Isn’t it ironic that agency operating costs have not decreased proportionate to the decrease in business volume triggered by the current recession? Amazingly, many of the costs associated with running a sales business have dramatically increased, due to increased customer requirements, principal demands and escalating travel costs.
Airfares have increased substantially due to airline reductions in the number of flights, and the schedules offered are so inconvenient as to reduce the amount of time a rep has to spend in front of his customers. Even though I purchased tickets four weeks in advance, a recent flight of less than 1,000 miles cost $350 and required a layover resulting in six hours of travel time. A couple of years ago, one could go round trip from the Los Angeles area to Washington D.C. for $200 in half the time. Lodging costs have more than quadrupled since I became a rep, and it’s difficult to get a decent room today for under $100 per night.
Scheduled tax increases are bad enough, but the ability to plan ahead and/or hire new employees is hampered by lack of knowledge of future government regulations. As an example, a recent IRS ruling requires companies to issue 1099s to anyone they pay more than $600 per year. Increased paperwork like this cuts into selling and personal time. Taken as a whole, these issues make it increasingly difficult to replenish retirement accounts that were skewered by the recent financial meltdown.
Tangible expenses aside, our principals and customers are demanding more of our time. They want product shipped at lower prices and with almost no lead time. It seems the most demanding customers require the most attention but pay us the least in commissions. As a manufacturers’ representative, our time is crucial to our success. With customers getting more impatient, it seems we are working longer hours to yield the same results.
What’s the point? A mentor told me many years ago it’s okay to fire a principal or a customer. His point was reps sometimes do not evaluate the benefit/cost relationship of a particular business partner. If a rep spends 50% of his time on a principal that generates only 20% of commission income, he may want to take a look at the value of keeping that principal. The same is true with extremely demanding customers. The firm that demands a price 10% below market, overnight delivery and 24/7 customer service may not be worth the time and effort, particularly if there is plenty of other, untapped potential in the territory.
There is not a great deal we can do about government regulations, taxes and increasing demands from our best principals and customers, but the successful rep of the future will be constantly evaluating and replacing partners and customers who don’t meet the benefit/cost test. Take a hard look at your business connections this year, and have a great day selling!
