If you associate with power reps, you’ll have marketing and sales power in your territories.

Regardless of industry, all territories have several rep organizations that stand out above the rest. If you are a manufacturer does your line merit the attention of a major rep organization? If not, why not?

What does it cost your manufacturing company to manage your sales program? If you have rep firms that are totally professional with advanced systems and procedures your cost per territory or per substantial customer is less.

How to Beat the Typical Manufacturer Mind-Set, If You Are a Rep

What is the manufacturer’s impression of reps? In the food brokerage business, the manufacturer knows — the brokers are absolutely essential to his business. If you are with a weaker broker you lose. If you are with a major broker you win. In that business the manufacturer knows that the broker has superior people, superior facilities and superior capabilities.

In many other industries the evolution is in much earlier stages. In the industrial tool world, reps are consolidating and learning to deal with the large manufacturers who control most of the business. The reps with more feet on the street are the reps who grow market share and revenue. In the food service equipment and supply world the reps are gradually consolidating and smaller rep firms are merging.

In some industries groups of larger reps have emerged as “associations” working together to improve their operations, developing custom CRM programs and providing data to be analyzed and compared. In other industries reps have lost out to direct sales teams because the manufacturer determined that they could field a better, smaller sales force and deal with a shrinking number of customers. And, at the same time, these manufacturers significantly reduced their sales expense.

Industry by Industry Sales Force Facts

If you are in a business such as food service equipment as a mid-size or larger manufacturer you have to ask yourself, “Where do I get the most bang for my commission buck?”

This is the key question. The more commission paid out the better assuming that the sales team is critical to getting the business and building market share. When the sales force controls the business within the distribution channels the manufacturer has to develop relationships with reps who have power the way the big brokers do in the food industry.

As the reps consolidate, they develop superior systems for doing business. The manufacturers need to carefully examine the way the reps are conducting business. The manufacturers should evaluate the way the reps work their territories and utilize their personnel and facilities to maximize business.

Differences That Are Real Distinctions

Tiered management provides substantial internal sales force management. Sophisticated in-house marketing departments are coupled with highly professional customer service call centers that take major pressure off manufacturer’s resources. These are real differences that provide measurable value for the manufacturer. Only a major rep firm can run their business in this highly professional manner.

Only the Best Salespeople

Performance expectations for salespeople who handle the customers within the structure of the power rep firm is significantly different/better that that of other more traditional, smaller rep firms.

The power rep field salespeople have to be better. They are paid much more and they must earn it. In most cases their direct supervisors and the owners of their rep firm are reps themselves. They know what is necessary and they expect results. The world of the power rep is an “up or out” world in which only producers survive.

TAM-a Term Worth a Lot

In a given territory, what is the “Total Available Market” (TAM) for specific products, e.g., cooking equipment? If the manufacturer knows how much business they can tap into with the right representation they know what type of reps to solicit. Knowing TAM, the company can begin to evaluate the quality of representation that they can attract.

A Word on Line Overlap and Conflicts

The power rep firm may have minor overlap. These firms are smart enough to know how to handle minor product conflicts. In several cases I’m familiar with the analysis of overlap and conflict came down to less than 10 percent of the total volume and potential of either line. In one case a management and ownership change at a major producer caused the new management to go back to the power rep firm the previous management had seen fit to dismiss.

The president of the rep firm pointed out to the president of the manufacturer who was taking over this product line that his rep firm had added several new lines that did conflict with the previous line. The president of the company wanted the power reps to return to representing his line.

The rep pointed out the overlaps, which were fairly significant. The reply from the new president, “That’s a price we are more than willing to pay. We want you and your team to represent our firm regardless. We’ll do so many good things that you will end up selling much more of our product. I’m not worried about conflicts.”

That situation demonstrates the power of power reps and the hold they have on territories and manufacturers.

How Much Is Enough to Attract Top Reps? Money Talks and Everything Else Walks!

There is no doubt commission is the key to the relationship between manufacturer and rep. If the manufacturer has a very small piece of a given market — either geographic or by market segment, then the powerful well-equipped and well-managed major rep firms will not be interested. If the manufacturer is bringing a lot to the party, then the manufacturer can court and secure the services of a major rep firm. Will the manufacturer automatically see huge gains in sales and profits?

Nothing Is Automatic

Retaining a major, sophisticated rep group is only going to be successful if the manufacturer, no matter how much commission they can start the rep with, has a powerful, well-organized and well-structured sales and marketing plan.

Manufacturers who are simply throwing product at the market, no matter how good and no matter how well priced, are kidding themselves. To work with a major rep firm the manufacturer has to bring more than product and price to the party. The manufacturer has to have a complete program for managing the reps and for maximizing the return on investment in the rep organizations. The manufacturer has to be ready to support the reps across the board.

Regional Management May Not Be Necessary

One major source of savings by being a major manufacturer with a sophisticated, professional sales and marketing organization is that there is very little need for field sales management. The major rep firms do all the management tasks that manufacturers previously thought they had to supply. In addition, several other functions that manufacturers have deemed vital to their sales efforts can be eliminated when a power rep is retained. Positions like national account managers and major account support managers are no longer necessary. The major, powerful rep firm has individuals assigned to these customers and these top managers are assigned to continuous dialogue and dealings with all of them.

Eliminate the Curse of Turnover

Manufacturers need to recognize the entrepreneurial nature of the rep business and understand the difference between their personnel and the rep firm’s personnel. Many of the managers working for the rep firm have been high ranking managers for manufacturers. Why did they jump the fence? In most cases because this type of manager is an entrepreneur.

They want to escape the structure and strictures of working for a big company. Although the rep firm may be a big business, it is an entrepreneurial environment with many privileges and benefits these managers can’t receive working for a manufacturer. This entrepreneurial environment results in a very significant reduction in turnover. These independent reps are lifers. They love their work and they work for many, many years — a huge benefit to the manufacturers they represent.

Big Bucks to the Bottom Line

Some manufacturers are investing 2-5 percent of sales in field sales management needlessly when they have major, powerful rep groups working for them. The commission dollars they have available to spend are more than sufficient to guarantee that the rep firm runs its sales force professionally and that the rep firm supports the sales force with sophisticated high visibility CRM programs and services.

Power rep firms have to have their organizations managing all sales and marketing programs well. This results in very substantial funds released for the manufacturer to spend on support for the sales team and a much more involved marketing and sales program. This shift benefits both the manufacturer and the sales personnel.

Technological Advantages

Power rep groups have technologies and systems that track all projects, from conversation to quote to negotiating the order. They track, know and document when they win and when they lose. Power reps share this information with their manufacturers, giving them knowledge of wins and why they won, but more importantly, when they lost and why they lost.

Manufacturers then have the ability to tweak price, product, features, options etc. For similar opportunities that follow they win!

Often, the Reps Are Bigger Than the Manufacturer

In industries like food service the brokers are often more sizeable than the manufacturers. The brokers and many rep firms in other industries know what has to be done to manage and succeed in a substantial territory with substantial lines.

The Bottom Line

Sales happen when a manufacturer recognizes that they cannot afford weaker, amateur sales representation. The representatives must be as big, if not bigger, than the manufacturer. The commission that the manufacturer pays must represent a significant percentage of the rep’s income. A powerful rep firm must take on only lines that are substantial and which provide significant increases in income.

Good luck and good selling!

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