After participating in a virtual conversation with three of his reps on the continued importance of reps regularly evaluating their principals, a manufacturer offered his thoughts on doing the opposite.

“I annually review how my reps are performing and when I find a problem or determine that something is amiss, I take care of it right away. Here are a few of the things that I’m concerned with.

“Before I even choose which reps to work with, I learn all about their length of tenure in the territory. After that, however, I regularly evaluate:

• Among their lines, how many are top lines?
• Among their other lines, which and how many are complementary to mine?
• I closely scrutinize the quality of the owners of the agency and their salespeople. What’s their reputation in the field?
• What customers do they call on and what do other reps (including my own) and other manufacturers think of them?

“I go through this routine regularly, and the results of my study have caused me to make changes in the past.”

When to Terminate

After reading several articles in Agency Sales on the subject of manufacturers terminating their reps, three manufacturers got together to swap some ideas. To a person, each manufacturer emphasized that after they had expended the time, energy and effort to team up with a rep, they were more than reluctant to make a change — however, sometimes that was the only path to follow when things didn’t go as well as they had intended.

Indicative of their views on the subject was one manufacturer who maintained, “We’re never in a hurry to terminate. I don’t think we’ve ever been overly quick to hire. Naturally, we’re going to be very slow to fire. And if and when we do, it’s only after we’ve made every effort to correct a situation and make sure that we’ve both tried to operate off the same page.”

Some of the steps the manufacturers outlined when they’ve identified a problem in the field are:

• “Our goal has always been to partner with salespeople — not order takers. Anyone can take an order. Occasionally we’ve made mistakes in the selection process. If we find we can’t correct a mistake, we will make a change.”
• “We’ll sit down with the rep as many times as necessary — often as far as a year in advance of making any termination decision. When we meet, we try to identify any of the areas of dissatisfaction, and if the rep is willing, we’ll map out a mutually-agreed-upon plan to address issues.”

Importance of Taking Action

A manufacturer who has enjoyed and prospered from the contributions of its rep councils for more than 10 years points to what he refers to as “calls to action” as an important key to its success.

“From the very beginning several years ago, we were diligent in our note-taking during our council meetings. One thing that was missing, however, was assigning a task to an individual and then putting a date to when something had to be reported on or a task completed. Finally, after hearing from our reps that they didn’t know what had happened with all their suggestions, we made it a point to set a date by which something has to be done or at least a reason provided why a task was not completed. In addition, one individual was assigned the task. Since then, we’ve had accountability, much more has been accomplished, and our reps and we are much more satisfied with the relationship.”

Learning From the Past

When several manufacturers new to working with reps asked Agency Sales what reps were looking for in potential principals, we found it useful to refer to an article that appeared in these pages more than 15 years ago. Among important considerations that reps cited then — that are just as important today — were:

• What’s the manufacturer’s current representation? What type of agencies does it work with in other territories?
• If the manufacturer is planning a change in a specific territory, has the company notified its current representation that they are making a change?
• Why is it making such a change?
• Does the manufacturer exhibit flexibility in its contract or do they say there’s just a standard contract for all their reps?
• What territory is covered by the agreement between manufacturer and rep? Are there any house accounts?
• What’s the level of marketing/sales support that the rep can expect?
• Training — Manufacturers should communicate the types of training programs that are available and detail their frequency. Who pays — including airfare and hotel?
• Commission structure — How are quotas established and what incentives exist for exceeding those quotas? Are there incentive commissions for new product pioneering?
• Termination procedures — Reps want to be sure that their contract with the manufacturer covers termination considerations (e.g., what the severance agreement is, whether extra commission will be given considering the number of years the rep has represented the line).

Welcoming Reps

When a manufacturer recently contacted Agency Sales, one of the first things he said was that the message concerning the efficiencies and economies of using independent manufacturers’ representatives is one that is being enthusiastically received. In this case, the company’s national sales manager has been charged with supervising the rep sales force at two different manufacturers over the last decade. “I know it’s taken me quite a long time, but I finally get the real point of using reps. Maybe it’s just that they better meet the needs of the companies I’ve worked for, but the fact is that they save us money in our sales efforts. More to the point, however, is the fact that we get exposure in front of the customer on a much more regular basis than if we had our own sales force.

“I’ve been out in the field on sales visits often enough to realize that when the rep makes a call, we’re not the only company that he’s going to talk about. The relationships our reps have made with their customers have led the customer to expect the latest on a number of companies’ offerings — and that’s the real benefit to us. Since we’ve carefully chosen our reps, we’re well aware of the fact our products complement their entire line. As a result, every time the rep walks through the customer’s door we have a sales opportunity and it shows on the bottom line.”

Incentives Work

It was truly refreshing to hear from one manufacturer who was realistic enough to appreciate the fact that he wasn’t always the first line that his reps spoke about when making a call. This wasn’t the case in all of his territories but was more common in those areas where the product line didn’t have that much business.

As the manufacturer related his experience, “In those areas where we didn’t have much business, we just figured it was in our best interest to simply expand our rep network. We had some difficulty finding reps primarily because of the lack of business, but eventually we signed on reps who were enthusiastic about working with us. From the beginning we realized we weren’t getting as much attention as some of their other lines, but we then added an incentive (i.e., increased commissions) that proved to be effective in making up for the added cost incurred by reps to get the business. This has proven to be effective both for us and the reps, and our business now is right about where we think it should be.”

The Problem With Forecasts

When two reps engaged in a conversation during their virtual networking meeting late last year, what they were speaking about offered some fairly valuable input for manufacturers that work with reps.

One of the reps voiced the complaint that through the third quarter of the year, his performance was only 40 percent of what one of his principals had planned for in his forecast. When he was asked how a specific target had been arrived at for that time, he responded, “That’s the problem — the principal came in at the beginning of the year and informed me that ‘Here’s the target.’ They neither asked for nor wanted any real-world input from me. I could have told them from the start that there just wasn’t that amount of business there. There was no way I could have even come close to their out-of-this-world projections. In addition, they hold up to me what a rep in another territory is doing and they fail to acknowledge the fact that there’s absolutely no comparison between potential business in our respective territories.”

Finally, he bemoaned the fact that “All I really want from any of my principals is two-way communication and planning. I’d say that’s what I have with the majority of my lines. If they’d come in at the beginning of the year, ask for my input and give me their hopes and expectations, which should be based on realistic goals, then we’d both be a lot happier at the end of the year.”

Accepting the Benefits of Synergy

Admittedly there are a number of manufacturers that don’t immediately fall back on the use of the word “synergy” when they speak about the benefits of working with independent manufacturers’ representatives. But while they may not use the word, they do admit to knowing what it means when they hear it. For instance, in a recent conversation with one manufacturer, he took pains to explain that an important consideration for him when selecting a rep is that the potential rep “not represent the same products (from other manufacturers naturally), but rather products that customers of ours would also need.”

When offered the chance to use the word “synergy,” he responded, “Sure, that works for me. That’s exactly what I’m looking for in my reps. I want each of them to have plenty of opportunities to get inside the customer’s door with his full offering. Once a rep does that, I know I’ll get my fair time share of his time.”

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