After completing a two-day rep council session where the subject of house accounts was addressed, a manufacturer had this reaction: “If you’re dealing with house accounts it’s really like being a little bit pregnant. Either you’re all in with your reps or you’re not. Either you use independent reps or you do not. Trying to do both is unfair, greedy, and plainly not what I’d consider to be the ethical way of conducting business. Having said that, manufacturers simply have to make decisions concerning how they want to serve the marketplace.
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“If a particular rep group takes advantage of the manufacturer and does not produce — after receiving house accounts — by expanding the sales in his or her territory, this group does not deserve the line. By being the recipient of a house account without having to do the normal missionary work, the rep agency should work that much harder for the manufacturer. The manufacturer must consider those commissions paid as their investment in their decision to hire a particular group in that territory. It is no different from having to pay the expenses of a new salesperson to sell and service that account.”
He continued, “In my view, some manufacturers expect reps to accept things which will not work in the long haul, and some reps are looking for the low hanging fruit without having to do any work. Neither approach works over time and both sides will walk away dissatisfied. It still comes down to an ethical business relationship that requires trust on both sides and a willingness to go out of your way to make it happen.”
The Importance of Business/Succession Plans
After speaking with several manufacturers for this issue of Agency Sales, there was one critical element of the principal-rep relationship that was driven home: the level of importance there is for principals that their independent reps have and share business and succession plans with them. It is interesting that the huge majority of manufacturers this publication speaks with emphasize that the existence of both are absolute prerequisites before they will even look at a firm to represent them.
And, once both plans are in place, the reps should be more than willing to share them with prospective principals. Time and again the point has been made that business plans should serve as a living, breathing document and should be flexible enough to change as the market demands change.
It’s worth noting that these points were not lost on a rep we recently had lunch with. According to the rep, his business plan was something that he worked on regularly and he made it a point to communicate any changes with this principals. When it came to a succession plan, he’s already working on creating a spot in the agency for his son, who is still completing his business education. Once the son joins the firm, his goal is to realize a buyout for his son that will guarantee the continuity manufacturers and customers are looking for.
Simple Keys to Sales Success
While proudly noting his company’s more than 35 years of experience working with a network of independent manufacturers’ representatives, a manufacturer was enthusiastic about describing how he and his reps make the relationship work. “For the entire period of time that we’ve been working with reps, we’ve kept it pretty simple as to what we look for in an outsourced sales force. The key for us is that the rep knows his territory and his customers and is the first to see the opportunities for his principal’s products with those customers. As a matter of fact, the rep probably sees the opportunity even before the principal would.
“Next up for us is that a rep represents a constant level of the cost of sales. The reps are out there constantly doing their job, and we know exactly what it’s going to cost us because we’ve agreed upon the commission ahead of time. Simply put — there’s no surprise.
“Then there is the fact that all principals that work with reps know about — we don’t have to teach the rep how to sell. That’s a skill the rep and his agency already possess. All we have to do is get him up to speed about our products and some of their applications. And, I might add our reps are adamant in their desire to learn about our products, especially our new products.”
The manufacturer continued that “We’ve always made it a practice to attract and cultivate people who are proud to be ‘repping’ us. We don’t have, nor do we want, anyone who might be embarrassed by us and our products. Ultimately, someone that we pick to rep us is going to be an individual that we believe will portray a favorable image in the marketplace. Perhaps the final attribute we’re looking for is that we want to be sure any rep we partner with possesses a strong commitment to customer service and to keeping the customer happy and satisfied.”
Stuck on Commissions?
Thankfully there was a third manufacturer present to act as a referee/tie breaker when two of his peers got stuck on the subject of how commissions can motivate reps to perform. In the course of a lengthy conversation, the two manufacturers spent an inordinate amount of time weighing the importance of commission rates. Each one was bemoaning the fact that he felt the only way he could get his reps’ attention was to offer a higher commission rate than the competition. In fairness to both, however, they stopped and paid attention to the third attendee when he emphasized to them that there are many more effective ways to motivate reps than just offering them more money. If the current commission rate is competitive, then turn your attention to areas such as advertising, promotion, field support, and regular communication. Try that and you’ll probably find that reps will have all the motivation that they need.
Well-Deserved Praise
Well-deserved praise was directed at inside sales support staff when a manufacturer was asked the key to his long-time success with a rep network. According to the manufacturer, “If there’s anything or anyone that is more important to our relationship with reps, I don’t know what it is. I’ve got to do little more than point to the lengthy tenures we enjoy with our reps (several of which exceed 25 years) to prove that I’m correct. It’s an understatement to say that our reps truly have champions in our company. Whether we’re talking about a quote, solving a delivery problem, or ironing out a commission dispute, our inside support staff are always there to help our reps. We’d be lost without them — and so would our reps.”
Treating Reps as Customers
If the previous item emphasizes how important it is for the rep to have a champion within the manufacturer’s business, one manufacturer has taken that philosophy a step further. When a manufacturer was asked to respond to the statement that “Manufacturers should understand that reps are their partners,” he said: “In order to encourage our reps’ performance in the field, we’ve got to treat them just as we would treat our customers. This is a message we’ve made every effort to drill throughout all levels of our organization. What this has resulted in is a feeling by all of our personnel that our outsourced sales professionals are a key reason for the success of our company. When they call for assistance or need an immediate answer to a question, there’s not one of us who won’t drop what we’re doing in order to help them. We’re well aware that whatever we do to help them is going to come back and help us in the long run.”
New Reps = New Ideas
When one manufacturer determined that his company’s rep council meetings were getting stale (addressing the same concerns over and over again), he took a close look at the roster of reps who were serving on the council. “The first thing that struck me was that we had a habit of only relying on long-time reps to serve on the council. I don’t know if it’s because we viewed their tenures as something that should be rewarded or if we were just comfortable with them, but whatever we were doing, just wasn’t working.”
After sitting through a couple of unrewarding council meetings, the manufacturer took a look at some of his newer reps. “I contacted two new rep firms and asked if they’d be interested in serving on the council. Thankfully, they both said yes, and they were appointed. “Immediately I noticed that conversations picked up and the subjects on the agenda began to change — all for the better. I firmly believe what happened is that the reps we had depended upon for input for several years just got a little set in their ways, and we let it go. Looking back, I’m glad we changed and shook things up a bit.”
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