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When a MANA member described an issue they encountered when negotiating an agreement with a prospective principal, she got plenty of feedback from her rep peers.

According to the rep, “The principal in question does not want to define a territory and they want to work on an ‘account-by-account’ basis. They are not offering any exclusivity; they demand the agency be exclusive to them. They have yet to offer a defined reason other than it ‘is not in their culture to offer exclusivity and it’s something they haven’t done in the past.’ They have even hinted that it is illegal for an agency to rep other competitors. They are not offering any pioneering contribution.” The rep concluded by asking, “How have others handled this type of negotiation?”

It really shouldn’t come as any surprise to manufacturers that reps’ responses, in general, were in the negative. The first bit of advice from another rep was to “Walk away — as fast as you can.” The manufacturer can continue to hire as many reps as they can find in your backyard who are willing to sell the line. Many of those reps can take market share from you. Essentially this same manufacturer becomes your competitor and if they give an account in your region at a competitive advantage over your customers, your commissions all go away. We will not sign any new lines that do not give us an exclusive contract for the entire channel of customers we specialize in nationally.”

Another rep offered similar advice, “Don’t walk, run away! You can bet this principal will be a problem once you do all the hard work and get them some business. I see commission, house account, split commission, and commission reduction problems down the road. Look for a principal that understands that you are running a business and not a charitable organization for principals.”

A consultant wasted no time weighing in when he offered, “It is a fundamental flaw in management thinking that a salesperson only does their job when they get an order — this is true for a rep or a direct sales force. There were many deals my manufacturers messed up (design, QC issues, etc.) when I was a rep and the other deals that fell apart because the customer dropped the project altogether or moved it elsewhere — all deals which took my professional selling time to develop and nurture (which is really doing my job), but for whatever reason didn’t bear fruit as the result of uncontrollable non-sales related circumstances. Exclusivity is merely a means to even that score — and if we play the game long enough, the score always evens out.”

Finally, another rep concluded the discussion when she noted, “A job-to-job rep contract with no exclusive territory is worthless. Actually, closing the order is only 10-15 percent of the required effort that a sales rep puts into a project. Manufacturers that do not understand that basic principle are doomed to failure. The competitors or manufacturers that do understand will eat them up and bury them very quickly.”

Why “Culture” Counts

After a manufacturer was complimented by one of his longest-standing reps for the positive way that the manufacturer interacted with his reps, the manufacturer was asked why an agency would hold him and his organization in such high esteem. The first word out of the manufacturer’s mouth was “culture.” He explained that from the beginnings of the company’s relationship with reps, “We decided the best thing we could do to make this process work was to involve the rep in our company culture. By that I mean if we treat our in-house employee one way, why would we treat our outsourced reps differently?”

He continued, “Our workings with reps go back close to half a century. Before that, our family-owned business strictly used factory-direct salespeople. As we grew, however, it was our feeling that we couldn’t stand the expense and what we determined was a lack of productivity by our sales force. Once we lined up with a network of reps, we were faced with what we felt was a different management challenge — how do we direct, communicate, educate, etc., a team of salespeople that was not directly under our control? Our answer to that question was — the same way we treat our own salespeople.

“In viewing how we treated our own people, we focused on the fact that we always paid them accurately and on time; we involved them in product marketing and sales strategies; we provided them with sufficient inside sales support including product samples and literature. With all those thoughts in place, it was really quite easy for us to work with our reps.”

The manufacturer went on to add that to ensure that relationship between reps and the manufacturers remain smooth over the years, “We’ve implemented a rep council that meets at least twice a year. Among many benefits that the council provides is the ability to head off potential problems before they become major hindrances.

“It really all comes down to treating reps as you would treat a member of your corporate family. They’re our eyes and ears in the field. If you want them to see and hear what’s going on out in the field, you’ve got to embrace them just as you would someone who reports to the factory every day.”

Why Reps Are Attractive

In a follow-up phone call with a manufacturer who sat in on a MANAchat earlier this year, a manufacturer went on at some length describing why his alignment with a network of independent manufacturers’ reps has worked out so well for him. As an aside, he took some time to describe some of the attributes he found especially attractive in the reps he’s had a lengthy tenure with. According to the manufacturer, “The rep I’m going to align myself with had better be someone who’s well-rounded and isn’t just focused on closing the sale. What I truly value is the rep who thinks strategy and planning — not just how many of what product the customer says he needs. And I’m not done yet — the rep I’m looking for should be as interested in the business pages of the news and Wall Street as he is in the sports results. He’s got to be someone who’s always one step ahead of the customer, not only anticipating his needs, but exceeding meeting those needs even before the customer realizes what his needs are. In other words, he’s got to possess a mindset that says, ‘I’m going to be there waiting for the customer.’”

Literature as a Selling Tool

Here’s how one manufacturer explained why printed literature still occupies an important part of his selling process. “Not every customer out there — or every rep — is in their 30s or 40s. There are still plenty of old-timers out there who, while conversant with the computer and the internet, still feel more comfortable holding a printed piece of literature in their hands.”

Admitting that he hardly makes use of as much printed material as he did 20 years ago, here’s how he makes current use of printed material:

• Reps are automatically provided with generous supplies of literature that describe the company’s background and capabilities. There’s also a full-line product catalog (both printed and online) combined with individual product data sheets.
• Every piece of literature is kept up to date and current and all new products are supported with printed pieces.
• The manufacturer regularly checks with his rep sales force to ensure that they have all the printed pieces and new product information that they need.

Time Is on This Manufacturer’s Mind

One manufacturer described her company’s initial forays into the world of rep selling with these words: “When I made the change from a factory sales force to a rep network one of my initial concerns was how I would know whether the rep is spending the proper — or at least what I thought was proper — amount of time on my lines.”

She continued, “I heard from other manufacturers how they wanted their reps to submit reports and other regular updates on their sales activities, but whenever I mentioned such things to my reps, they pushed back, and when I say pushed back, that’s an understatement.

“After about 12 months I think I hit my stride in relations with reps. I finally realized I just wasn’t going to get all of my reps’ time, and I certainly wasn’t going to get the amount of time from them that I did with a direct sales force. When I want more of the rep’s time and attention, I make sure that there’s a real need for it. I’m not going to waste their and my time on activities that don’t contribute to our joint effort. For instance, let’s assume I’ve got a product introduction in the works. Rather than just sit there and complain that I’m not getting their attention, I’ll let the rep know ahead of time why this is important and why it’s important for them, not to mention how it meets customer needs. My experience has shown this kind of one-on-one communication works wonderfully. For their part, reps have been extremely cooperative.”

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