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For the startup of an independent manufacturers’ representative firm, selection of manufacturers the agency decides to represent is critical. For an established agency, seeking the right manufacturers to add to existing lines is important for continued success.

Decide on an Industry

For a single-person rep agency, it is important to select manufacturers from the same industry. For a multiple-person agency, adding manufacturers from more than one industry is fine, but each salesperson should focus on one industry alone. A successful independent manufacturers’ rep must clearly establish in each customer’s mind the best rep to call for technical assistance, service and to place orders. If a rep sells products from more than one industry, customers become confused when to call which rep.

How do reps select their industries? If you are successfully working for a manufacturer who uses reps or is planning a transition to a rep sales force, this is ideal. If this manufacturer offers you a territory where you live or where you would consider moving, sign a rep contract and lock into this industry.

If you are not in this situation, pick an industry based on your work experience or in which you have customer contacts, or an industry recommended by knowledgeable friends. My career began in the commercial construction industry. I represented a small group of products as a sub-rep for a family friend who was a successful independent manufacturers’ rep. I also represented my father’s roofing and waterproofing subcontracting services.

Locating Manufacturers

Whether you are starting your manufacturers’ rep agency or are a seasoned rep needing additional manufacturers, be selective. This is a challenge. Leading manufacturers in your industry who have a sales force of manufacturers’ reps may already have representation in your territory. How do you locate and contact manufacturers?

Contact rep friends with manufacturers you represent who work in different geographic territories for a list of other manufacturers these friends represent. Ask for an introduction to these manufacturers and/or a person to contact. Verify the success they are having with each manufacturer and other details they can share.

MANA has an excellent system to help reps locate existing manufacturers using their RepFinder® website or mobile app.

For each manufacturer you consider, check their website to learn about their products and organization. Would their products be complementary to the current products you sell?

A critical step is selecting the right manufacturers. If you are starting a rep agency, you may need to begin with manufacturers that do not have a rep in your sales territory. As early as possible in the development of your “stable” of manufacturers, locate a manufacturer with one or two products that can become your “horse” to ride to success. A “horse” is a manufacturer that, with proper sales representation, can generate a large sales volume and commissions and become dominant in your sales territory.

I was fortunate. One of the manufacturers I added within the first year was a horse. The rep had passed away suddenly. The manufacturer needed to appoint a replacement quickly. I was in the right place at the right time. The sales volume of their product, with complementary manufacturers’ products I added, allowed me to build my architectural construction product business rapidly. We grew to an organization of six employees in a little more than 10 years.

These horses may not run forever. This first one had a run of 14 years before product problems and market conditions caused me to find another horse. Be vigilant about watching for replacement horses.

I did not find a second “horse” manufacturer until 15 years later. The products of this second manufacturer generated sales and commissions to heights I had never experienced in my entire career. The commissions carried me into a comfortable retirement 11 years later.

Another type of “horse” manufacturer provides steady income while requiring a modest sales effort. I was fortunate to represent two of these manufacturers during my 46-year career. One of the reasons why our relationship worked well was both manufacturers, historically, used only an independent rep sales force. Keep a sharp eye out for this type of manufacturer. They are golden.

Balance of Manufacturers

A rep agency, whether it is a single-person or a multi-person agency, requires a balance of manufacturers and products. Each agency needs a sufficient stable of manufacturers to build a profitable business, but not too many manufacturers. When you sign rep contracts with manufacturers you must be prepared to meet their requirements and expectations. If an agency signs contracts with too many manufacturers, the agency may not be able to build a strong personal relationship with each manufacturer.

A correct balance is also important to provide the highest level of service to your customers. If an agency sells too many products, customers become confused about who to call for technical assistance and how to place their orders.

The manufacturers in your stable should be complementary to each other. When you call on a customer for one manufacturer, introducing one or two other manufacturers’ products should flow smoothly. This ability to present more than one manufacturer’s product during the same sales call is one of the major benefits for manufacturers to use an independent rep sales force.

All the manufacturers you represent are not equal. Some produce high sales volume and commissions. Others produce lower sales and commission. A rep cannot predict if one of the smaller producing manufacturers might become a “horse” in the future.

To maintain the correct balance, calculate a line profitability analysis at least annually. If any manufacturer’s sales volume does not provide a profitable return on the sales effort expended, cancel that manufacturer. Replace them if necessary. Make the change in a business-like way. Do not burn bridges.

MANA is an excellent resource for information about line profitability analysis.

Conclusion

Keep each salesperson’s focus on one industry. Sign sales contracts with the right number of manufacturers to be profitable. Maintain a balance of manufacturers within your stable. You will enjoy a successful, rewarding career.

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