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It’s more than gratifying when a manufacturer communicates with MANA and Agency Sales concerning the reasons why they have gravitated to the use of manufacturers’ reps.

That happened recently when the manufacturer of a line of industrial paints and coatings wrote, explaining: “We are exploring the use of reps as a way of filling voids in our marketing coverage. While we are not fully ready to appoint agents at this time we wanted to find out what was available. That was our reason for joining MANA. So far, we have learned that there are plenty of firms and individuals interested in the opportunity of working with us.

“While we’re coming close to choosing our agents, at the same time we’re acutely aware of the potential benefits and even the pitfalls that might accompany going to market with reps.”

With the former — benefits of working with reps — this manufacturer proves he’s right on the mark by saying, “In executing our plan to work with a network of manufacturers’ representatives our goal is to achieve market coverage in areas where we currently have no stores or dealers. We will select independent reps that carry ‘allied,’ complementary products and serve an established customer base. Reps will only be paid for what they sell. In addition, it is our hope that reps will allow us to achieve a rapid start in our sales efforts and will lead to increased market share.”

Weighing the Cost Factor

As one national sales manager was reviewing more than 20 reasons why three of his non-competitive peers had made the move from a direct sales force to independent reps, he made the observation that “two of the factors that weigh heavily in my decision are the fact that reps can hopefully save me money and they’ll pay special attention to small accounts.”

He continued by discussing the former when he said, “One of my manufacturing friends was adamant that the spiraling cost of compensation and traveling expenses dictated that I take a serious look at reps. After all manufacturers’ representatives pay their own payroll, Social Security, taxes, health insurance, vacation and sick pay, pension or profit sharing, expense accounts, cost of cars and gasoline. Add to that it saves the manufacturer any relocation expenses. And reps don’t involve their principal with personal problems. Payment from the manufacturer is for sales only — service, communication prospecting and budgeting problems are all the rep’s concern. That’s a huge ‘get’ for me.”

The latter point, that of paying attention to smaller accounts, was especially attractive to this manufacturer. “I’m the first to admit that we’re not the ‘number-one’ manufacturer in our field. We produce a high-quality product and are well respected in the industry. However, since we’re not the first manufacturer that a customer might want to consider, it’s important that we have someone in the field who will pay attention to us. Add to that the fact that direct salespeople are more apt to be selling against a quota or a bonus arrangement than reps. As a result, they often high spot the larger accounts and might tend to neglect the smaller ones, thus missing the growing ones. Because of their multiple lines, reps can afford more coverage of all sizes or customers in their territory.”

Taking Time to Make a Decision

Surprisingly, it remains a fact that many manufacturers take less time and care when it comes to engaging an independent representative than they do when hiring a direct salesperson. And then they provide less training to the rep after the appointment. Hopefully, this is something that will change in the future, but in the meantime:

• Follow the general rules of hiring — Don’t appoint a rep in a hurry. Appointing a rep at a trade show, or on the phone, can be a costly error. To quickly take on a “reputation” representative because he or she will accept your line can result in future problems. Base your decision on facts and a systematic search program. Avoid impulse appointments. Changing reps is expensive.
• List exactly what you expect of the rep firm — If the requirements of both parties are spelled out in the sales contract (as they should be), use them as the principal points of discussion during an initial interview with an agency. Or, use an organized pre-screening process that will not only assure you of a better sales team down the line, but will save a lot of time and money, not to mention effort.

Paying for Value-Added Services

When the subject of reps wanting to be paid for value-added services they perform on behalf of their principals was raised one manufacturer offered this response: “If one of my reps approached me with the request that we consider paying him for services he was performing above and beyond what is normally expected, my reaction is that this is a totally acceptable subject for a conversation. As a matter of fact, if I ever learned that a rep was grousing about not being compensated for something he was doing, I would go to him and let him know that he hasn’t been taking advantage of the relationship we have. Rather than complain, I’d want the both of us to put our cards on the table, consider how the situation is currently being handled, and then address our mutual concerns.”

Completing the Loop

A manufacturer provided us with a timely reminder of the importance of keeping reps in the loop when he detailed some of the steps he normally takes to accomplish that goal. Among the tips he offered were:

• Upon signing with an agency, he personally puts them in touch with all of his other reps, either by personally introducing them to each other or by seeing to it they have the opportunity to get together.
• As a rule, he outlines all the responsibilities of the agency — and of the manufacturer. By performing that task at the very beginning, he maintains that he heads off problems further down the line.
• He reviews all company policies that relate to sales — this entails how the company invoices, how the rep collects, how the rep provides technical support and anything and everything else that one company might do differently from another.
• Of paramount importance, he immediately introduces a new rep to the entire top management team. And, he ensures that the rep has a complete tour of the manufacturing facilities and meets the people he’ll be working with.
• He initiates the rep into the company’s structure by letting him know who to speak with, how and where they can be reached.

After performing all these steps, the manufacturer doesn’t just assume everything is going to work well. Rather, he follows up, either by phone or in person, to make sure the initiation process covered everything. And, he asks if the rep needs to know anything to ensure the relationship will prosper.

Hitting the Ground Running

It sounds like this manufacturer has implemented a sure-fire way to hit the ground running with his network of independent reps. According to the manufacturer, whenever he signs a new rep, and a relatively short period of time has passed where the manufacturer feels optimistic about the partnership working, he has the agency’s salespeople come into the plant — but not just for a tour. Over a period of a week or more, he’ll have the rep’s salespeople work in each of his departments to achieve a real feel for what’s going on. Once that’s complete, he then requires reps — at least the head of the agency — to come back annually for sales meetings where they are brought up to date on any changes that many have taken place.

When we spoke with this manufacturer, he was in the midst of running a new rep salesperson through his operation — a process that was going to take two weeks. He reports that his reps have reacted very favorably to this process and he was interested in what other manufacturers may have in place when it comes to training.

Evaluating the Principal

Smack dab in the middle of its annual performance review of the agencies that make up its independent rep network, one manufacturer received some valuable and much-appreciated news from one of its reps. While reviewing one of its top performing reps, the rep turned the tables a bit by “…notifying us that they were also reviewing us and thankfully, we were at the top of their list when it came to their principals.”

Among the areas for which the rep had praise for the manufacturer were these:

• Commissions — “This was a true winner for us. Do we pay what we’re supposed to accurately and on time — all the time? A resounding ‘Yes.’”
• Integrity — “The rep wasn’t only concerned with our reputation with him, but he evaluated how we were viewed in the industry. That included what our customers and competitors thought about us.”
• Products — “Does our current product offering provide customers what they need? And, just as important, can we be counted on in the areas of research/development and new product offerings? Do we ask our reps what’s needed in the field, and once armed with that information, do we act? Once new products are developed, do we support the effort by offering incentives to our reps to develop demand?”
• Communication — “Do we facilitate the flow of information from our company to our reps? Can we be depended upon to keep our reps in the loop regarding any important developments? Do we use communication tools (e.g., website, text, email, electronic newsletter, etc.) that reps are comfortable with?”
• Adaptability — “Did we change with the times? When the needs of our customers and the marketplace change, were we able and willing to change our approach?”

MANA welcomes your comments on this article. Write to us at [email protected].