© Sandra Dragojlovic | Dreamstime.com

When a group of manufacturers got together at an industry meeting earlier this year, the topic of conversation very quickly veered in the direction of defining the ideal rep. One manufacturer was especially ready for this discussion as he reached into a manila folder and pulled out an old, wrinkled piece of paper with notes on it. He explained that he first came across what was on the paper years ago at a MANA seminar for manufacturers. On the paper was a list of attributes that the ideal rep ought to possess if the partnership between rep and principal was to survive and thrive. According to the manufacturer, “I’ve carried this with me for years and refer to it often. With very few exceptions, the attributes listed here have served me and my reps very well.”

Not to keep readers in suspense, among the attributes this manufacturer has learned to value over the years are these:

• Is the rep firm well-managed and growth-driven?
• Can it boast of a lengthy tenure with key lines and its own key personnel?
• Does it have financial stability and healthy cash flow?
• Are their lines compatible and do they avoid representing competing lines?
• Do they have and share a business and succession plan with their principals?
• What is the ranking of each principal’s contribution to the income of the agency?
• There was much more on the manufacturer’s aged piece of paper, but he swore by these as providing him with the guidance he’s put to good use over the years.

Reactions to Weekly Sales Reports

Principals who request regular sales reports from their independent reps should hardly be surprised when they receive a negative response to that request. At least, that’s certainly the tone of an Internet conversation that took place among participants in MANA‘s LinkedIn discussion group.

The discussion started with a deceptively simple question from a MANA member — and then it took off from there: “My principal’s new management wants weekly reports,” says a MANA member. “They are a good principal, but not our largest. How should I respond?” How would you respond, MANA members?

Editor’s note: First the good news — this story has a happy ending. The rep who reported his concern let the discussion group know that the principal bent somewhat to the overwhelming logic that weekly reports are excessive. As a result, the request was rescinded.

One of the first to respond to the question was a rep who notes, “I’ve had principals ask for this over the course of the 22 years I’ve been in business. My first question to the principal is why do you want the reports? Second, what purpose will they serve? I usually over-communicate (if there is such a thing), so planned reports are redundant in my case. I also advise my principals that by asking for reports they are violating the independent contractor safety harbor rules by the IRS. This makes them liable for withholding and SSI taxes. If the principal is paying a prospecting fee then I’m morally obliged to keep them informed of what I’m doing to justify the prospecting fee. Educate your principal and don’t keep them in the dark about your activities and my guess is this request will go away.”

Words of Caution

Next, some words of cautionary advice were offered to the group: “Whenever there is a change in ownership and/or management which results in a ‘new management philosophy’ such as this, it’s best to prepare for the worst and have another company at hand as a replacement in case you need it.”

The desire to understand the request for sales reports was next when a consultant said: “I’d try to understand what’s prompting the frequency of the reporting request (which I’d suspect is a trust issue). I would then attempt to redirect the principal’s attention to results — which is what we all want. I would also take steps to help the principal understand that time spent on weekly reporting is not going to help to deliver sales results. A better alternative might be to establish a cooperative business plan for the territory, agree on shared goals/activities and a communication plan that satisfies all parties.

“As has been said before when this question has been discussed, communication and trust between principal and rep are critical — but sales reports are not. Results are all that matter. We will take the time to discuss with the principal whenever a principal decides they want to waste our time with these things, but we draw a hard line and always have it (weekly sales reports) deleted from the contract. We just have better things to do, and so do they. Usually they do not feel strongly about whether or not we submit weekly reports.”

A consultant and keen observer of the rep profession notes that “This topic has been debated before and will be argued again in the years ahead. It is a topic which generates significant emotional stress on both sides of the argument. Nonetheless, the issue boils down to a misunderstanding by the principal of the distinctions between an ‘in-house’ sales team vs. an ‘out-sourced’ team.

“Those of us in this LinkedIn group know that with an ‘in-house’ team the sales management process can mandate any number of reports with any frequency it deems necessary for its specific business. The ‘in-house’ rep could never get away with telling his manager, ‘My results speak for themselves. I don’t have time to write reports.’

“However, when an ‘outsourced’ team is used, the obligation for them to prepare and submit reports cannot mimic the ‘in-house’ arrangement. It is a trade-off which the principal must accept in exchange for the many benefits gained from using the rep model.”

The consultant continues, “Unfortunately, the rep probably won’t win the battle with this principal. As stated in the original question, there is new management in place and they will likely impose their misguided will on their existing reps or replace them with others willing to comply with the new requirements.”

Adding some perspective to the discussion, another rep explains, “I love being a rep but the part I hate the most is being taken for granted once you have established the business. For some strange reason, some of principals feel that once an account is up and running, it is time to marginalize the rep and cut him out. This usually starts with the request for weekly reports. No matter what you report, it will not be enough to satisfy them because the decision has already been made to reduce your commission or cut you out all together. The weekly reports are just the justification for that decision. I would start finding out from your customers if they would entertain another vendor and see if you can vest pocket one because the day of reckoning is at hand.”

Offshore Principals

Another rep added the variable of working with offshore principals to the discussion when he explains, “In my experience, the more distant the principal (overseas), the more they insist on some sort of frequent reporting. I do not see weekly reporting as being especially productive, but we do offer such reports in some cases.”

What’s much more important than regular reports, he continues, is that the rep demonstrates he stays on top of issues and helps the manufacturer follow up with customers’ expectations demonstrating organizational skills and priority management. “I need some sort of log or reporting tool for myself to achieve this. I do have to do it, but do not necessarily have to share this entirely with the manufacturer. Some of my clients understand and respect that.

It might be something that you revisit at a contract renewal time once you have had some history built up.”

A rep who spent some time earlier in his career working for a manufacturer explains that “I worked for a manufacturer in the past who asked for weekly sales reports from all the reps by Friday and then followed up with conference calls every Monday. What resulted was a lessening of the sales activity for each rep by 2-4 hours per week. When I became a rep, I went in the opposite direction when I started my own company. What this all comes down to in my opinion, is respect — that’s the main issue. As a manufacturer we spend the effort on finding the right relationship first and foremost. By spending face-to-face and phone time with our channel partners, our inside sales staff and sales managers generate the projections I need to manage the business.

“If we need information, we call and collect what we need over the phone and generate the summary internally. You have to respect that the rep is out on the road and make selling your product as easy as possible.”