Reps in the Crosshairs

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As the economy stays stalled longer and longer, reps increasingly find themselves in the crosshairs of manufacturers looking for ways to cut costs. In some cases those cost-cutting goals have trumped fairness and excellent reps face unilateral cuts in commission or unwarranted conversion of hard-earned customers into house accounts. This month’s Agency Sales looks at sales commission erosion.

By the time a manufacturer announces a commission cut or new house account, the decision usually has been made and the rep gets a take-it-or-leave-it ultimatum. So how can a rep company protect itself from these kinds of losses? One rep’s solution was to preemptively promote and prove his company’s value proposition to his principal.

“We have almost a decade-long relationship with one of our principals, and I have always made it a policy to be in regular contact with that principal so they knew exactly what we were doing on their behalf. About a year ago, their regular-as-clockwork commission check was late. They had been on time for so long that I assumed it was an oversight and that the check would come soon, so I didn’t call them until the check was 10 days late.

“When I called they were very apologetic and agreed to rush me a check, but the reason for the late check was a little jarring. ‘Sorry that your check is late. What happened is that we took a look at the value we were getting from all of our reps and realized that the only rep we were getting any value from was you. So last month we fired all of our reps except you. The accounting department didn’t realize we still had one rep left so they didn’t make a commission check run this month.’

“On one hand, I was flattered that my consistent message about my company’s value proposition was received loud and clear. But on the other hand, I couldn’t help but wonder what had happened to all the other reps who had represented that line. They couldn’t all have deserved to be fired. I couldn’t have been the only rep worth keeping, but apparently I was the only rep who had consistently communicated my long-term value proposition. And because I was the only rep they knew brought value, I was the only one they kept.”

So many reps fired at once is an extreme example, but it could just as easily apply to a situation where a manufacturer is considering a commission cut or adding house accounts. Your best defense is to proactively communicate to each of your principals your rep company’s value proposition, so if any of those manufacturers start to look for ways to achieve cost reductions at the expense of its reps, your company will stay out of the crosshairs.

Commissions: The life blood of any sales agent

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Commissions as we know them in the sales business are the payment we receive from a principal for conducting business with their products to our customers.

Many manufacturers have a hard time understanding a sales commission arrangement because the people that manage the company are paid on a salary that is a guaranteed amount of money paid to them on a regular basis. Commissions are variable. If we don’t sell anything, we get paid nothing. If we sell a lot, we get paid a lot.

In our current economic times, many manufacturers have to scale back their operations to … Read the rest

Reps See Steady Pressure on Commissions

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If it’s possible to gather a group of independent manufacturers’ reps and charge them with the task of discussing the state of commissions today, chances are any discussion will closely resemble talks that may have occurred, 10, 15, 20 years or more in the past. Typically they’ll say:

  •  “There’s more pressure on our commissions today than ever before.”
  • “Manufacturers are asking us to perform more of the tasks they’ve typically performed — all with no increase in commission.”
  • “If we approach a principal to present our argument for an increase in commissions, anything we say is met with deaf ears.”
  • Read the rest

Lead Your Organization Through Major Change

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When change is forced upon you, making the shift is often more stressful and more difficult than when you thoughtfully decide to take your organization in a new direction. After all, making a change that you plan for is exciting and filled with opportunity, while making a change as the result of outside forces putting pressure on you is filled with risk and unpredictability.

Unfortunately, most organizations resist these externally mandated changes and are slow to respond. They fear the risk involved, and as a result they miss many opportunities. Change under external circumstances is scary because you often don’t … Read the rest

Ways To Market Yourself

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Here we are well into 2011. This is one of those years where many professionals are feeling more optimistic than they were at this time 12 months ago.

That’s refreshing. It’s a much better feeling than we had at the beginning of 2010. But while the stock market has been rising, tax cuts have been extended and business is picking up, these are far from ideal times. High unemployment persists, and the economy still has a cautious, uncertain feeling to it.

Today’s business environment remains somewhat perilous, but at the same time, there are great prospects for those who

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A Creative Way to Make Prospecting Appointments

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Here’s a situation. You have created a list of 20 highly qualified prospects. You’ve researched them, and you know that these 20 people hold your prosperity in their hands. But they don’t know you, have never spoken to you, and aren’t inclined to drop everything and see you.

How do you get to see them?

You can do what everyone else does: send them an e-mail, maybe leave a voice mail message, then be really frustrated that no one calls back. Or, you can do something a bit different, and much more creative.

For those highly qualified prospects, think of … Read the rest

The Traditional Sales Approach of “Are You a Farmer or Are You a Hunter?” Is Grossly Misleading

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Those that refer to the traditional sales approach of “Are you a farmer or are you a hunter?” have fallen behind with this old concept or approach.It also indicates the individual’s lack of skills and expertise that are needed for business development especially in this new global business environment.

The farmer approach or mentality refers to those who like to nurture customers and clients with customer service and tending to their needs. This is their main skill and personal comfort zone.

Sometimes it can be taken to the extreme, earning the bad reference, ‘Are you just an order taker?’… Read the rest

What is Your Customer’s Price Tolerance Ratio?

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Every customer has a price range where they are willing to make a decision without any further thinking. I refer to this as the Price Tolerance Ratio — also known as the PTR.

 

Knowing your customer’s PTR is critical. I believe it is one of the major obstacles salespeople fail to comprehend. As a salesperson, when you don’t understand a customer’s PTR, at least one of the following results is inevitable:

• You offer a price that does not maximize the profit potential.

• You get the order but encounter resistance from the customer that hinders the relationship.

• … Read the rest

Avoiding the “Blue” Between Employee Privacy and Electronic Communications

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Conducting business effectively today often requires employees to have the ability to communicate and research quickly and efficiently, sometimes on a 24-hour, seven-day-a-week basis. Employers, therefore, often provide employees with a wide variety of electronic technologies, such as computers, laptops, Internet access, e-mail, personal digital assistants (PDAs) and smart phones. In addition, employers often allow, and sometimes encourage, employees to use business and social networking Internet sites in connection with their jobs. While such technology and access provide greater efficiency, they also increasingly result in blurring the distinction between personal and professional use. Because zero-tolerance policy on personal use would

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At Times, Business Owners Can Be Their Own Worst Enemy

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Those who own a business hold their peers in high regard. Someone may be disliked personally, but they get a thumbs-up when it comes to running a company. Those who survived the recession deserve a special commendation. Only the naïve outsider thinks otherwise.

Having had a marketing services business for 35 years, I have had what seems to me an unusual opportunity to work closely with nearly 200 business owners, some for several decades. As time passed, I accumulated a wealth of impressions, which emerged as something of a business owner profile. To put it into a few words, these

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Engaging The Underdog Edge for Persuasion Success

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Think of a problem you’re trying to solve:

• Maybe you want to get raises for your team members.

• Perhaps you have a dispute with the IRS.

• Maybe you are the CEO who needs a legislator to vote for a bill that enables your company to expand into new markets.

• Maybe you want that “plum” job.

 

In these situations, no matter what your title or reputation, you’re not involved in an equal partnership. You’re the underdog. If you’re the team leader, you’re the underdog to your boss. If you’re the taxpayer, you’re the underdog to the … Read the rest

The More Communication, The Better

It would appear that it’s not just independent manufacturers’ representatives who read and/or comment on the MANA LinkedIn discussion group. One manufacturer recently contacted Agency Sales magazine with a recommendation that a forum examining the value, or lack of value, of regular call reports was must-reading. Especially worthwhile, he said, was one contribution from a CPMR rep who didn’t necessarily believe reps should automatically shut the door to all types of regular reporting to their principals. The rep had attended a MRERF continuing education session conducted at Arizona State University that was devoted to “Understanding Your Manufacturer.”

According to

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Avoid Social Media Meltdown: Create a Strategy Take Back Control

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Everyone said that you and your business needed to be on Facebook, Linked-In, Twitter, and every other new social media site or service that has made its debut since then. You linked your webpage and your blog and made sure you had the right apps on your mobile devices to post on the go. You have profiles and pages on multiple services and — now what?

Losing track of where you and your company are online, over-engaging, under-engaging, and inaccessible content can hurt your ability to reach your audience. Hurdle past these issues and get back on track with

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How the Procuring Cause Doctrine Can Garner Long-Term Contract Protection: Or How I Learned to Stop Worrying and Got What I Was Worth

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The Scenario

Having represented sales agents in contract negotiation and litigation since 1989, I have seen a wide variety of contracts addressing the principal-agent relationship. Most often, reps will settle for contracts completely lacking in long-term commission protection. There seem to be several reasons for this. The rep:

• is new to the industry, has no true book of business, and will take anything to get in the door;

• does not understand there is no long-term protection;

• is so dependent on the commissions from this principal that they would rather accept a one-sided agreement than risk termination.

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Review of 2011 Recent Developments

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The IRS has recently announced that the mileage rate for automobiles has been increased from 51 cents per mile to 55.5 cents per mile for the six months that began July 1, 2011, and ends December 31, 2011.  This rule applies to those taxpayers who use the business mileage allowance instead of the actual costs of operating a business auto.  These costs include depreciation, gasoline, insurance and all repairs and maintenance.  The only allowed additional costs to mileage are tolls and parking.  The increase seems reasonable.  Assuming that gas has increased in price about 60 cents per gallon, if … Read the rest

Planning Your Children’s Retirement

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When our generation was growing up, we were taught about Social Security, and many of us had grandparents who were reasonably comfortable with a combination of their investment income and their government checks.

 

Today, not so much.

Over the last few years, we have seen the market crash and burn, and Social Security is on its way toward doing the same. So, if we’re scrambling to salvage our retirement income, imagine what it will be like for your kids. If you haven’t done that already, here is some good news for you.

When we were just starting out … Read the rest