep vs. Direct — Always an Interesting Story

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During the year I get lots of opportunities to talk to manufacturers. These range from phone conversations to presenting at national sales meetings to conducting manufacturers in-house seminars, but they mostly occur when I give presentations to manufacturers’ associations, where we engage in great dialogue about this topic — rep vs. direct. Can you guess which side I stand firmly on?

Certainly there are situations where it really makes sense to have a direct sales force, or a hybrid sales force comprised of both direct and independent reps. The most common reasons I hear in support of this option are generally “our product is too technical” or involve issues of being able to control their salespeople. Large organizations certainly are more likely to have a direct sales force, but this is not always true. The key is to have the right sales reps, whether direct or rep.

Note that I am very confident that the manufacturers who are reading this article are not the ones who really need to read it. We know that our MANA manufacturer members “get it.”

Ok, so why reps? Why do MANA manufacturer members outsource their field sales to our professional rep members? There are several key advantages for successful sales growth with reps:

  • Multi-line selling: Reps have more than one product and company to sell, which gets them in to see many diverse customers, often providing opportunity to present their other lines. The complementary and synergistic nature of the line card then allows manufacturers to gain leverage from the rep’s other lines. This is a huge advantage for the customer who can purchase multiple products from one rep, further enhancing the relationship via the level of sales.
  • Customer knowledge and relationship: This is the intellectual property of reps. They have grown these customer relationships wide and deep, and really know their customers’ needs, wants and how to best solve their problems. Reps are problem-solving, solution-seeking, marketing salespeople. Typically the Reps have been in a territory for a long time and have ‘grown up’ with these customers.
  • Reps only get paid for success: Manufacturers only pay when reps successfully sell — this creates the ultimate motivation for the rep.
  • Market intelligence: Good reps are solid businesspeople and know their market and industry very well. They can act as a great resource for their manufacturers to give advice on what other lines are doing with sales and marketing strategies, and also offer solid ideas about new product introductions. Reps are the eyes and ears of the manufacturers.

My great friend, who recently passed away, talked and wrote about the three ‘myths’ surrounding reps and how strong and wrong these perceptions are engrained. Bob Trinkle’s three myths are:

  1. Reps are an additional channel in sales. Not true: A salesperson, whether direct or rep is needed to sell stuff. The rep is the same as a direct person and should be treated as an extension of the factory. The best manufacturers do this, and treat their reps with respect and mutual trust.
  2. Manufacturers don’t get the reps “mind share.” Time spent on a line is the wrong thing to measure. Manufacturers sometimes ask reps to do crazy things (like create useless reports) thinking that this will help them get more of the rep’s time, which translates to more attention and then more sales. Would someone really care if I spent 10% of my time on their line and sold $2 million vs. spending 20% and selling only $1 million? I hope not. I would recommend that you help the rep have more selling time, be easy to deal with, and measure sales dollars instead of time spent. Remember also that the other lines that a rep carries are not competitors for your time; these lines very often provide leverage for a manufacturer who gets pulled into a customer via another product line interest.
  3. There is some level or break-even point where it makes sense to terminate the rep and go direct. This is a terrible misconception. This cost analysis is usually incredibly inaccurate and leaves out many costs that are built-in to the independent rep model. Recall that if the rep is getting paid lots of money, it must mean that the manufacturer is getting tons of revenue since the rep operates on just a small percentage of the total sales. See the solid comments from my friend Glenn Thompson in the feature article about liking to send reps big checks and about paying higher than average commissions on time.

Reps are running a business. Commission does not equal income and in many cases the total earnings of all employees at a rep firm is about 50-60% of the total commission dollars received. The other 40-50% goes to ever-increasing rep expenses like health care, automobile, travel and entertainment, technology updates, etc.…

Re-reading this, I’m asking myself, “Gee, are reps the greatest thing since sliced bread?” Certainly not, and of course there are some not-so-good reps out there. The key is to find, hire and motivate the right reps — the great reps — the MANA reps!

Create solid business partnerships built on trust and respect, and help knock down obstacles that block sales from happening. Be easy to deal with, say “yes we can” and have some productive fun. You will succeed! Good luck and good selling.

Rep vs. Direct — Inside the Mind of One Manufacturer

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When the subject of discussion is rep vs. factory direct sales force, Glenn Thompson comes down firmly on the side of the rep. Thompson, president of Fantech, Sarasota, Florida, maintains that a commissioned rep sales force is “the most effective means of going to market.”

Since 1987, Fantech has been manufacturing and supplying core products including:

  • Inline fans for bathroom exhaust, dryer boosting and radon mitigation.
  • A full line of indoor air quality equipment such as Heat Recovery and Energy Recovery ventilators and Whole House Hepa Filtration.
  • Larger CFM fans for commercial applications such Inline Centrifugal Fans for Round,
  • Read the rest

Feet on the Street

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Reps are ready to hit the ground running.

Eric Johnson, CPMR, is quick to offer compelling reasons why reps are the most efficient means for a manufacturer to take his products to market. Maybe it’s his more than 18 years in the trenches as an independent manufacturers’ rep, or exercising all the lessons he learned in three years of CPMR training, or a combination of both, but Johnson doesn’t hesitate for a moment when he’s asked to explain why a manufacturer should work with reps.

Johnson’s agency, Precision Component Sales, Inc., Sparta, New Jersey, services the needs of OEMs in … Read the rest

Sales and the Absolute Power of Information

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Excerpted from the book Take Your Sales Performance Up a Notch.

Most salespeople love to be active — out in our territories, seeing people, solving problems, putting deals together. This activity-orientation is one of the characteristics of a sales personality. A day sitting behind a desk is our idea of purgatory. Unfortunately, this activity orientation is both a strength and weakness. Much of our ability to produce results finds its genesis in our activity orientation. It provides some of the energy to move us to sales success.

But it can be a major obstacle. Far too often, we’re guilty … Read the rest

Formula for Success — Dispelling the Age-Old Sales Myths

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Amazon.com currently lists more than 13,000 books that teach people how to be successful in selling. Most of these books are very good, while others are misleading. Unfortunately, some authors and “sales experts” continue to perpetuate age-old myths about selling that need to be dispelled. Three of these biggest myths are:

  • Myth #1: Anyone can be successful in selling if they work hard enough.

Hard work helps, but it alone will not make you a successful salesperson. There are salespeople out there who work 60-hour weeks and stay busy as bees and they still struggle to find a prospect or … Read the rest

How to Keep Your Sales from Running Out of Gas

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Most of us have figured out that it’s smart to have a least a few gallons of gas in the tank at all times. And it’s not very bright to see how far we can go before running out of gas. A couple of “come and get me” calls is usually all it takes before we get the message to head for the gas station before disaster strikes.

Nevertheless, far too many businesses somehow missed this memo. Every day they are running out of gas and don’t know how to find their way to the nearest pump.

Now, if this … Read the rest

Tips for Presenting to a Potential Principal

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When you prepare to present to a principal whose lines you want to represent, you are going to learn as much about the company as you can. This is common sense. And often what makes a presentation successful is not a specific skill, but rather simple common sense.

I’ve seen speakers do some very inappropriate things during a speech — things that have little to do with content or delivery but which affect their credibility and the quality of their speech.

For example, telling an audience as you start that you did not have much time for preparation is unfortunately … Read the rest

How to Cultivate a Network of Endless Referrals

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In the March issue of Agency Sales you met a new contact and did an excellent job of establishing an initial rapport. This was accomplished, first, by simply letting them talk about themselves and their business instead of you talking about yourself and your business. Right there, that separated you from practically every other salesperson they’d ever met. You also asked them two of the “Feel-Good Questions” as well as the “One Key Question,” which together, is a powerful combination.

By the time the conversation ended and you asked for and received their business card, the new contact was very … Read the rest

Taking to the Field With a Purpose

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One manufacturer recently related his philosophy concerning field visits with his reps. According to the manufacturer, “There’s got to be a reason to go there, and by that I mean you’ve got to do much more than just look at the calendar, say, ‘I haven’t been there in a while,’ and decide to go. Rather, ahead of time consider what the value-add is — to not only the rep, but also to the customer. Gone are the days when a trip to the field is just a ride along and a chance to shake a few hands. The savvy principal … Read the rest

Using Social Networks to Make Your Company Recession-Resistant

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Most people are familiar with the term “Web 2.0,” which refers to a second generation of web development and design that focuses on fostering social networking via the web. Innovative companies are beginning to embrace Web 2.0 as a way to enhance communication, information sharing, and collaboration, thereby allowing them to work smarter rather than harder.

The business use of Web 2.0 represents a new trend called “Business 2.0.” Aside from being the name of a defunct magazine, Business 2.0 is about using the new web-based social networking applications (many of which were originally created for personal use) in a … Read the rest

Retailers, Your Will and More

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“If the World Series were held on Election Day, the networks would project the winner after three innings.”

IRS Audit Guide for Small Retail Businesses

Some readers may have a second small business of this kind, or even a primary retail business. As usual, these IRS audit guides, while intended as instructions to their own auditors, also provide valuable guidelines and warnings for every retailer. Here is a brief overview of what is ponderously called: “IRS Market Segment Specialization Audit Technique Guide — Retail Industry.”

Small retailers tend to be cash intensive. The IRS auditor is looking for controls over … Read the rest