Before, it had always been in the abstract for me when I learned via verbal or written reports from other reps when they described their challenges in dealing with a principal’s new management team. In my more than two decades of repping U.S. companies in foreign countries, I had never experienced an extensive purge of management of my principal’s staff — until now. Adding to the challenge I now faced was the fact that my agency was considered part of the old regime and thus under suspicion of harboring ideas of the recently departed management. As this management turnover started to unfold, it dawned on me that taking steps to become more proactive with new management in these types of situations was the desirable path to follow.
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Early on I discovered that when there’s a significant change in the principal’s management team, it isn’t until a detailed conversation takes place between the rep and the principal that previously held practices and assumptions can be clearly understood. And when it becomes apparent that new management’s business orientation has been in the domestic U.S. marketplace (vs. overseas), the essentials of international repping and the heightened risk-concept of pioneering U.S. products must, from the outset of this “new” relationship, be extensively restated.
When what my hybrid company was doing internationally was being compared to what domestic brokers do in the United States, I attempted to correct the misperception and restate the nature of what my company does and does not do. Then, when it was suggested that an international rep, working exclusively in pioneering products, forego part of his commission in order to lower the export price and get the order, I further realized how large the gap was in our mutual understanding of each other’s responsibilities.
Contesting House Accounts
Further adding to the challenge, when an attempt was made to unilaterally take a key foreign customer and convert it into a house account, the principal attempted to make me feel guilty for pointing out the breach in our relationship while in the next breath conceding he had not even taken the time to refer to our mutually shared written agreement. I pointed out that to attempt to call the rep’s customer a house account not only flouts the contractual relationship, but it turns on its head the directional flow of leads. Traditionally, principals provide trade leads to commission-only reps as a kind of non-guaranteed subsidy that the rep might use to finance the cost of pioneering the principal’s products to a wider audience. The directional exchange of leads is never the reverse.
Written Communication
This pileup of principal miscues grew when the principal threatened to tear up the pioneering contract that existed between us. It was then that I decided it was time to communicate with him in writing in order to bring some context to principal/rep challenges. When there is a difference between the rep and the principal regarding the definition of words and an understanding of what we the parties can and cannot legally do, I’ve found that putting it in writing is a much more effective course of action vs. mutual yelling into a telephone. When I mentioned to the principal that I would be sending him a long-needed letter, the gap in mutual understanding was so broad, it wasn’t surprising that his reaction was that he did not think such a letter was imperative.
When working under a pioneering contract, I’ve made it a practice to never ask any small U.S. clients to share in the risk by putting money towards foreign market development. After all, in my opinion allowing the principal off the upfront financial hook remains the essence of the LOP/LOP. Because the small U.S. principal cannot or won’t risk scarce capital in developing foreign markets where demand, let alone the allowability, of the principal’s products is as yet undetermined, the enterprising professional rep can take on the pioneering burden if the product line is dynamic and unique enough.
Always predicated on a company being export-ready, the LOP/LOP concept appeals to the truly savvy U.S. principal because it provides a golden opportunity for them to get their unique products into foreign markets at an extraordinary discount while simultaneously positioning them to tap into overseas markets and their potential revenue streams. But the caveat is this — if the small principal is inexperienced in the realities of international trade, they will have a hard time absorbing the fact that when a new product category is so unique that it not only catches importers’ attention, it also gains the attention of regulatory bodies within targeted foreign countries.
And once the product line is caught up in the gears of the foreign government’s regulatory and review machinery, the process can crawl along or even stop as the foreign importer tries to think of creative ways to legally bring in the product line through an often calcified, foreign governmental bureaucracy.
Since months — and even years — can pass with some foreign governments still considering whether to spec-in a new health product category, for instance, an inexperienced, small U.S. principal new to international trade, and already antagonistic from the shotgun rep-principal relationship that they inherited, can resort to pretext as a way of trying to exert some control over the rep-principal relationship.
MANA as a Resource
To get out in front of situations like this, I’d recommend that a rep acquaint himself with the latest information (e.g., articles, special reports, etc.) from MANA. The association will educate reps and principals alike that dramatic changes in the management of a principal can generate ongoing complaints and concern among reps. Armed with this information from the invaluable MANA library, a rep can share this with new principal management — especially those with scant background in working with independent, professional rep firms and who are also only vaguely familiar with the concept of reps taking on the burden of pioneering products.
However, limiting the chances that this information will be persuasive to the principal are the very real constraints on a small principal’s time to think through what is being presented to him. When a small principal, with a skeletal, in-house staff, thinks it’s normal for the rep to be asked to act as a «back office» on, say, regulatory and administrative issues, one can see how time-constraints and force of habit enable the types of justification that the principal thinks are legitimate rep tasks.
To disabuse new management of such preconceived notions, and to hopefully influence a more normal behavior between a principal’s new management team and the rep, a restatement of the tasks of rep vs. principal should stress how much consultative selling already is entailed in the work of professional reps.
International trade takes considerably more time than domestic business. Furthermore, because of the nature of many of the products I rep (e.g., consumables that go into, or interact with, the human body, clinical studies, etc.) it’s important to determine the importer’s desire and various levels of regulatory scrutiny. Time-wise it can be similar to selling a component to a car company — a thousand eyes (the importer’s staff, governmental agencies, medical associations, medical education associations, etc.) must thoroughly vet and/or weigh in with opinions before the product is given the collective green light and a purchase order can be issued. It is a mistake to assume new management will be aware of these variables or will be able to grasp that how things are done in Baltimore are not how things are done in Jakarta or Moscow.
When all of the shared institutional and international knowledge gets shoved out the door and management comes under new direction, a rep merely deciding to fret about what may come does not even amount to half-measures. To preempt other issues from bleeding over into the larger business relationship, it is better to acknowledge that with a departure of a principal’s key manager, there is also bound to be a shallowing of the pools of shared understanding and values that formerly existed in the rep/principal relationship.
Charitably speaking, in doing damage control the rep might consider the possibility that any stunts, any trust-shattering operational habits and behavior by a principal, might very well grow from ignorance. They might simply not know what they do not know.
Nonetheless, while MANA is the definitive source to help prevent impulsive decision making, if a principal does not avail themselves of the information via association membership, the communication and education of the process always rests on the rep’s shoulders. Having on hand a ready-made tool that restates and reemphasizes the tenets of the formal contractual relationship already in place is something that can be used, and reused, with new principal management.
