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It’s hardly uncommon for sales and marketing executives to move to new companies every couple of years. Some do it because the road to the top in their company is blocked. Others do it because they are unhappy with their present jobs. And some do it simply because they become bored very easily once they accomplish what they set out to do.

Whatever the reason, when marketing people who manage a team of agents leave, they often cause chaos in the field without knowing it. Being an agent is living life on the edge of uncertainty. Commission checks are often late. More aggressive competitors take away business. Whatever, it’s a life with significant rewards and a lot of anxiety.

Manufacturer marketing people seldom know what they do to agents when they take a walk. But one marketing vice president did and he related, “It took me three years to build the best team of agents in our field. Once I did it, the work lost its challenge and became routine. It was time for me to move to a company that needed me to do more than run what I had built.

“When I made the decision to leave, I had a long talk with the owner of the company and asked him to let me pick my successor. He agreed. I told the agents I was leaving and asked them to nominate people for my job. I wanted them to have some input and to feel that they weren’t being left in the lurch to face a new marketing guy with ideas that conflicted with theirs. To my surprise, two names surfaced on most of the lists the agents gave me. These guys were marketing directors at companies they represented who the agents felt would be right for them. We engaged a headhunter to speak with them so that it was an arm’s-length activity, and decided on one, who now has my job. The agents are very pleased with him and so are my former employers. I think that this is the way it should always be done.”

Keeping an Eye on the Business Cycle

On the face of it, there should be very little difference in the way a company selling through agents is managed from the way a company with its own salespeople is managed. However, there are some significant differences to consider. Several manufacturers shared their thoughts on this subject:

• “Don’t get overwhelmed” is the advice one manufacturer offers. “Remember that your agents sell the products of others and if you are overwhelmed and fall behind in deliveries, they may simply shift their energies to their other principals until you get caught up. This kind of up-and-down cycle is bad on morale and it’s very difficult to manage, especially from a cash-flow perspective of both the agent and the manufacturer. By being overwhelmed I mean several things, among them, letting receivables pile up, letting quality, delivery and professionalism slip, and letting your agents see you panic in any of these situations.” These problems often occur early in a product life cycle, or at time when a company is expanding and taking on more than it can handle.
• “Don’t get dazzled by sales growth,” was the advice offered by another manufacturer. “The important factors to watch are profits, both in absolute terms and as a percentage of sales, and your return on assets. When you have good benchmarks in these areas and know what factor drives them, you will be in a much better position to plan and manage your marketing. Remember that your reps think mainly in terms of unit sales; you have to think in terms of what you make or lose on these sales.”
• “Don’t become trapped by inertia,” another manufacturer explained. “It’s tempting to slack off a bit when you have hit your targets. This doesn’t make good business sense in many ways, especially as it impacts your reps. When you slack off a bit and orders get a little late, they (the reps) will turn their attention to their other principals who are operating full blast.”
• “Be aware of how you tolerate risk, and have a good sense of where you want your company to go.” The manufacturer who offered that advice said that she first sold with reps because she saw them as much less of a risk than salaried salespeople. She said that after she saw what reps could do relative to what she might expect from a salaried sales force, she realized that they were the best bet all around. She added, “Growth involves risk, and you must be prepared to take prudent risks, but not at the expense of markets you have already built. In other words, continue to support your reps wherever you are in your particular business cycle.”

The Difference Between Compatibility and Synergy

The most successful reps invariably report that they look for lines that are not just “competitive,” but are synergistic. This is a notion that is just as important for manufacturers seeking agents as it is for agencies seeking lines. One manufacturer who does heartily subscribe to this notion reported that “because of all the real benefit of reps’ other lines to be able to help sell our line, we don’t just look for agents whose lines are not competitive. That’s a zero-sum game. We want two and two to add up to five!”

Which lines do prospective agents have that automatically lead into your lines? This is a question you should include in your rep interviews if it’s not already part of the picture.

Effectively Using an Agent Profile

A manufacturer who started with agents from day one reported that he had built his extraordinary team of agents over the years by developing and using a clearly crafted agent profile. He explained, “When we first started selling, we appointed two agents, one in our home area and one in a key market area for us about 2,000 miles away. We had a lot to learn in the early days and as we learned, we kept notes and records of our achievements and failings. When it came time to open other territories, we were able to use this information to create a profile of the kind of agent who would be best for us. We also knew what we had done that was successful and what wasn’t. We were able to quickly screen agents for those who best fit our profile and we were then able to tell them how we felt the relationship should go. We did, of course, solicit their views on the relationship, too. As a result, we have built a team that is strong and as devoted to us as we are to them. I guess the manufacturers I read about who seem to go through a lot of reps before they find those who are going to be best for them do it on the fly. They haven’t taken the time to work with the kind of profile we have put together.”

Good Deal Equals a “Win-Win”

The marketing manager of a fairly large manufacturer took an opportunity to boast a bit about what he had been able to accomplish with his first rep. According to the manufacturer, he had been able to knock a full percentage point off of what was a fair commission rate. He had gotten the agent to agree to pay his own expenses for his plant introductory visit. And he chiseled away at a few other things as well. He maintained that his boss had been proud of him.

A year later, however, it was a different story. The agent, who had one of the best reputations in the field, had produced undistinguished sales. Further, he didn’t seem too interested in pushing the line the way the manufacturer thought it should be pushed. Then one of the marketing manager’s friends asked him “What did you expect? The agent wanted your line. It’s a prestige line. You want him; he’s the best in the territory. Then you cut off his legs with the deal you agreed to.” It was wake-up time and the marketing manager realized it. He took the steps necessary to correct the situation and now he and the agent are an unbeatable team.

We always like to cut the best deal we can, but when cutting a deal, you have to ask yourself what is “good”? A chiseled-down deal usually leaves the agent with little to gain for his or her efforts.

Fixing What Doesn’t Work

A manufacturer noticed that within the past six months there was a slight drop off in his business in all of his territories, despite the fact that his field was a growing one and that his products had wide general acceptance. Then an agent happened to mention that a person who was assigned to work with him in the marketing department seemed to have little interest in and even less understanding of the work he was doing. It didn’t take long to discover that the person in question was the wrong person for the job. The man was transferred to work for which he was better suited and a young comer in the marketing department who really wanted to be the rep contact person got the job. It’s too soon to tell whether this will turn things around, but if the enthusiasm of the reps for the new man is any indication, all will be well — very well, in fact.

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