Decisions can’t be made in a vacuum. That’s especially true in the agent-principal relationship. In order to provide decision makers with the best chance for not only making the correct decision when it comes to starting a relationship, but also on whether to continue the relationship into the future, a regular process of mutual evaluation is recommended. It’s also advisable to conduct such evaluations only after both sides have spelled out and agreed upon mutual expectations.

Independent manufacturers’ representatives and principals alike maintain that the best way to know and understand how well or how poorly your partner is performing in the relationship is via formal or informal evaluations.

Measuring Commitment

Starting with some recommendations that principals ought to keep in mind as they evaluate their outsourced sales force members, gauging the agent’s commitment to a line could very well head the list. Is the individual agent and every member of the agency truly willing to invest the necessary time, effort and expense in order to support the manufacturer — at least to a level of income expected from that manufacturer?

This mindset shows why objectives and clearly stated expectations are so important. If objectives are established, plans and progress must be agreed upon in order to achieve those objectives. Does the agency engage in the appropriate follow-up and communication that would allow the principal to measure his true commitment? Keep in mind that the cost associated to gain that initial contact with a prospective customer in just about all industries is quite high. However, once that contact is made, the cost to work the contact, in other words, to follow up, is quite a bit less. Does he exhibit a willingness to accomplish that follow-up?

Results Speak for Themselves

Nothing seals a deal like results. That’s why manufacturers should expect their agents to produce a predictable market share within a reasonable period of time. Defining a predictable market share might be a bit difficult to determine given the differences in industries. For instance, when considering commodities or consumer products an increase in market share might be expected early in the relationship. In the industrial market, however, the gestation period could be a quite a bit longer. (This point is emphasized elsewhere in this issue of Agency Sales as the subject of retainers and shared territorial development fees are discussed.)

If expected market share is not achieved in an agreed-upon period of time, perhaps it’s appropriate for both sides of the relationship to examine causes. It’s important to keep in mind that a shortfall in market share might be a direct result of a poor match between agency and principal — or poor support by one or the other of the partners. If that’s the case, then the relationship ought to be carefully reexamined and agreements reached on how to resolve the identifiable problems.

Product Knowledge and Training

Product knowledge and training are two elements independent manufacturers’ representatives can’t get enough of. If the agent is fortunate enough to be working with a manufacturer that provides the product education and training, experience has shown they’ll embrace the opportunity. Agents maintain that they want and need the product training in order to give them a leg up on closing sales. If a principal notes that he has an agent that regularly puts off attending needed training, that’s something that should carry considerable weight in the evaluation process.

Feedback

The subject of communication between principals and agents is no stranger to the pages of Agency Sales. From the principal’s perspective, the most common complaint in this area is that they don’t always get the information they need from their agents. When that situation occurs, what follows is an introduction of the subject of call reports — something that agents will usually object to.

If a manufacturer’s products and services don’t precisely fit customer needs, then the agent certainly has a responsibility to advise the manufacturer. And this is something the manufacturer should certainly measure his agents on. The feedback responsibility also should include detailed input on competitive activity, changes in customer organizations that should be of interest to the manufacturer and all other data that would be welcome to the manufacturer for current and future planning.

The elements listed above are hardly all-inclusive. What’s most important in any evaluation — formal or informal — is being able to measure how the agent and his agency perform the fundamentals that are expected between principal and agent. The foundation for the best fit between the two is the ability to arrive at common objectives and commitments to support each other. What’s required is a routine auditing process (i.e., an evaluation) to ensure that problems are promptly identified and resolved, opportunities quickly identified and realized and that adjustments in the relationship are made as necessary.

Agents Evaluating Principals

If it’s important for principals regularly to be evaluating their independent manufacturers’ representative sales force, so too is it important for agents to have a clear vision of how well their principals are performing and supporting their efforts.

According to the majority of representatives, the subject of integrity is high on their list as they evaluate principals. Does the manufacturer live up to its commitments to both agents and customers? That’s a key consideration.

The subject of integrity covers all aspects of the relationship from returning calls to on-time delivery to prompt resolution of problems. Failure in any of these areas will certainly put a dent in the relationship.

Is the Agent a Member of the Family?

Several years ago Agency Sales ran a series of articles on top-performing manufacturers, all of whom had been recommended by representatives. In the view of the representatives, one thing that allowed various principals to stand apart from the rest was their willingness to accept agents as members of their corporate families. Very often those principals had what was referred to as “rep champions” on staff. These were individuals who were charged with being the main contact for the agent in their communications with the manufacturer. In addition to that ‘main contact’ role, those individuals made certain that agents always had a voice and were always communicated with on matters of importance, including product development and marketing plans.

Manufacturer executives have a responsibility for developing a clear understanding of the importance for creating a win-win relationship with their agents. Anything less is essentially shooting oneself in the foot long before the race is started.

The ability of the manufacturer to involve the agent in their communication loop is something they should be evaluated on.

Commissions

Commission rates obviously are determined to a large extent by the marketplace. However, once rates are agreed upon, agents expect that their commission payment and related commission matters will be handled accurately and professionally by their manufacturers.

Responsiveness to Agents and Customers

Manufacturers should always look to their representatives and customers for feedback in order to improve products, services and system offers. This requires a high level of responsiveness to both agents and customers in order to satisfy both constituencies.

Development of Quality New Products

Once a relationship is forged between an agency and a manufacturer, there is hardly any more motivating force to the agent than the introduction of quality new products. Such efforts provide the agency with something new to talk about with their customers.

However, it’s not unheard of that agents will complain that their principals provide little information on products that they have in the developmental stage. A product is developed and then handed off to the agent to sell. From the agent’s perspective, it’s not that easy. The majority of representatives view high product quality as the major single ingredient for enhancing the image and reputation of their firm and the manufacturers that they represent. That’s why it’s so important to involve them in the process.

Marketing Support

As they evaluate their marketing partners, manufacturers’ representatives give much weight to the area of marketing support. They agree that they can hardly enter the marketplace without support in terms of:

• A mutually-agreed-upon annual marketing plan
• The aforementioned new product development
• Product training opportunities
• Advertising, promotional support and participation in trade shows
• Collateral support in the form of everything from application and pricing data, competitive analysis, market analysis, case histories, organizational charts and contact points, not to mention a variety of other materials that a professional manufacturers’ representative will need to be successful in the marketplace.

MANA welcomes your comments on this article. Write to us at [email protected].

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The Real Value of Evaluations

Providing credence — as if it’s needed — to the value of employing performance evaluations of their marketing partners, a manufacturer and an independent manufacturers’ representative weigh in with their views of the value of such a process.

Brian Burmaster, vice president, sales for Vortex Valves, Salina, Kansas, explains that while his company doesn’t conduct a formal written evaluation, it does regularly evaluate the performance of its network of independent manufacturers’ representatives.

In terms of whether a formal approach is better than an informal evaluation, Burmaster explains that “What we do really wasn’t done on purpose, it just sort of evolved that way. In saying that, what we’re sure to include in any view of our independent representative sales force is to make sure we look at more than just growth in the sales volume. If that’s all you’re concerned with, you could find yourself on a bit of a slippery slope. Other things that you’ve got to be sure to consider are the product mix, the type of customer who’s buying, and how sales compare to the previous year. We’re also sure to break out sales geographically as each territory is different.”

In conducting such evaluations, which he explains are generally done by the regional sales manager, there are some red flags that would get attention. “I’d say the greatest concern we have occurs when we question an agent’s results and the response is some sort of an excuse. Our goal is to understand what’s happening and if the agent doesn’t take ownership of a situation, that will raise our eyebrows and certainly get our attention.”

Burmaster adds that the results of evaluations “wouldn’t cause us to part ways with an agent. What we’re looking for once again is to understand a situation and if there’s a problem, to correct the problem. Basically, that’s what we’re striving to accomplish.”

Another believer in the value of evaluations is John Knott, president, JD Technologies, LLC, Middleton, Massachusetts. “Evaluations of our principals are something we strive to complete, but I’ll have to admit that ours are ongoing and on a more informal vs. a formal basis.” He adds that in his opinion, “Evaluations ought to be conducted both ways — agents of their principals and vice versa. It’s critical to know what each is thinking about the other’s performance.” He adds that another important consideration when it comes to evaluating performances is to get input from multiple sources. “I can recall an instance when four months into a relationship with a manufacturer the president had compliments across the board about what we were doing. We thought, ‘This is great, this is going to really work out for us.’ Then one month later, we learned the general manager had a different opinion. It seems he was fairly new to working with reps vs. a direct sales force and he thought it was a lot of extra work to deal with an independent sales force. That’s why more than one or two people ought to be involved in the process.”