What Happened to Straight Commission Reps? — Part Two

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Last month I answered a manufacturer’s question about why manufacturers’ representative agreements increasingly include clauses covering Life of Part/Life of Program (LOP/LOP), shared market development fees, and/or extended post termination commission.

This month I answer that manufacturer’s follow-up questions:*

“Let’s say my rep Fred closes a major order at Acme Company and I give Fred LOP/LOP commission on that program. Later I replace Fred in that territory with a new rep, Nicole.

“When that program comes up for renewal, Nicole is managing negotiations for a reorder that is still commissionable to Fred due to LOP/LOP.”

  • “Why would Nicole work hard to maximize the selling price on this reorder?
  • “Why would Nicole work hard to keep this reorder from going offshore?”

Why Would Nicole Work Hard to Negotiate the Best Deal for Her Principal?

Nicole plans to write new orders with Acme and earn LOP/LOP commission on those new orders. Nicole knows that if she lets prices tumble on this reorder it will be harder to get a good price later when Acme’s next new project comes up. Maintaining a good margin now serves Nicole’s interests when she negotiates with Acme on the next project.

Of course, if the principal still has lingering concerns about Nicole’s motivation to maximize the selling price, the principal can always give this negotiation extra attention and oversight.

Why Would Nicole Work Hard to Keep This Project From Going Offshore?

Once Acme starts sourcing its projects offshore, Nicole will face offshore competition on every future project she quotes to Acme. Nicole will do everything she can to avoid having Acme starting to source its projects offshore.

Bottom line, most manufacturers would love to be facing a situation where they had so much business that managing quotes for reorders became a major undertaking. After all, you had to get the orders in the first place for reorders to be an issue. And getting orders is exactly what reps do best.


* The manufacturer’s comments have been edited for clarity and brevity.

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Last year, I made a presentation to 20 roofing manufacturers’ representatives. During the Q&A, one participant asked, “Are principals asking MANA members to fill out online CRM reports?” I asked the group, “How many of you have principals who asked you to fill these out?” Half the hands … Read the rest

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This year’s winner Peter Feigl, of Peter Feigl Handelsagentur in Austria, gave an extraordinary acceptance speech. With Peter’s permission, we are reprinting his speech in Agency Sales magazine:

My name is Peter Feigl, I am 40 years old and I’m from Linz in Austria. At the beginning of my working life, I made an apprenticeship as a mechatronics. Then I became a field manager. And now I am a … Read the rest

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In his explanation for not renewing his membership, Melocik emphasized that “I did want to thank MANA for all that I have been able to learn from the organization and for the contacts that allowed me to pick up additional … Read the rest

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I’ll use my world as an example and ask you to translate accordingly.

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We have three levels of questions and it’s … Read the rest

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In my many years working as a consultant and trainer with dozens … Read the rest

Ways to Keep Customers Coming Back

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Such business behavior has unintended consequences. The cable companies are an example. Customers have learned to complain and threaten to leave unless they are given concessions. And how do you feel when a company unleashes the sweet talk after they haven’t heard from you? … Read the rest

Why Sales Success Is the Exception, Not the Rule

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Is My Pay Plan Fair?

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Question:

I sell for a living. In our pay plan, we compete with our revenue numbers from the previous year, and approximately six percent is added to the previous year’s revenue number. That becomes your goal for that particular month. We get a salary plus commission and have a stair-step commission that starts at 80 percent of our goal. The problem is there is no motivation between the salespeople due to the fact that we are competing with numbers from the year before. When we have talked to management about it, they say that if we changed the pay plan, … Read the rest

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According to the manufacturer, “Thankfully, I’ve been in the position where I really haven’t had to worry about what my reps are going to do in the future because, by and large, each of the firms I work with have been more than willing to share information that pertains to how they operate now and what their future plans might be. These are … Read the rest

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But, in order to deliver on a better customer experience, you first need to understand who this new kind of digital customer is and what they want. It’s clear that the … Read the rest

A Commissioned Sales Representative With a Contract …Who Doesn’t Have a Contract

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With this scenario as a backdrop, I thought it would be useful to share one of my favorite fables.

The Hedgehog and the Fox was written by Sir Isaiah … Read the rest

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Charles CohonMANA CEO Charles Cohon is an invited speaker scheduled to be with some of the best reps in the plumbing industry in Napa, California this fall for the Association of Independent Manufacturers’ Representatives (AIM/R) 46th Annual Conference. Cohon’s presentation, The Quick and the Dead, focuses on the urgent need for reps to be agile in today’s challenging business environment.

“It’s a special treat for me to be with my friends at AIM/R,” noted Cohon, “because every AIM/R member also is a MANA member!”

This Annual Conference is “the place to be” for professional, independent business owners to learn, share, … Read the rest

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For many years, NMRA has enjoyed a close working relationship with MANA and regularly offers its members access to its SalesWise business development training and coaching teleforums. The organizations frequently collaborate on projects and co-presented a past IBEX workshop.

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