Issue: September 2009

Rep Contracts: Simple, Clear, Fair

By

Maybe it seems too obvious, but I think that there are some real basic things that manufacturers and reps need to observe and do when creating an agreement for representation.

The things that both parties need to strive to have:

  • An agreement that is simple, yet complete.
  • An agreement that covers all the needs of both parties and clearly states expectations.
  • An agreement that is fair, equitable, and balanced, not one-sided.

Let’s recall another obvious fact: reps are not attorneys, and neither are the sales managers that are usually involved with the negotiation of the contracts. We’re sales folks, and that’s what we do well: sell! There is a certain need for professional help when it comes to the construction of an agreement that fits the above criteria.

Some tips for manufacturers when it comes to representative agreements:

  • Listen to what is important for the representative firm to have in the contract.
  • Don’t establish an agreement that creates problems if there is a significant sales growth in the future.
  • Avoid any house accounts unless there is an extremely valid reason.
  • Be open to suggestions for new and different clauses, and don’t say, “all our agreements have to be the same.”
  • Don’t hide behind, “it’s up to our legal department.” If something makes sense, get it in the contract.

Some tips for representatives when it comes to representative agreements:

  • Listen to what is important for the manufacturer to have in the contract.
  • Don’t “negotiate to negotiate” — focus on the things that are important and make sense.
  • Think openly and with a win-win attitude as to not get stuck in the negotiations. Try new stuff!
  • Review your existing contracts annually, to be certain that they are up-to-date and applicable.
  • Use a MANA attorney for the process. (The list of MANA Rep Attorneys is available to all MANA members.)

Another great tool for both parties is the new, and continually updated, A Manual for the Creation of a Rep-Principal Agreement. This is available in the members section of our website under “Contract Guidelines.” We also have some great reports relative to starting a new rep-principal relationship.

Remember that this first step in the process is very critical, so take your time. Establishing a great Representative Agreement is the best way to create a high level of trust, and get the relationship off to a great start.

I don’t know about you, but I’m getting tired of hearing all about the “turbulent times” and “recession economy” and “how bad it is…” I think that we all know where we are. The real question is what are we going to do about it? Reps need to push themselves more to make more sales calls, find new opportunities and new accounts, and really listen to what the major customers need and want. Manufacturers need to not cut commissions. Recall that if a rep territory is down 50% in sales, they already took a 50% reduction in commission revenue. If you cut the commission by 20% (5% to 4%, or 10% to 8%), they effectively are getting hit with a 60% reduction to their company’s commission revenue.

What we all need to do is get out of our comfort zones, communicate more, enhance the teamwork between the factory and the representative, and be positive and optimistic with new ideas and different approaches and solutions. And, more than ever, MANA matters: promote the function and have passion for your profession.

Reps vs. Factory Direct Sales Force — Which Way to Go?

By

Today’s manufacturer has several different options to take their products to market. Whether it’s the Internet, a direct sales force, or network of independent manufacturers’ representatives the question remains the same: How can a manufacturer bring their products to market in the most efficient and cost-effective way? With studies showing that the average sales call costs more than $300, manufacturers can’t afford to make the wrong decision.

The independent manufacturers’ sales representative is a proven cost-effective alternative to a direct sales force. The Manufacturers’ Representative Educational Research Foundation (MRERF) in a recent article in Fortune magazine summed it up best … Read the rest

Attorney Panel Tackles Contract Questions

By

The steady beat of questions to a panel of attorneys at MANAFest on the subject of reps and their contracts showed how important that subject is to reps. When five rep-savvy attorneys took the stage at MANA’s first-ever, rep-only event, attendees couldn’t wait to pepper them with specific questions on their relationships with their principals. High on their list of concerns were: re-negotiating contracts, the benefits of a handshake vs. a written agreement, and how to protect commissions when principals file for bankruptcy.

Attorney members of the panel were: Stephen Valentine and Victoria Valentine, Valentine & Assocs., West Bloomfield, Michigan; … Read the rest

Not All Contracts a Good Fit for Fashion Reps

By

It’s a timeworn and oft-repeated tale that independent manufacturers’ reps are familiar with.

It goes this way: the rep signs on with a manufacturer to establish their brand, market and ultimately sell their products. The rep moves ahead with the pioneering work, develops the territory and completes all the ground work to establish the brand—all with the expectation that commissions earned will be commissions paid.

What’s the payoff? Commissions earned were commissions denied.

Normally this tale comes from the automotive, electrical, electronic, or some other industrial sector, but this time the scenario—or scenarios—grew out of the fashion apparel industry.

Consider … Read the rest

Good Questions and the Basics of Selling

By

Excerpted from Question Your Way to Sales Success by Dave Kahle.

Sales is, at its most basic level, a relatively simple process. I recall one of my clients showing me the flow-chart of his sales process. Twenty six steps. That level of detail may be appropriate for that specific situation, but it is an overkill when we are talking about the application for a typical professional salesperson.

The job of the salesperson is much like playing golf. In a four-hour round of golf, the club hitting the ball only takes about three minutes. Everything else is prelude or postlude. The … Read the rest

Teeling & Gallagher: A Textbook for Success

By

The fact that Teeling & Gallagher hasn’t appeared in the pages of Agency Sales since 1987 shouldn’t be taken as a sign the rep firm isn’t still active and successful in Indianapolis, Indiana. In fact, it’s just the opposite. That they’re here again is a testament to the firm’s ability to plan for the future, their continuity and their professionalism.

As a matter of fact, when a cover article on the agency appeared 22 years ago, Agency Sales reported that “While other agencies talk about planning for continuity, Don Teeling and Tom Gallagher wrote the book on the subject.” If … Read the rest

Reps Continue Move to International Trade

By

There are a number of factors or trends at play mandating that independent manufacturers’ representatives who are all ready at work on the international stage continue their efforts. At the same time, reps not involved internationally had better pay heed to what’s going on in the world’s markets as they consider whether they should dip their toes in international trading waters.

Those are just some of the opinions offered by Paul Eitmant, principal and president, IP Group International.

A consultant who deals extensively in international markets and reps’ involvement in them, Eitmant maintains that business is all about following the … Read the rest

How to Make Marketing Work

By

Successful marketing depends on one basic concept. To find it, start by peeling away the corporate jargon and the pompous pronouncements of the would-be gurus. If you’re lucky, you may stumble on marketing’s core concept: focus total attention on the customer — not on the product or the company — just the customer.

To state the issue as clearly as possible, marketing fails when companies act as if telling their story is the main objective. Such thinking undermines marketing by pushing the customer out of the picture.

“We have a program that’s a perfect fit for the client,” the rep … Read the rest

Principles for Creating Growth in Challenging Times

By

Whether you are in Houston, Texas, or Moscow, Russia, the business world has changed. While the economy may trend up and down, change is a factor that stays consistent. Even if your business is currently suffering, when it returns to the good times, the industry will not be like it was during the last period of prosperity. No one likes change, but everyone must deal with it.

The key to your business coming out on top of change is knowing principles that will never change:

1. Basics: Vince Lombardi had just taken over the Green Bay Packers and was being … Read the rest

MANAFest Provides Reps With Tools for the Future

By

Just as the roar of the Harley-Davidson motorcycle gets attention from other motorists, that’s exactly what Ken Schmidt did at the opening of MANAFest. Schmidt, former director of communications for Harley-Davidson, who filled the role of keynote speaker at MANA’s first-ever rep-only conference, got and held on to the attention of his audience when he said “To be successful we have to get the people we serve to like us more than they did before and more than they like the competition.”

To strengthen his point, the communications consultant detailed what Harley-Davidson did to deliver itself from the depths of … Read the rest

The Top Mistakes of Social Media Marketing

By and

As a business owner, you already know the importance of utilizing traditional public relations — print, radio and TV exposure — to keep your name circulating in the marketplace. Now, however, there’s a new PR outlet you need to become familiar with. It’s called Social Media Marketing, and when combined with your traditional PR efforts, Social Media Marketing can help you penetrate the marketplace with your message quicker and easier than ever before.

What is Social Media Marketing? It’s utilizing the various social networking sites to enforce your brand and market your business. A social networking site is simply an … Read the rest

How Interest Rate Changes Affect You

By

The rise and fall of interest rates is one of the biggest factors influencing the economy and financial markets. It is important to have a basic understanding of how interest rate changes affect your pocketbook and investment portfolio.

Typically the Federal Reserve lowers interest rates to jump-start the economy. Lower interest rates mean consumers may be willing to spend more money and incur more debt. This stimulates the economy in a variety of ways, including increased revenues from products sold to the consumers and taxes generated from those sales. Investors, on the other hand, have a different perspective.

Bond Investors:… Read the rest