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 Chapter 11 to the point where today the company stands as a prime example of a company that routinely makes its customers’ dreams come true.

“Remember that how your company is perceived is exactly what the customer gets,” he explained. “For decades Harley-Davidson was exactly what we looked like. We offered a poor product, no support, etc. At the same time, we held a virtual monopoly (90%) of the market. We got lazy, and we turned the company over to someone else. We witnessed the greatest downturn we could imagine. What we had done was to seed the market for the competition who were predators. They came in and very aggressively took market share. We have no one to blame but ourselves. We provided this opportunity to them on a silver platter and they ate our lunch.”

He noted that the lowest point for the company occurred in September of 1985 when the CEO called me into his office. “I knew ahead of time I was about to have the worst day of my life. Right away he said ‘We have no money, we’ve lost our biggest lender and we’re filing for Chapter 11.’ The day only got worse when I called my wife and told her not to buy anything.”

Things picked up a bit, however, when at 4:45 p.m. on New Year’s Eve (“When just about everyone had already gone home.”) the company received a line of credit from a lender at 27.5% interest. “That’s not showing an awful lot of faith in you,” he said.

Finally getting a line of credit was one thing, but turning the company around was something else entirely. “We knew we had to do something different but we didn’t know what. We had to sell more product. We asked how were we going to do that to save our jobs.”

What Harley-Davidson did, and Schmidt points to this decision as a turning point for the company, was to ask customers what they wanted. “We got two semis and loaded them with motorcycles and took them to wherever cyclists gathered. Then we let them test ride the cycles. As they got off we asked for their comments, suggestions, complaints. Some of these conversations were very powerful. We discovered that 100% of the test riders when asked for their thoughts would share them with us.

“When was the last time you worked for a company that did business this way and asked their customers for their thoughts? The bottom line for us was that the people we were talking to — our customers — were willing to support something that they helped create.”

Schmidt continued that the efforts of his company were aimed at modeling the behavior of the customer and at building relationships with customers. “When it comes to modeling behavior, when there is ugliness in a culture, it will find it’s way into the marketplace. Create a different, a positive culture, and that will find its way to the customer. Once you’ve established your culture, concentrate on building and maintaining relationships. Individuals (customers) are lifted up and elevated and they will reward the source of that positive relationship by telling other people what happened to them. You (the seller) then become the primary source of conversation. Remember that in sales we want people to like us and they’ll prefer us to someone else. I’m not going to offer the lowest possible price, no one will benefit from that. What I will do is spend time and effort with our customers. That’s what makes all of us successful.”

Transactional Selling is History

Schmidt wasn’t the only one who concentrated on the basics of selling at MANAFest. Next up for the audience of independent manufacturers’ representatives was Gerhard Gschwandtner, founder, CEO & publisher of Selling Power magazine.

According to the magazine publisher, there are a number of trends at work in the marketplace that impact individuals involved in the process of selling. “The major subject of any conversation about selling has to be the economy. But there’s much more happening out there that you probably don’t know anything about. For instance, I maintain that in transactional selling is history. In three years, transactional salespeople will be out of work. All selling processes will move online. Amazon.com started the trend and it’s spread everywhere. As a result, I see a lot of opportunities out there for people who are involved in relationship selling, but not in transactional selling.”

Continuing with his emphasis on the importance of relationship selling, Gschwandtner noted, “Selling is all about influencing someone to change their mind. If you make friends with the customer, if you develop a relationship, you can better influence the customer to change. And keep in mind that it doesn’t matter what we think selling is, selling is what the customer thinks it is. If the customer wants a relationship, offer it. If the customer wants business advice, offer it. If he wants a transaction, offer it.”

One of the negative effects of the downturn in the economy, according to the magazine executive, has been a downturn in companies’ investment in sales and marketing. In his opinion, that’s a mistake. “I predict that companies that have significantly reduced the sales and marketing investment in 2009, will be gone by 2010.” He continued that when “The recession finally ends, you’re going to see those companies that failed to innovate lagging behind. Innovation must be an integral part of your company’s DNA. If you’re not innovative, you can’t complain about the lack of business because you’re not doing what you should be doing.”

Finally Gschwandtner urged his audience to take some positive steps to prepare for the inevitable turnaround:

• Create a winning formula for your company.
• Accelerate the focus of your organization.
• Install a sense of urgency.
• Cultivate curiosity — “I’d point to this as the number-one success factor for a company.”
• Regularly engage your prospects in conversation.
• Ditch the typical sales pitch — “Asking your customers questions is the real path to success.”
• Your future depends on you doing the impossible — “It’s going to be more difficult to be successful in the future, but to do so we’ve got to be more creative in what we do.”

It’s Still the Economy

While Gschwandtner pointed to various sales’ trends and their impact on the rep profession, the economy and its accompanying trends took center stage when Alan Beaulieu of the Institute for Trend Research, addressed MANAFest attendees. According to the economist, “The reason we look at economic trends is because there are a great number of people in business today who are new to industry. In their careers they’ve only experienced prolonged periods of prosperity. By using trend figures, this recession shouldn’t have been a surprise. At the same time, we know that a recovery is coming.” He added, however, that the recovery won’t come until the end of this year, “and we’ll really see progress in 2010.”

He continued by noting that oil prices shouldn’t present a problem for at least 18 months and the job employment situation will improve into 2010. In an aside, the economist noted that “The unemployment situation isn’t all that important unless you’re looking to hire someone. By knowing the unemployment rates, that simply shows that you have a social conscience.

“In addition, interest rates are about as low as we’ll ever see them, but debt levels in this country remain a matter of concern. Our current debt level is $11.3 trillion, making us the 17th highest debtor nation in the world as a percentage of Gross Domestic Product (GDP). And, that remains a problem.”

As the country continues to move forward, Beaulieu pointed to several economic benchmarks that reps ought to pay close attention to. Those benchmarks include:

• Business-to-business activity.
• The imbalance between orders and inventory.
• Corporate bond prices.
• The purchasing managers’ index which leads the economy by about a year — “We already have an indication of good things ahead with that index.”
• Rate of change of stock prices.
• Industrial production.
• Retail sales.
• Housing starts — “When that changes, six months from there we’ re in recovery.”
• Private non-residential construction.

If MANAFest attendees thought their information plates were full with the presentations from Schmidt, Gschwandtner and Beaulieu, they were more than pleasantly surprised with the full complement of presentations and breakout sessions that completed the program. For instance:

Diversifying Your Rep Business

If change is inevitable, then three reps who have embraced changing their organizations via diversification of their product/service offerings, were well suited to let conference attendees know what they’ve done to prepare for the future.

Emphasizing that “Customers are hardly bashful when it comes to telling you what their problems are,” the reps described the evolutions of their companies.

Members of the panel were:

• Pat Cobb, CPMR, World Class Industries, Inc.
• Roger Ralston, Tri-State Components, Inc.
• Frank Fein, Associated Marketing, Inc.

Explaining how his company has changed over the years, Cobb said that World Class Industries performs a number of functions including simple assembly, kitting, international sourcing and supply chain management. He said “We simply listened to the needs of the customer. Took a well-educated business risk and said ‘Yes we can.’”

Fein noted that he started his agency “on a shoestring” in 1981. Originally Associated Marketing served the plumbing business but gradually moved into irrigation. “Our business is now landscaping, water works and utility companies, plus a few other things.

Explaining that “We’re more of a traditional rep firm,” Ralston said, “we serve a number of industries including OEMs, consumer, industrial, medical, military and safety. We continue our efforts to research for emerging new markets and products — wherever there might be an opportunity for us.”

In the end, the three manufacturers’ representatives focused on common strategies that have guided them in their diversification efforts:

• Communicate with your customers.
• Listen to the customers’ needs.
• Find a solution to the problem they describe.
• Be willing to change the face of your business — “ Be aware of what’s happening in your business and don’t be afraid to make a change.”
• Be willing to take risks — “Be aware that you have to take a chances. Just do it.”

Small Rep Firs and Start Ups

The importance of planning and the ability to negotiate with your principals were two of the key points developed during the breakout session devoted to Small Rep Firms and Start Ups.

Jerry Leth, MANA’s director of membership, who moderated the session, posed the question: “If I were to use Google maps, MapQuest, or whatever to find a destination, you’ve got to plug in your starting location before doing anything. You’ve got to start with the knowledge of where you are today. So too is it with a rep firm. As you construct your business plan, you begin with a SWOT analysis. In looking at your strengths, weaknesses, opportunities and threats, it’s important to be brutally honest about how much sales you’re going make, the revenue, etc. Constructing such a business plan helps you get from where you are today to where you want to go in the future.”

Obviously one of the many things that has to be done to be successful in the future is to locate principals to represent. Once located, it’s critical for the rep to be able to negotiate terms for that representation that are beneficial to both sides — call it a “win-win” situation.

When it comes to negotiating with those principals, consider it a two-part operation.

First is the actual negotiation — trying to get agreement from the manufacturer on issues that will work out for the both of you. If it’s not beneficial to both, the relationship won’t work.

After you’ve hammered out the issues, then it must be put into a legal document. Be careful of what’s contained in the legal document “because the terms you include may become even more important to you in 15 years than they are today. And, remember, before you sign anything, have an attorney familiar with rep law look it over.”

Grow Sales With Principals

When Paul Pease, The Pease Group, spoke on the subject of Growing Sales with Principals he spent a good deal of his time emphasizing how important it was to plan. Citing the example of a newly opened rep firm that three months in business already had a written business plan, he said. “Engaging in mutual action planning provides a light that can guide people (e.g., reps and their principals) in the right direction or to help them avoid danger.”

He continued that the fundamental premise of mutual action planning is that both parties must commit to actions that grow business and are accountable to honor those commitments. If there was any need to provide an example of the benefits of planning, he quoted three-time Indianapolis 500 champion Bobby Unser who said: “The only teams that had a chance to win the Indy 500 were the ones who had a plan. So when the race started, the teams with no plan had already been eliminated. Then the race was won by the team that adapted the quickest.”

Washington Legislative Update

MANA Counsel John Satagaj brought conference attendees up to date with happenings in Washington, D.C. Noting that we’re still going through the transition from the Bush to the Obama administration, there are a few areas that remain important to manufacturers’ representatives, including:

Taxes — work remains to be done concerning an anomaly in the law related to the sole proprietor in an S corporation who pays for his own health care. Legislation addressed part of that but “didn’t do the whole job” as it is still taxable for the self-employment tax. “We’re working on legislation to deal with that anomaly.

He also related efforts to simplify the home office deduction. “It’s complicated.”

And, “For those not planning to die in 2010, we’re working on the estate tax repeal due them.”

1099s — According to Satagaj, the government needs revenue and “As a result, they want 1099s issued to any person who gives services to another company — this includes sub agents. Think of your business and how many other companies provide services to you. The list goes on and on. Every one of you will send everyone who sells you something a 1099. The whole world will have a 1099. FedEx will have a billion of them. Then think of the difficulties you’ll have in obtaining all of their tax identification numbers. It’s absurd.”

Health care reform — “It’s coming to our neighborhood. In our part of the world it’s tough to obtain affordable health care insurance for ourselves and if we have a couple of employees, it’s impossible.”

Manufacturing in America

In his presentation “What’s Up with Manufacturing in America?” Aric Newhouse, senior vice president for Policy and Government Relations, National Association of Manufacturers (NAM), focused on the key issues facing manufacturing in this country including:

• The economy.
• Rising cost of energy.
• Rising legal costs.
• Rising regulatory compliance costs.
• America’s corporate tax burden.
• Health care crisis in America and the rising cost of employee benefits.

The association executive emphasized how important the political arena was when it comes to developing solutions to any of these problems. According to Newhouse, “President Obama came into office with a mandate from the electorate. The Democrats have majority in Congress and the President has high approval ratings. Coming into office his approval rating was around 70% and it’s around 61% now. That’s in comparison to President Bush who had an approval rating of around 41% at his high-water mark. Nixon’s rating upon his resignation was higher than Bush’s was. Obviously the American people thought we were headed in the wrong direction. Then here comes the Obama message. A big question remains if the Democrats can reach the number 60 in the Senate. If so, they can move anything trough there.”

Health Savings Accounts

Pat Brown began his breakout session on Health Savings Accounts (HSAs) by stating “Insurance is different to me than to you folks. What most people refer to when they refer to insurance is health care. That’s not what I’m talking about. This is paying someone to take risks from you that you elect not to take for financial reasons. It’s similar to you having auto or homeowners insurance. Think of HSAs as a two-part thing: First is the insurance; second is the bank account”

Brown, Associated Benefit Planners, Inc., added that the “Internal Revenue Service is good and flexible to you with these funds. The rules for HSAs are as you like it.”

What appears in this article is just a sampling of the programming that was prepared for attendees at MANAFest. Several additional panels and breakout sessions addressed subjects that reps deal with on a daily basis.