Part II: Building for the Long Term

An independent manufacturers’ representative must maintain strong relationships with the principals they represent to be successful and profitable. Part one covered the first four tactics a rep should always remember: Agree on a fair contract, maintain regular communication, the rep‑principal relationship, and treat the customer service group as a customer. This article will cover the remaining four.

Follow Company Procedures

This concept can present a challenge for a rep, particularly if some company procedures are out of line with the procedures and principles of the rep’s organization. Following company procedures is part of the philosophy of acting as an employee. Each principal has different procedures for their sales operation, including quoting, entering sales orders, reporting, and providing key information about customers and general market conditions. Properly and professionally handling this part of a relationship with principals is a key element in developing a long-term relationship that is profitable to the principal and to the rep. The rep must find ways to operate with each principal and their procedures in a way that does not burden the rep with undue overhead and reduce his time for selling.

Each principal also has their own philosophy of what they expect from their reps regarding sales reporting. This might include sales call reports, reporting on the status of quotes, providing periodic sales forecasts and reporting on marketing conditions in their territory. For a strong relationship, a rep must come to an agreement on the appropriate type and frequency of reporting to each principal that also works for the rep.

Some manufacturers put full confidence in their reps and treat them as professional salespeople. These types of manufacturers only expect reps to quote all projects in their territory, work with their customers to close as much business as possible, and to periodically provide a summary sales report.

Larger manufacturers and even some smaller ones who fully realize the importance of serving their customers are using various CRM systems to collect customer data. A CRM as defined by Sales Force, who sells one of the most sophisticated CRM systems, is a technology for managing a company’s relationships and interactions with customers and potential customers. The goal of all CRMs is simple: increase sales, improve business relationships, and improve profitability.

A rep must hold his ground about how much time a CRM system takes away from his selling time. The only resource a rep has is his time. A rep should make it clear to his principals that he too requires a reporting system to properly track leads and sales as well as to keep records related to his customer base. If a principal’s CRM system does not work for a rep, the rep must suggest a modification that works for both parties.

For a rep’s primary principals, sales-related communication should be at least weekly. Secondary principals should receive regular communication each month. If a principal does not have consistent communication and see action from a rep, it is natural for him to wonder if the rep is doing his job.

Aggressively Market to Architects, Engineers, and Building Owners (End Users)

One of the most important activities that differentiates the building materials manufacturers’ rep from reps in other industries is the need to promote principals’ products to specifying influences such as architects, engineers, and building owners. This is particularly true for reps of architectural products. It is a time-consuming effort. It requires close coordination between principals and the rep to be successful. The final sale is made to general contractors or subcontractors or sometimes directly to building owners.

Most building material manufacturers understand the critical role of the specifying influences in the selling process, but only a small percentage of manufacturers know how to train and manage a sales force to be successful in having their products listed as the design standard or at least as an equal in specifications. Some manufacturers have a separate group of employees in business development who spend all their time marketing to architects, engineers, and key accounts. Others expect the sales team to perform this marketing function as well as quote, close sales, and build relationships with both the specifying influences as well as the buying customers.

When a principal expects a rep to perform this marketing function in addition to closing sales, the rep and principal need to have a clear understanding of how much time the rep is expected to dedicate to performing this marketing and how much time is to be dedicated to closing sales and developing close personal relationships with customers. Commissions are normally paid on sales dollars, so the commission structure should reflect the cost burden the rep has in marketing to the specifying influences. The rep must insist on full control of this effort with each principal because it significantly affects the rep’s profitability.

Travel With the Sales Manager

It is important for sales managers to travel to meet face-to-face with customers to develop the principal’s direct relationship with his customers. These visits give the sales manager an understanding of the ever-changing market conditions the rep faces and assist a rep in the handling of manufacturing and/or customer service problems. The visits also allow the sales manager to provide market feedback to the rest of his management team to improve existing products and customer service as well as to develop new products customers need. The rep needs to have an understanding with each principal as to how these trips will be coordinated.

• Does the sales manager travel alone or with the rep?
• How often are these travels required?

If the principal and the rep have a good, long-standing relationship, the sales manager might periodically meet with customers without the rep. He might receive feedback that will assist the rep in serving his customers more effectively. In most cases, the sales manager and rep should travel together, so they can make a joint evaluation of each customer. Both the principal and the rep need to have a clear understanding of what actions they must take together to be the preferred supplier for each customer.

I have found most sales managers find it difficult to carve out time to travel to meet customers, so frequency is normally not a big problem. It is most valuable for sales managers to meet with customers when there is a large order to negotiate or a major problem to be resolved. Customers appreciate seeing the sales manager accompanying the rep. Such visits make the customer feel important in the eyes of the manufacturer and help solidify the personal relationships for all parties. The rep should set the agenda and lead the meetings.

Maintain an Appropriate Number of Principals

The total number of principals that a rep has in his stable of manufacturers depends on many factors including the size of a rep’s sales force, a rep’s sales and profit goals, and the operating efficiency of his organization. These must be balanced against the sales volume each principal is expecting.

Most principals prefer that a rep carry as few lines as possible, so the rep will spend more selling time on each principal’s products. In my 40 years of rep experience, the 80/20 rule provides a general guideline for reps. Approximately 20 percent of the principals represented account for approximately 80 percent of a rep’s sales volume and profit. The 20 percent group is called primary principals, and most all the rest are secondary principals. There may be a small number of tertiary principals. These might be ones that have products that are complementary with other lines, take very little effort to meet the principals’ expectations, and at the same time provide a decent, marginal income.

All principals must be treated as important customers. Primary principals deserve a rep’s full attention and commitment to increase sales in line with agreed-upon sales goals and other actions that are part of a market plan. Appropriate, timely sales reporting, regular communication about quoting and ordering products, and a positive and friendly relationship with customer service personnel and all levels of the principal’s management team are critical in developing a long-term profitable relationship for both the principal and the rep.

In many cases, secondary principals are not very demanding regarding total sales, reporting requirements, and general communication, because they understand that the potential volume for their products does not compete with the potential of the primary principals. They are more easily satisfied by whatever sales volume the rep can generate and have confidence that the rep will do his best to provide the highest level of customer service to build that secondary principal’s reputation in the territory.

Establishing appropriate operating procedures for each group of principals allows a rep to optimize the number of principals he represents and maximize his income. Although at any one time a principal may question the number of lines a rep carries or the attention the rep is giving to a certain principal, if the proper procedures are in place, the rep should be able to explain how and why he is generating an appropriate sales volume for the territory for each principal.

Conclusion

In conclusion, I’ve found building a long-term relationship with each principal requires constant focus and communication. At the same time building these relationships develops life-long friendships and makes selling more fun. I have seen it happen. I have lived it. Make the most out of every professional relationship to enable success to find you.

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