Whether you are already committed to the independent manufacturers’ rep business model, are switching from direct sales to rep-based sales or are just starting to build your sales force, there are many factors to consider.

Here are five of the most important factors to consider when choosing a rep company:

1. Synergy between the rep’s lines and your products and/or services.
2. Reputation and longevity in the territory.
3. Number of existing lines.
4. Number of outside and inside salespeople.
5. Long-term plan.

Let’s drill down a bit deeper.

Synergy

“The interaction or cooperation of two or more organizations, substances, or other agents to produce a combined effect greater than the sum of their separate effects.”

Synergistic selling is the foundation under every successful representative agency, and also the main reason why selling through independent representatives is a great alternative to direct sales.

I began my career in the manufacturer’s representative business in 1986 as the junior salesperson on a six-person team. Most of our lines were high-technology components and instruments related to vacuum, flow, pressure and temperature, and our customer base was a mix of industrial users and OEMs and research facilities. I had spent the previous six years working for one of those lines and thus naturally focused on that line in my initial sales efforts. I quickly realized that approach would only take me so far; I had to learn the other lines to be successful. Shortly thereafter, the value of product line synergy was crystal clear. Customers using Line A also had an interest in Lines B, E and G, and often provided referrals to colleagues who might be interested in Lines C, D and F, and so on. Making calls and appointments was easier. Providing customers with added value during sales visits was easier. The cost/benefit analysis for making a sales call improved. It was like magic, and my sales grew year after year.

When a rep company has synergistic (also called complementary) product lines that are marketable to the same customers, they can provide fast market entry (or resurgence if sales are down) for your product line in that territory. And they can successfully maintain and grow relationships with your end customers over the long term because they have more reasons to be in touch and more opportunities to learn what is going on.

Note: You want a rep company that is already calling on your prospective and/or current customers but does not have a line that is directly competitive* with yours. Also, make sure the rep’s geographical territory matches well with your needs. Be cautious with starting a new relationship based solely on plans to expand into new markets and/or new territory.

Reputation and Longevity in the Territory

Look at this from two perspectives. First, your future rep, while independent, will be an extension of your company. You need a rep who will protect and enhance your good reputation and will conduct business ethically. Second, you need a rep that knows how to run their business and knows how to sell. Talk with existing and/or prospective customers in the territory.

Two simple questions to ask:

• Are you familiar with (rep company)?
• (If yes) Would they be a good choice as our field rep to call on your company?
• (If no) Can you recommend a local rep to handle our line at your company?

Being established for a long time in the territory is generally better, but not always. The longer a (synergistic and reputable) rep firm is in a certain territory, the more certain you can be that they already know how to create sales and grow your business; but don’t automatically count out the newer rep. Look deeper into the sales histories of the key personnel to find out how extensive is their network of contacts in the territory. This also ties into the next two items.

Number of Existing Lines

There is no magic number, but there is usually a strong relationship with #1 synergy, and #4 below. The more synergistic the rep’s lines, the more lines a rep can effectively manage. That said, generally a very small rep firm will max out at 6-12 lines, whereas a larger rep company can often professionally manage more lines, sometimes many more, depending on how the account and line responsibilities are assigned. Candidly assess where your company would likely stand in terms of time allocation rank among the rep company’s existing lines, and compare that to your perceived needs. If the result does not match up well, keep looking.

Number of Outside and Inside Salespeople

Sometimes you will be wildly successful partnering with a very small rep firm, and other times a larger firm is required to provide the coverage and account penetration you need. Your main concerns need to be: first gaining the rep firm salespeople’s mind share, and second, the percentage of total available sales time your line will be presented to and/or discussed with your current and prospective customers. If your products or services are highly specialized, you are usually better off focusing on the quality and expertise of the salespeople as opposed to the quantity. If your products or services are targeted to a broader market and do not require a highly technical sell, larger firms are often your best bet because the focus is more on breadth of coverage. Larger firms also tend to have stronger inside sales support, which plays a larger role with broad market product lines.

Long-Term Plan

Some questions to ask:

• What is the firm’s ownership structure?
• Is there a business continuation plan in place?
• Do you plan to grow your team over time or maintain your current team size?

Good luck finding your next great independent sales representative!

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* Most principal-sales representative agreements have a strict non-compete clause. However, on occasion a gray area will exist, i.e. the rep has a line that presents a partial conflict but would otherwise be an excellent choice for the majority of your offering. There are different ways to address this issue, but that’s a topic for a separate article.

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