As presented, the question was: How do you share the cost of visiting a new principal when airlines and hotels are involved? I have always felt the principal should share the cost if they are serious about hiring your rep firm, although I find it difficult to get manufacturers to pay sometimes. Please advise if you ask principals to share the cost, and if so, what is the typical cost-sharing arrangement?

First into the fray was a manufacturer who notes, “As a principal for years, I believe that it is incumbent upon the principal to come to you with the resources (sales and product) required to train a new rep and consequently pay all of those costs. However, if and when the rep comes to the factory for an organized event, the principal should pay the room and provide food, but the other travel expenses are on the rep.”

While the manufacturer feels that “Both sides need to show a commitment to the other,” he adds a telling question from the principal’s perspective: “If the rep isn’t going to spend money to come to the factory to improve their ability to sell the product, are they really going to put in the time and effort to sell it when you aren’t around?”

A rep quickly countered that “It is always welcome when the principal picks up any portion of the cost. As reps, we need to determine where we want/need to go (trade shows, sales conferences, factory visits, etc.) in order to improve our relationship and business plan with a good principal. With good lines that are committed, I will pay my own way and accept anything they want to pick up (e.g., hotels, airfares and, of course, meals always). With a new line, however, you will need to assess the future — don’t let an airfare or hotel deter that relationship.”

Another contributor who’s been on both sides of the desk (rep and principal) says, “I think it’s a shared expense. As a principal, when it came to training at the factory, we paid for the hotel and food if they visited the factory. They were responsible for their airfare or gas. As the rep, I feel the same, not that I wouldn’t let the factory pay for the airfare — but that’s not going to happen.

“At a trade show, it’s always been the rep’s responsibility to get there and pay for their hotel unless training is involved and then only the nights of training.
Now, of course, this isn’t a hard rule, I have one principal that only wants me to fly in for a day of training and fly out that evening. I have one that wants everything paid by the rep (I don’t go there much). For the cheap factories, I push them toward Internet training, which admittedly isn’t as effective, but hey, I’m just a poor rep.”

Finally, another manufacturer offers a scenario that he maintains has served him and his reps well: “As a principal, any time I approach a rep about taking us on as a new product line, I travel to them at my own expense. I don’t think they should be asked to invest money from their own pockets until they have signed on and committed to working with us.

“Once they are signed on, it becomes situational. When there is travel to the factory for training, they are expected to get themselves there. Lodging and meals are provided once there. When I travel to them to help them get started in their territory, I pay for my airfare, hotels and meals, but I expect them to pick me up and drop me off at the airport and provide any transportation needed within their territory. Generally, if there is a trade show in a rep’s territory that we mutually agree would be beneficial to attend, we ask that the rep provide their own transportation, lodging and meals, and split the cost of the booth. If it is a national show that we determine would be beneficial to everyone in our network, we absorb the cost and invite any reps who would like to attend to do so at their own cost.
“The investment in the relationship should be a two-way street.”

Making the Relationship Work

Perhaps it was the difference in cultures, but a bit of a red flag was raised when a foreign manufacturer began his relationship with a rep here in the United States. On the positive side, the manufacturer was very much aware of the importance of communicating shared expectations and for the need of a written contract that insured the best interests of both parties. What wasn’t so good, however, was the principal’s apparent lack of knowledge on how to establish, nurture and maintain a good personal relationship between him (and his factory people) and his rep.

When the principal introduced this conversation to a group, a U.S.-based manufacturer offered the following: “Whether it’s brand-new relationship or one that’s been ongoing for a while, it’s always important that both sides make it a practice to regularly revisit the terms of the relationship through the business cycle. This should be done because just as anything else in life, situations and people change. In any strong and lasting relationship, all parties have to pay close attention, re-evaluate and constantly ask questions concerning the relationships. Communicate with regularity and be sure to anticipate and answer all questions concerning what the relationship is all about.”

“We’re Not Always First”

It was refreshing to hear one manufacturer be realistic enough to appreciate the fact that he wasn’t always the first line his reps spoke about when making a call. This wasn’t the case in all of his territories but was more common in those areas where the product line didn’t have that much business. According to the manufacturer, “In those areas where we didn’t have much business, we figured it was in our best interests to simply expand our rep network. We had some difficulty finding reps primarily because of the lack of business but eventually we signed on reps who were enthusiastic about working with us. From the beginning we realized we weren’t getting as much attention as some of their other lines, but we then added an incentive (i.e., increased commissions) that proved to be effective to make up for the added cost incurred by reps to get the business. This has proven to be effective both for us and the reps and our business now is right about where we think it should be.”

Reps Help Sales Manager Sell Internally

After receiving a less-than-enthusiastic response to some of his marketing ideas from company executives, a manufacturer sales manager decided to make greater use of some of his reps’ sales and marketing talents. Here’s how he explained it: “After a couple of failed attempts at getting my suggestions across, I simply came to the conclusion that the executives at my company didn’t necessarily think the same way I did. So, before I ventured forth again I contacted some of my top reps to get their ideas. I told them what I wanted to propose, gave them my ideas as to their involvements and asked for their input. What they came back with was plenty of supporting information, sales projections and competitive data — not to mention figures on what the market potential would be.

“Than came the test and I passed it with flying colors. I won’t say that I overwhelmed the top brass with all I had to offer but I certainly showed them more than they ever expected. On top of that, I informed them of the reps’ involvement and guaranteed that if we implemented the plan in question the reps guaranteed their buy-in. And buy in they did. Our latest marketing plan involving a new product introduction couldn’t have been any more successful.”

Strength In Joining Others

If the contacts that MANA has been receiving from manufacturers are any indication, the demand for independent reps continues to grow. It would appear that as the economy continues to lag, reps are seen more and more as the most cost-efficient means for reaching the market. In addition, as the economy improves, these same manufacturers will look to expand their rep networks as that allows them to grow without adding costs on their end. It’s also worthwhile to keep in mind that MANA has long advocated that manufacturers not only get and maintain their membership in this association, but also explore the benefits to membership in one of its sister rep associations.