“You have the line and there’s a management change with the manufacturer. Now what?”

At the outset, the words of one rep should be taken to heart when that question is posed. According to the rep, who boasts of representing a number of lines for more than 30 years, “No one likes change and whenever there’s change in management or ownership of one of your principals, there’s a fair amount of trepidation. Naturally, problems can follow. At the same time, however, it would be wrong to paint all manufacturers with a negative brush in terms of their relationships with their reps.”

This rep went on to explain that while she has little or no unease with the majority of her agency’s lines, when a change is announced with a major line, you can’t help but be a little uneasy.

According to the rep, “Financial holding companies are buying manufacturing companies and putting incredible pressure on them to grow. For us reps more and more responsibility is being pushed down and expected of us. While commissions are not increasing — and sometimes decreasing — we are expected to fill out sales funnel reports and provide more service. Often, the companies we represent are in a mature industry. Expecting double-digit growth immediately and a high return on investment forces management to satisfy these anonymous faces with constant reports. We sell specialized, custom equipment. We cannot know all the time when a purchase order will be issued. We are afraid to put all of our sales ‘opps’ in the system and then get dogged to death. As independent reps, we are highly motivated. We sell nothing, we make nothing! In fact, some of these directives are dancing on the edge of IRS rules regarding independent contractors.”

With a thought to the future, she added, “My son has joined the business and I am concerned about the future of this business model. The pressure is compromising long-term relationships. Also, some manufacturer dictatorship styles are threatening long-standing contractual agreements. When you have repped a line for 30 years and are given ultimatums, the ripple effect through our industry is huge.”

To illustrate what can happen that causes her the type of frustration she refers to, the rep noted the following two examples:

• “A financial holding company purchased one of our principals. Their big mistake was in thinking that the products we sell are commodities — that’s hardly the case. Then they began to put pressure on us to deliver orders in a hurry. That’s a big mistake in an industry that’s as mature are ours. This is all happening at a time when the economy is healthy and business is good. Every week they pressure us to submit reports. Maybe I could see that when business is bad, but certainly not now.”
• “In another instance we went through a change in manufacturer management. The new national sales manager was someone experienced in working with mega-companies and on top of that he doesn’t like reps. He’s got a reputation for bullying his reps, and several of his reps resigned the account. What remains for us to do is to decide whether we want to continue to work under these circumstances. Then when you consider the size of the business we bring in (in excess of $3 million) that’s a lot to walk away from.”

What results in circumstances such as the rep described is that “We’re all feeling a certain level of disrespect. The reality of it is that I forgot more about our territory and the products they sell than they will ever know.”

Evaluating Line Cards

She concluded, “One possible solution to this problem is that every year we should be evaluating the manufacturers on our line card. If a company undergoes the type of changes we’re talking about, then perhaps the decision has to be made that they’re not a good fit any more.”

Striking a somewhat positive tone, another rep located in the East related some of his thinking when his long-tenured regional sales manager retired earlier this year. “Thankfully, the rumors we hear are that he’s going to be replaced with someone I know well and have worked with in the past. In that kind of circumstance it’s not necessarily as disconcerting as it might be. But having said that, if the new RSM was someone we’re not familiar with, it would give us pause.

“We’ll always do our level best to work with whomever they bring in, but if it doesn’t look like it’s going to work out, you’ve got to take a look at where that company sits on your line card and determine if it’s going to be worth the effort.”

Head Down and Working Hard

A Midwestern rep whose agency has been in business since 1975 has made every effort to follow his father’s advice as he regularly faces challenges from his principals. “My father always told me that ‘If you just keep your head down and keep selling, then everything will work out.’ I’ve learned that’s not always the case. Looking back over the 32 years I’ve been in business, most of our principals at one time were all family-owned firms. As business progresses, however, companies grow larger and they get purchased by another company. Sometimes those sales are good for us and sometimes they’re bad. Now that we’re dealing with several much larger companies, even though we’re performing the same functions that we ever did, problems arise — and those problems aren’t easily solved. In attempting to solve those problems, you make an effort to climb the ladder to the top decision-makers and you’re not always successful.”

He continued that one of the more painful experiences he’s suffered as an agency owner was “When we had to take the initiative to terminate our relationship with a principal. We had the line for more than a decade, but then came the change in ownership. Even though we continued to be a top performer, their management didn’t agree with the way we were working in the territory. They were one of our top lines and we took a major hit.”

Ever the realist, this rep maintains, “As your principals grow larger and larger and go through growing pains, as the independent sales guy, I’ve had to learn to deal with them. Often that results in taking on more responsibilities and paperwork. But in the long run, as a rep you have to change. If you stay stuck in the old ways of doing things, you’re doomed.”

Understanding the Agreement

After considering the question that began this article, another rep observed that “In some ways this is a new problem; in another way it’s not, it’s happened before.”

As to why it might not be a new problem, she noted, “It used to be that the person you signed your contract with was going to be with the manufacturing firm for a long time and they understood the terms and more importantly the spirit of the agreement. On the other hand, where it might be relatively new in many cases today, there is a faster change in management. Companies are changing hands at a pace we haven’t seen before.”

How can/should reps deal with these changes? “In order for the rep-manufacturer relationship to be successful it’s necessary that there be a true balance. On those occasions when circumstances have changed and the rep finds himself working with new manufacturer management, then there’s an excellent opportunity for the rep to engage in some education on the role of the rep. The bottom line is that when the manufacturer and the rep truly understand each other’s role, they form an unbeatable team.”

In conclusion this rep made reference to an “Editorial in the Field” that appeared in the March 2019 issue of Agency Sales. In that editorial, John Beaver, MANA’s chairperson of the Board, advised: “Being a first-class rep in some cases means being a good soldier. The trick is to survive until the nightmare ends, so go with the flow. I believe in the old saying, ‘Water seeks its own level.’ Eventually the person who is a nightmare either comes around or goes away. In either case, the unnecessary reports, excessive travel, and other unproductive activities fade away.

“And being a good soldier can pay some real rewards. That house account may one day be yours. Or you may be spared from a proposed commission rate reduction.

“That nightmare manager could someday be your best advocate at the factory. After all, factory staff is in the best position to remind upper management that sales don’t fall from the sky — sales come from the reps’ efforts, which sometimes involve a grueling travel schedule and 60-70-hour weeks. So, taking good care of reps is good business.”

A Manufacturer’s Perspective

No discussion of this subject would be complete without input from a manufacturer that has undergone a fairly recent management change. In this case, the manufacturer is a family owned business that can boast of a lengthy track record with its network of outsourced sales professionals.

According to the company’s president, “A good number of these consolidation moves that we’re speaking about have occurred among much larger companies. When those moves take place, it can involve the company taking on a much wider scope of products. As a result, perhaps there’s some justification in their minds when it comes to changing the business model. They may make certain moves because they feel they have the capability to save money.

“With us, however, since our inception more than 40 years ago, we’ve been in love with the rep business model. I couldn’t ever foresee another way of going to market. Because we sell specialized products we rely heavily on the leads our reps provide because of their ability to cross sell. If we worked solely with a direct sales force, we could never develop the number and quality of leads that our reps provide us.”

While this company does not make use of a rep council, the company president explained that an important tool he uses to ensure that company management and its reps continue reading off the same page is periodic meetings with its rep network. “This year, for instance, one week we had half of our reps come into the factory for two days. That meeting was followed the next week with a similar meeting with the remainder of our reps. During that time we conducted roundtables and asked them what we can do to improve. Finally, we put our reps together with each other to provide them with an opportunity to share their concerns — and let them work through their own problems.”

The company president went on to explain that his company certainly undergoes changes in their sales management, but when that occurs, “There’s never a change in our philosophy as it relates to our reps. There’s never been a change in our sales culture, and there never will be.”

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