It’s very satisfying when the message promoting the value of reps gets repeated by an outside source. Recently, the following came across our desk from a company that provides a matchmaking service for manufacturers and reps. It’s interesting that the benefits cited by this company so closely echo the message that has consistently been repeated for years by Agency Sales and MANA.

According to the company, it’s important to consider the type of product that the manufacturer is taking to market. Off-the-shelf products tend to be sold through resellers. The reseller’s value add is same-day delivery. The more engineered the product becomes, on the other hand, the more complex the selling effort. Products such as these will require product application knowledge and are traditionally sold through direct sales or independent sales reps.

Keeping in mind that most commodity products are sold through resellers, what are the advantages and disadvantages of a direct salesperson vs. a sales rep?

• The direct salesperson requires a base pay, benefits, bonus, expenses, training and management.
• The sales rep only gets paid on results.
• The direct salesperson requires time to develop a customer base.
• The sales rep has established accounts with established personal relationships.
• The direct salesperson is dedicated to selling only your products or services.
• The sales rep normally carries a number of product lines. As a result, with sales reps, you must compete for their selling time.
• The direct salesperson has to be managed.
• The sales rep sets his or her own hours and work schedule.

Perhaps the main message to take away from this is that if your company decides to go with sales reps, then you must decide how to find, evaluate, contract, train and manage them. A successful sales rep should be someone carrying products and services that complement your products and services. The existence of complementary lines ensures that they are calling on the right customers and individuals within those customers who buy your products and services. Success in evaluating, contracting, training and managing sales reps is dependent upon the products and industries.

Defining the Word “Nice”

Since Agency Sales readers and MANA members have long addressed the subject of what makes a “nice” principal, comments on that subject from one rep proved to be very timely and interesting.

According to the rep, “A nice principal is one who understands reps as well as what the relationship should be, and values that relationship.

“We recently resigned a line that annually paid us more than $25,000 in commissions. That’s not a large amount as far as lines go (it actually ranked a distant third in our lineup of 10). The reason we gave up the line was that they were preparing in-house salespeople to become company salespersons. It became obvious — communication was bad, and conflicts with customers were increasing. When the first move to in-house sales was made in another territory, it was known immediately because all the reps in our industry stay in touch. It was sad this happened because the in-house guy that took my territory has 14 states to cover. We gave the principal concentrated coverage in four states, but they wanted ‘control.’ We felt obligated to give up the line and move on to develop something else that would be ‘ours,’ instead of building what would belong to someone else.”

Early on, the rep in this case emphasizes the problem of poor communication. In cases where the rep and principal work well together and the rep has truly been made to feel as if he’s a member of the “team,” communication seems to be the key.

Staying With Who You Know

A business consultant recently got in touch with Agency Sales and in the course of a lengthy conversation, he made the case that existing customers are the best customers for manufacturers and reps. At the same time, those customers offer the best opportunities for increased business. After emphasizing that point, he followed up with a few pointers on how manufacturers — by working closely with their outsourced sales force — can realize that added potential with existing customers:

• Provide value-add for your customers — critically appraise their businesses and determine how you can be their problem solver and solution provider.
• Keep service on the front burner — whenever and wherever customers need support, ensure that it is provided.
• Keep in touch — the best way to learn what the customer’s needs are comes from being in front of them and communicating.
• Treat them as a partner — let them know that you’re in this with them and their satisfaction is your ultimate goal.

He tied all these points together by stressing how an outsourced sales force is one of the most practical and effective means of achieving these goals.

There’s No Replacing “Feet on the Street”

A manufacturer who was fully engaged in building his European sales operation recently offered, “We’re convinced it’s the local rep who provides us with the really effective ‘feet on the street’ in Europe and other international countries. At the same time, however, that’s the way we’ve built our U.S. business.

“We’re located in the Midwest, and the majority of our executives were born and bred there. As a result, I’m not so sure what we think we know can work in all corners of the country. That’s why we’ve built such an extensive network of independent reps that cover all 50 states. We’ve never done it any other way — maybe because we’ve been convinced by our success. But here’s the way we look at it:

• “By working closely with reps, we’re better able to budget for our sales and marketing expenses.”
• “Since we’re so educated and oriented toward our one small corner of the country, we’d never be able to scratch the itch that potential customers in the south or northeast need scratched.”
• “We’re hardly the biggest manufacturer in the world. We simply can’t afford to build a direct sales team that would provide us with the coverage we presently enjoy with our extended network of independent reps.”

The Move to Reps

A rep who was just completing a two-year term as the chairman of his rep association had some interesting thoughts on the continued move by manufacturers to contract with independent reps. According to the rep, “There’s a definite move on the part of manufacturers to either turn their sales operations over to reps or to incorporate reps into their blended sales strategies. There are a number of contributing factors to this trend, not the least of which is the ever-increasing cost of maintaining a direct sales force. Added to that, however, is something I’ve heard from a number of manufacturers, and that is the difficulty they’ve had over the years in keeping personnel in a given territory. One manufacturer in particular let me know that during the last 10 years, the longest period of personnel continuity he’s enjoyed in any one territory has been three years. That what’s drawn him to the concept of using independent reps.”

Succeeding With Help From Friends

A manufacturer who had recently made the move from a direct sales force to reps was quick to offer thanks to several of his non-competitive manufacturer friends for providing him with valuable guidance. According to the manufacturer, “We had reached the point where we knew there was no way we were going to reach hoped-for sales numbers and still be able to keep our operating costs in line. So, from the outset, we felt it was pretty much of a ‘no brainer’ that the only way for us to go was with a network of reps who would only get paid when they made the sale.”

He continued, “Since we were fairly new in a number of the geographical markets we were looking to penetrate, it worked in our favor that the agencies we chose to partner with had been in business for a long time. As a result, while our product may have been new, the agencies were well established with all the buying influences in their territory. That worked well to provide us with the quick start we felt we needed.”

Not done yet — then there was the issue of widely choosing agencies that carried a line of products that were already complementary to the products this manufacturer offered. “Sure, we were interested in establishing our brand name with customers, but that job was going to be extremely difficult if we couldn’t get our foot in the door. Because we chose our reps carefully, they got their foot in the door in a hurry. Following that, it was the rep’s reputation and the synergy of the entire product line that took over.”

This manufacturer was quick to admit that he’s only been using reps for about18 months, but “If the start they’ve provided us continues, we’re going to be more than satisfied.”

Fixing a Problem — With Help

When a commission payment problem arose for a manufacturer and her rep, the manufacturer admits that the only way they felt they could fix it long term was by asking the rep’s help. According to the manufacturer, “Thankfully when the problem came up, the rep didn’t just sit there and let it fester. Instead, they let their views be known, we listened to them and took action. Here’s how we look at the relationship. We’re here to help the rep as much as we can. After all, fair is fair and by helping them, we help ourselves.” She adds that what the company has heard in response to the manufacturer’s action has been positive. “We’re one of the companies they believe is making every effort to do things the right way — and they tell other reps about our efforts. That benefits all of us.”

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