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Whom do you represent? Why? How do the lines fit together into an explainable portfolio of lines?

The explanation of your portfolio is a major issue for you to consider with your sales team. Do the lines you represent make sense as a multiple-line package of products that your customers understand and appreciate?

This question is key to your firm’s ability to leverage the package of lines you have been able to acquire for sale in your territory. It does not make sense to represent lines that do not benefit from being a synergistic part of your package.

Your customers who actually understand the advantages of dealing with an independent manufacturers’ representative will clearly understand and appreciate the portfolio of manufacturers you have created for their benefit. The smart buyers, engineers, and others within your customer group have learned the value of the agent. It is your responsibility to make sure they appreciate this value by providing a portfolio of lines that is really beneficial to them. In every industry the best agencies have the best lines — the lines that help them create a synergistic selling program.

Synergy is Key

Those customers that do not understand or appreciate the synergistic package you present need to be educated. Your salespeople need to learn to present the lines in a way that creates excitement and demonstrates value. Getting your customers and prospective customers to understand the way your lines work together to make doing business with you efficient and effective is key to current and future success.

Potential is the Key Factor

When you examine the lines you are selling, of course, looking at current commission revenue is key. Second, you and your team need to evaluate what the future holds for each line with your key customers. Is the line becoming more important to your best customers? Is the line a good fit with the day by day business of your best customers? If the line is more of a specialty line, does it appear that there will be more situations where the line fits into customers’ plans in the future.

Each of these questions is an important part of evaluating the future importance of each line.

The Five Percent Rule!

As your firm has grown, your reputation as a high-quality agent has grown. Lines have come to you because other agents recommended you. You have taken on lines because you think they will do well for your team. You have taken on lines because you like the sales manager. You have taken on lines because they seem to have potential because the sales manager talks about new products, new programs or other considerations that seem promising.

Now is the time to look realistically at the lines in your portfolio. How many lines provide the bulk of your commission income? What lines are included when you isolate the top 80 percent of your commission income? It usually takes 5-10 lines to reach 80 percent or more of the firm’s total commission. Lines that contribute less than five percent of the total do not make the cut.

What is on the Bottom?

After the 80 percent group, what do you have? It is vital to critically analyze each of the lines in the bottom tier of your portfolio. Evaluate each of these lines carefully and realistically.

• How long have you had the line?
• What has the commission income been the last three years?
• What is the trend?
• What is the relationship with the company?
• What does the company expect from you and your team — reports?
• Frequency of field visits?
• Other demands?

The Danger of Minor, Low‑Commission Lines

I’ve heard all of the independent agents’ rationales for keeping small commission lines — it pays the gas, tires, telephone, etc. It is a good line. The sales manager is a great guy. There are always a 100 reasons, or excuses, for continuing to represent a line that represents 1-2-3 percent of your total commission income.

This is a big mistake. All you have to sell is time. Anytime a line is on your line card you are expected to professionally represent the company. Anytime you represent a line you are vulnerable for mistakes, bad work, poor communication and other oversights, mistakes, errors, etc. that can damage your reputation.

Losing a Key Contact

By continuing to represent a minor, low-producing line a good relationship with a sales manager or executive from the company may deteriorate. The company people may feel you have not done a good job. They may feel you have not succeeded because you have not put in the time and effort on their line. They may feel that your team is not very good. All of these negatives can come back to bite you. The sales manager may get a new job with a company you would love to represent. He will not call you — you have not done well by him in the past. He may tell his people how he feels about your firm.

Avoid the Negatives!

You are earning very little commission. You are risking your reputation. Why? The key is constantly evaluating your lines and dropping lines that are low commission, low potential, possible problems.

The Law of Numbers

If you have 15 lines on your line card and if 10 of those lines provide 90 percent of your commission, then five lines mean 10 percent or an average of two percent each. You are taking business risk for two percent of annual commission — why?

Everything in your business life is about numbers. The constant evaluation of your line card is one of the most important activities you, the owner, top manager must do it religiously!

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