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Taking a break from a roundtable discussion at an industry meeting earlier this year, one manufacturer described his major reason for making a move in the direction of independent manufacturers’ representatives vs. a direct sales force.

“We’re simply not getting the bang for our buck that we need. In our case the cost of paying and supporting our direct salespeople isn’t being covered by their performance in the field. Our thinking is that if we replace them with an outsourced sales force, all we have to do is pay commissions and the reps support themselves.”

Two of the manufacturer’s peers at the meeting offered a bit of a semi-warm agreement with his thinking. According to one, “I certainly can’t discount the importance of wanting to save money in the sales function, but when we made the move that desire was a bit further down the list of our priorities. Here’s what we were looking for:

• “First off, like yourself, we weren’t getting the performance we desired from our direct sales staff. We were looking for improvement in our market share and our decision to go with reps was based on the fact we felt reps knew the territory well and were ideally positioned to give us that improved market share.
• “Next, we performed our due diligence well and the reps we chose to partner with know the territory much better and their roots are sunk a good deal deeper in the business community than any salespeople we had on staff.
• “Following up our performance of due diligence, the reps we’ve aligned ourselves with already enjoy great relationships in the territory. That’s something that would naturally take our direct guys months to achieve — if they ever do.
• “Then anyone dealing with a direct sales staff has to face the reality that their outside salespeople don’t want to stay in that position for extended periods of time. The reps, on the other hand, have a commitment to their business community. They’re in it for the long haul and we don’t have to worry about replacing them anytime soon.
• “Finally, at least by our reckoning, is the financial payoff. We realize the cost savings and got that ‘bang for the buck’ that we’re all looking for.”

Citing a Reason for a Second Rep Council

Elsewhere in this issue of Agency Sales appears an article describing the creation and operation of a manufacturer’s rep council. That company’s experience brought to mind what another manufacturer did years ago with its rep council. Just as the manufacturer cited in this issue, the manufacturer created a council “to provide us with the input we need in order to make changes and address the needs of our reps and customers.” He went on to describe how they’ve had their best input from councils that have been made up of their rep top performers. But he continued that “We took an additional step to create a second rep council made up of our less than top performers. Sure, this sounds a little strange and the obvious question is why would you want input from reps who may not be carrying their weight? But here’s our thinking — not all of our less than top performers are 100 percent to blame for what goes on in their territory. After a bit of study we’ve determined that there may be something different about their territory and the customers that they work with. Rather than just discount what their concerns are, I’d like to hear from them.

“Has their level of performance got something to do with what we’re doing or not doing? Have we, or they, somehow dropped the ball when it comes to agreeing upon mutual expectations?

“By creating this second council and patiently listening to their input, we’ve been able to make some changes that have markedly improved their performance. I’m not going to say they’ve reached the level of our top performers, but they’ve increased sales over what they were. That shows us that we’re on the right path.”

Learning from Past Mistakes

Rather than being turned off with the prospect of working with independent manufacturers’ representatives, the newly appointed regional sales manager for a manufacturer relished the prospect of starting all over again.

After admitting that one of the major reasons he left his previous position was the company’s inability to work well with its network of outsourced sales, here’s how he described what he had learned about doing just about everything wrong: “To begin with, they rarely did anything to involve their reps in the workings of their company. They rarely — if ever — scheduled rep visits to the factory and didn’t do anything to encourage the reps to get to know as many people as they could at their headquarters. That’s obviously a major problem since it’s the manufacturer’s inside people who provide daily support to reps. If they don’t do anything to build a relationship, that support isn’t going to be all it could be.

“If that wasn’t enough, paying commissions late and a failure to respond to requests for quotations were hardly unusual.”

He concluded by noting that company management made it a habit to complain about the reps’ performance in the field. “It’s no wonder our reps didn’t meet expectations. Those expectations were hardly defined and the company did little to make them feel as if they were a member of the team. Believe, me, I don’t plan on repeating any of these mistakes in the future.”

Finally Getting the Message

One manufacturer ruefully admitted that it’s taken him quite a while, but after many years he finally realizes the true benefits of working with independent manufacturers’ representatives.

Here’s how he explained it: “I’ve been working with reps for about 10 years now and I’ve got to admit that it’s taken me that long to finally understand what they do for us. More important than just saving money for us on the sales front, they allow us to get the exposure we need in front of our customers. “I’ve been out in the field conducting sales visits often enough to realize the fact that when a rep makes a call, we’re not the only company they talk about. It all comes down to relationships and our reps have done a great job of establishing firm relationships that have led the customer to expect the latest on a number of companies’ offerings. It’s that last point that is truly beneficial to us. Since we’ve carefully chosen our reps, we know or products complement the other products that they represent. As a result, every time they make an appearance in a customer’s office, we’re given a sales opportunity.”

Everyone Is a Rep “Champion”

Manufacturers and reps both emphasize how important it is for the rep to have someone in the manufacturer’s operation who serves as their champion. By champion, they mean a go-to person to act as their advocate within the organization and someone who can always be depended upon to answer a question or solve a problem. One manufacturer that has taken the term “champion” to new levels explains what they’ve done: “We’ve designated everyone in our company as a rep champion. Everyone in the organization is empowered to make decisions and get things done. That’s what makes working with us so easy, according to our reps.”

Proof that the company means what it says can be found in the manufacturer’s mission statement, which includes the following: We understand that your job is to turn inventory with products that will bring your customers back. We understand that our job is to help you do it.”

Some Tips for Motivating Reps

“Because of the commission structure and the way we work with our network of reps, we’ve found that they are entirely self-motivated.” That’s the way one manufacturer opened his presentation to a group of his peers earlier this year. He continued, “You don’t have to micromanage a rep sales system. All you have to do is stay in touch, travel with, watch and listen to what they do. Keep an eye on their sales. If you see something going wrong, just give them a bump and they’ll react. I’ve also found that reps are more inclined to make that final sales call of the day compared to what a direct salesperson might do. That practice all has to do with their self-motivation and their desire to make more money.”

The Need to Stay in Front of the Customer

In the face of a seemingly constant wave of new technological tools provided by Apple, Microsoft and others, a manufacturer was asked if he’s found his reps are more content with a high-tech vs. a high-touch approach to selling. Here’s how he responded: “If anything, the face-to-face contact our reps provide with our customers is more important today than ever. Look back and think of the various technological innovations that have changed the way we conduct business. Many of those changes may have made us — and our reps — more efficient and productive on the one hand, but on the other hand, they’ve come together to make us more dependent upon machines. That’s why when a rep shows me that he’s maximizing his time in front of the customer, I remain impressed and convinced that reps are the way we want to go to market.”

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