There’s probably no better endorsement for the rep way of going to market than one from a manufacturer who has long-established ties with reps. That is just the case with a manufacturer who participated in an interview with The Thinking Salesman Letter (www.TheThinkingSalesman.com). Written and produced by former MANA Board member Al Brosseau, the interview covered major reasons why the manufacturer has enjoyed a long and fruitful relationship with its rep network.
At the outset, the manufacturer explains that the 100-year-old business, which works with a mixed direct sales staff and network of 21 rep firms, started with reps because of the lower and variable cost that they represent. The company’s OEM national account manager handles OEM accounts which are outside of the normal market for reps.
• Pros & Cons — Getting and maintaining mindshare and the reps’ time remain of paramount importance for the manufacturer as he discussed the up and downside of working with reps. According to the manufacturer, “Reps eat what they kill. Their commissions are a variable cost that varies with the results. Sales go down, there are less in commissions. Sales go up, higher commissions are paid.” With the latter, he emphasizes that higher commissions should hardly be a problem because “you should have the sales to pay for the commissions.”
If the variable cost is a plus, what he terms as a “lack of control” over reps would be a negative. “We know that our company is the main line for our reps, but we continue to fight for more mind share and greater market share. We try to increase their mind share of our company through product/solutions training for our reps as well as our customers. We offer a complete line of products and we continue to improve and expand our product offering.”
• Communication — The company’s regional vice president explained that he keeps in close touch with his reps in a variety of ways. “I communicate with our reps often — at least weekly. I also travel with them in each territory at least twice a year for one week at a time. This gives me a good feel for both the rep and their respective markets. We also issue field sales memos each month as needed for product and personnel updates.”
He continues that the company does not ask, require or expect monthly sales reports “because I receive project and market updates during our phone-e-mail communication. It’s understood that any change in distribution or personnel is reported quickly along with a plan to take advantage of these changes.”
He adds, “Communication with our reps is important and traveling all markets reinforces the importance of that communication by validating our sales plans with our customer partners in each market.”
• Praise — In conclusion, the manufacturer added these thoughts on working with reps: “I have a lot of respect for our reps and the entrepreneurial spirit they bring to the marketplace. Rep agencies need to be flexible and take advantage of our ever-changing market opportunities. Our reps need to supply the complete package and the services that go along with that offering.”
The Best Way To Motivate Reps
There was no shortage of responses to a question introduced by a manufacturer concerning how to motivate an independent manufacturers’ rep sales group. Here’s how the manufacturer kicked off things: “How do you motivate a sales team that is a team of independent and/or agency reps; and they are all under-producing, with every excuse in the book — yet have a guaranteed commission on sales?”
Perhaps seeking some clarification of the question, one rep asked: “How do you know they are under-producing? Have you discussed your method of judging their performance with them?
“I’m sure there are some lazy people out there but my experience is that reps are driven to make as much money as possible. If they can’t make that with your company because of some problems, they will do it with another. All principals fight for my time and unless I see the possibility of a big payoff in the future, I tend to work with those who can provide the quickest and largest return on my time. There is one other thing to consider. The rep business is the only business I have been in where you can almost be assured of being fired if you do an outstanding job. What is your history of retaining your reps? Have you fired the high performers so you could make their accounts house accounts or put a factory man in the territory? In short, look at what you are doing to motivate them and assure them that if they succeed you will not remove them from the territory or cut their commissions.”
Taking a similar tack, a second rep asked for a bit more information in order to guide the manufacturer: “It may well be in your interest to provide a little more information than you have already. For example, are your reps underperforming based on historical levels of sales or are they underperforming as the result of some arbitrary sales goal issued by the company? Additionally, it may be good for you to list the ‘excuses’ and perhaps give them the title of ‘field market intelligence provided by the sales force.’ If you can do this and re-present the question, I believe that the answers provided may prove to be quite useful.”
The subject of clarification didn’t go away when another rep said that “In my opinion you need to be clear on what the expectations for growth are. If you expect 20 percent growth and are only getting 5 percent, then you have to evaluate first whether your reps believe your targets are attainable. If they honestly don’t believe the growth target is attainable, then you will not be able to motivate them. If you offer to eliminate some of their main ‘excuses’ will they then be able to meet expectations?”
Then, taking aim at the guaranteed commissions, the rep continued: “Since their commission is guaranteed, they may not want to do what is needed to get your desired growth. If this is the case, then you need to look at adding new reps and/or getting different reps. In my opinion motivation comes from a mutual agreement on what reasonable expectations and performance looks like. If they are involved in discussing and setting the growth targets, they will be motivated to attain them.”
Another rep was a bit more critical when he responded to the manufacturer that perhaps, “If you have to ask that question, you don’t have a grip on your job responsibilities. What is the starting point? Where and what are the industry trends? What is the product mix? What are the product’s price/performance ratios? What is the overall marketing plan? Sounds as if this might be another doomed, archaic company. Can it be salvaged? So many questions.”
Addressing that subject of guaranteed commissions that seemed so important to the manufacturer, a rep noted, “It seems this manufacturer is guaranteeing the commission dollars regardless of the sales volume. The only instance I can think of for doing this is to get a territory going by covering the start-up costs for the agent. Believe me when I say that no agent worth his salt wants to make a career of living off the start-up commissions. So then what is stopping them from growing the business? Usually, I find that the manufacturer does not have a good understanding of what the rep is up against. That can be partly due to the rep not communicating, but in this case it looks like they are doing that but the manufacturer perceived these as excuses. Maybe they are the facts — not excuses! I think it would be an excellent idea for this sales manager to attend a MANA seminar. He may come away with a new perspective.”
Staying on the subject of commissions, another contributor to the conversation noted, “We can come up with suggestions all we want to guide you, but the unfortunate fact is you don’t motivate sales by commission — you recruit productive salespeople that you partner with to grow business. In the end, you grow your business; they earn their commission which then becomes a reward for good performance — not a motivator or a point of contention. The core of the problem here is not the sales team, motivators, circumstances, etc. The core problem is the management behavior needs to change.”
A final contributor agreed with those comments when he noted, “Money is not a good motivator. It is certainly part of the benefit that comes with the profession we enjoy; however, I would like to add that clear and regular communication on both sides is very important. All aspects of the relationship must be clearly communicated and regularly revisited. The channels must be open and honest communication must be allowed: goals set, goals changed, parameters looked at jointly and discussed, etc. There are so many factors involved and all too often the rep is blamed right off the bat — in some cases for good reason, but in others not so. Working closely together, making it a joint effort, and clearly communicating with each other are so important and motivating. Motivation in most cases occurs by taking care of the people, working well with them, caring, and just good old-fashioned appreciation. Money and the freedoms are great perks and important, but certainly not what drives most of us to go out and sell. If you put pressure on commissions, are complicated to work with, or do not appreciate the rep side, you can bet the motivation to push your company will not increase in most cases.”
