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An independent manufacturers’ representative related a conversation he had with a manufacturer who was a personal friend. The manufacturer worked in an industry different from the agent, so he felt free to discuss some of the problems he had in the past in finding and working with an outsourced sales force.

According to the agent, “My friend was relating a history of bad experiences he had with reps. It reached the level where he had been turned off by the entire experience. After asking a number of questions, I felt free to offer him my perspective, which I hope encouraged him to revise his approach to accepting the rep model of going to market.

“First off, I felt it was important to let him know that in his search for an agency, he should look upon that task the same way he would in looking for a supplier. When you decide to outsource your sales effort, you’re not really hiring a salesperson; what you’re doing is making an agreement with an independent business person.” He went on to describe for his friend some guidelines he should follow in the effort:

• Make sure there are firmly established standards when it comes to making the agency selection — Prior to doing any selection, make a concerted effort to actually draw up a complete and realistic set of standards, including the qualifications that are desired in an agency.
• Plan to ensure you find the correct agency — It’s hardly unusual that what might be regarded as the best agency in a territory is unable to take on your line for one reason or another. That’s why it’s so important to decide ahead of time whether you’ll be satisfied with what is perceived as the second- or third-best, or simply to move on to another territory.
• Qualifying and screening an agency — It’s critical for a manufacturer to personally meet the head of an agency in the agent’s office in their own territory. It can’t be understated how much can be learned by meeting in this manner. Much can be learned by observing the office environs and gauging the type of employees at the agency.
• Learn all you can about an agency — This can and should be done by carefully weighing references, speaking with other non-competitive principals and customers and naturally checking trade and credit references.
• Plan and communicate marketing functions — Never underestimate the importance of having a written marketing plan for the territory. And, don’t be afraid to ask the agent for his input. His reaction to your marketing plan will go a long way toward letting you know whether you’ve chosen the right agency.
• Have one person accountable for the agency selection — Having what we might call a “rep champion” in place can be critical to making the partnership work. And chances for success are much greater if the final decision remains with that person.
• Compatibility is key — Searching, investigating, locating and interviewing a prospective agency can be a time-consuming and expensive proposition. As a result, ask yourself, “Do I truly like and respect this organization and can I be sure that this will be a lasting relationship?” If you answer, “No,” don’t be afraid to move on.

Market Specialization

The subject of the need for an independent manufacturers’ representative to truly be a “specialist” in the market he serves came up in a conversation with a principal. According to the principal, whose products could truly be defined as “market-niche oriented,” “Today’s salesperson must truly be a specialist in that market so that he or she cannot only talk about the product offering, but also alternative solutions, trends in the industry, trends among competition, potential legislative impacts, world political implications and a wide variety of other factors that impact their customers’ business. Salespersons must now be consultative salespeople, not merely sellers of products. They must know how to manage the relationships between the companies they represent and the markets served. If a supplier is multi-market oriented, the most successful sales channel will be composed of specialists in each key target or at least in a minimum number of market targets.”

Old Advice Still Works Today

One long-time manufacturer member of MANA shared some guidelines he recalled from an article that appeared in Agency Sales more than two decades ago. “The article was describing some keys to adhere to in order to give you and your agency the greatest chance for success. As I recall them they were:

• Picking the best available rep — It’s odd that, in general, manufacturers spend more time selecting a direct salesperson than they do an independent agency. In truth, just the opposite should be the case — especially if you’re looking for long-term results.
• Support the rep — This goes without saying. The number-one way to guarantee a poor result between principal and agent is to fail to provide the support the agent needs to get the job done in the field.
• Be able to manage constant change — Over the length of any principal-agent relationship, the objectives of manufacturer and sales representative are bound to change. It’s those organizations that can successfully manage those changes that will be successful.
• Carefully design the channel — Many companies use only one sales channel despite having a number of separate market targets. Channels should be designed on the basis of what the rep does well, not what a manufacturer might hope they will do.

“There was a great deal of additional advice in the article, but it’s these four major points that I’ve always kept in mind as I continue to go to market with an independent sales force,” he said.

Never Underestimate the Value of Training

Few argue that paying commissions to independent manufacturers’ representatives accurately, on time, all the time remains the single best motivating force for principals. Having agreed upon that point, however, the manufacturer should never underestimate the motivating value of offering training for agents. At least that’s what one manufacturer believes.

The manufacturer surveyed its outsourced sales force last year and came back with data supporting the view that “Our reps believe that ongoing training and education strengthen relationships for us. We’ve found that our reps believe that it’s the manufacturer who provides the most training and information to work with generally become the most valuable principal in the eyes of the rep. What happens is that there is more understanding, knowledge and experience available to the customer. When that occurs, we all benefit.”

Paying Attention to Territories

The value of networking and accepting the advice of industry peers was a lesson hardly lost on one manufacturer as he recalled his experience beginning going to market with independent agents. According to the manufacturer, “We were new to reps, having had a history of working with a direct sales force. When the time came to make a change, I sought out a number of non-competitive friends at industry meetings who had more experience than I did. If there was anything they drove home to me about working with reps, it was the importance of paying attention to the area I was assigning to a new rep.”

He continued, “The key factor I had to come to terms with was being sure that I gave the rep enough territory so that he had the real potential to make enough income so that he would devote the effort required for my line. This required careful analysis on my part, not to mention communication with the rep before deciding on what territory he was to cover.

“I can look back now at more than 15-years’ experience working exclusively with reps, and because of our two-way communication, there have been little or no problems in this area.”

Doing the Most With Sales Leads

When a manufacturer at a trade show this summer was asked what his responsibility was for assisting his agents when it came to sales leads, it was as if the floodgates had been opened. Shortening his response a bit, the manufacturer maintained that it’s up to the manufacturer to play a strong role in qualifying sales leads before they even get to the rep.

“Believe me, I’ve heard all the reasons from others as to why they believe it’s the rep’s job, but hear me out. Look at it this way — if you had a salaried sales force, you would qualify the leads one way or another. Any sales manager who knows his stuff knows that lead qualification is a poor way to make use of a talented salesperson’s time. That person should be in the field making calls. How is this any different than when you sell through independent agents? You expect them to do what they do best, and that is to sell your products. Isn’t it a double standard to think that agents should qualify leads and salaried salespeople should have them qualified for them?”