A manufacturer recently wrote to Agency Sales about the relationships he enjoys with several of his independent reps. This manufacturer should be forgiven for his boasting because what he wrote about shows that he and his reps know what it takes to forge a strong relationship.

Here are a couple of the reasons why the manufacturer felt he was entitled to be so proud about how he works with his reps:

• “We and our reps have worked long and hard at sustaining relationships. It’s a little like a marriage. If the little things go wrong and you start picking at each other, then those little problems become major concerns, and everyone ultimately suffers.”
• He continued by pointing to the importance of mutual response to each other’s questions, appreciation for each other’s problems, effective two-way communication, personal contact, and a true sense of partnering.

Making the Right Choice

A long-time manufacturer member of MANA reflected on some of the reasons why her company made the move from a direct to an outsourced sales force more than two decades ago.

According to the manufacturer, “We had reached a point in our corporate planning where our goal was to grow our business as quickly as possible. As we considered how we were going to meet that goal, we carefully studied the cost and timeliness involved in putting a direct or a rep sales force in place.

“In considering a direct sales force, just trying to find talent remained a chore. Once you find the talent, then in our case you have to make sure that they are all degreed engineers and then you enter the lengthy training process. After your people are trained, your sales force is then faced with the task of developing relationships in the field. This latter point is crucial because whatever field sales engineers you put into place are only going to be successful if they develop the proper business relationships with potential customers. Considering the entire process we are talking about, we’re looking at a period of two to three years. We just didn’t have the time to wait that long. The answer for us was an independent sales rep sales force, and we’re glad we made the choice we did.”

The Key to Diffusing Problems

Some interesting feedback developed when a group of manufacturers were presented with the following scenario: Conflicts may arise from the manufacturer when acquisitions or mergers occur or a manufacturer moves forward with getting into a category that a representative already is in with another manufacturer. Rather than potentially losing a quality representative, how do you view allowing the representative to manage the perceived conflict?

The consensus from the manufacturers was that they believed the most important factor in this kind of situation was communication between the rep and the manufacturer.

The manufacturers agreed that they would get the rep involved in the situation earlier rather than later — even to the extent of disclosing potential mergers and acquisitions to the rep. That being stated, each case needs to be considered individually, product by product. Even with conflicts manufacturers want to talk these situations through with reps and discuss the best result for both parties. The key is to have honest communication early and often.

Do Handshakes Work?

One manufacturer offered the opinion, “We’ve always found that a handshake agreement suffices when we decide to work with a rep.” Another manufacturer was quick to offer a dissenting view when he said, “That’s never been the way we operate, and we’re not going to change any time in the future. Here’s why: We’ve invested a great deal of time, money and effort when it comes to choosing the reps we go to market with. Once we both decide we’re a good fit for each other, it’s our desire to formalize or memorialize the relationship. That effort provides the guidelines for the relationship and goes a long way to protect each side. It draws the parameters within which each party will operate. In addition, if a rep ever approached me and said that a handshake agreement would do the job, I don’t think I’d take him all that seriously. Reps are professionals, just as we are. As a result, I think it’s important to treat the relationship professionally, and nothing does that better than crafting a contract resulting in a win-win for both sides.”

More on Contracts

It seems like forever that rep-savvy attorneys — not to mention reps and their principals — have struggled with the subject of reps who work with their principals on the basis of a handshake agreement. While there’s more and more movement in the direction of having the written contract, the subject never really seems to go away. Depending on whom you talk to, you’ll hear conflicting advice like:

• “A handshake is better than a poorly written contract.”
• “A handshake agreement isn’t worth the paper it’s written on.”

To counter those views, here’s what one experienced manufacturer advises: “We’ve always followed the practice that it’s critically important to have our reps under contract. We choose our reps carefully. That means that we spend a great deal of time searching for and interviewing reps, visiting with them and having them visit us and getting to know all of our factory personnel. Figuratively, they become a real part of our corporate family, our organization, our business culture. Having a contract ensures that both sides of the agreement are comfortable with the terms.

“It’s a very tough, competitive world that we operate in and I believe there should never be any hesitation on the part of manufacturers and reps to enter into a contract. The contract simply spells out the rules of the understanding. It would be foolhardy to proceed without one.”

Revising a Website

At the end of the year a manufacturer was initially proud when he introduced his company’s new website to its network of independent manufacturers’ reps. But as time passed, he was hard put to react to what his rep council members had to tell him about it. “Unanimously the council members let me know that I had seriously missed the mark when it comes to communication. Looking back I’ve had a fairly successful history of listening to what my reps tell me. That’s why when they said the website I had worked long and hard on wasn’t doing the job for them, I knew I had better pay attention. According to them, my biggest mistake was not consulting them from the very beginning. My thinking at the time was that the site was being put together for my and my customers’ needs, not necessarily for them. My mistake was not considering their needs. Among the things that got my attention was their desire to have a link running from their respective sites directly to mine, and once there, they provided me with a number of tips on how to make the site more useful — for them and their customers. Once again, I should have included them in the loop — like I usually do in other matters. I won’t make that mistake again.”

Don’t Forget Inside Staff

And speaking about mistakes — how about this one reported by a manufacturer new to working with reps?

“I admit I started off on in the wrong direction, but thankfully I learned quickly and changed my ways.” That’s how one manufacturer described the situation shortly after he had made the move from direct sales to independent manufacturers reps.

According to the manufacturer, “Because I no longer had a salaried direct sales force, I didn’t have the salaried rep support staff in place prior to making the move. If I was able to learn anything from the experience that I could pass along to others, it’s this — remember your reps are your ‘sales partners,’ and they need as much support — if not more — than your direct people ever did.

“Since I was saving all that money on salaries, it was the opportune time to beef up the inside staff.

“Training the inside people on how to work effectively with reps is critical. And it’s not a one-time deal — it’s an ongoing process.

“With the aid of my reps, I now regularly conduct ‘audits’ of my inside staff to ensure that they are performing at a level that makes the outsourced sales force function as easily as possible.”

The Value of Networking

Reps have long reported to MANA and Agency Sales concerning the benefits they derive from speaking to each other during various networking opportunities. Recently one manufacturer relayed to us that networking opportunities that started among the reps that comprised its rep council have grown into something much larger — and more beneficial.

“When we conduct our annual rep council meeting, we always put time aside for our reps to meet with each other so they can exchange problems they face, solutions to problems, or simply to share some of their best practices.

“It didn’t take us long to realize the benefits that came out of these sessions. As a result, what we’ve done is to take this to the next level. We’ve suggested to our entire rep network that they make an effort to stay in touch with each other. We’ve provided each of our reps with everyone’s name and contact points. The result is that many potential problems have been headed off and many of our reps report they’ve been able to employ a new business practice that prevents them from having to ‘reinvent the wheel.’ The bottom line is that there’s never too much communication.”

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