© Myvisuals | stock.adobe.com

The similarities of reps working with principals and reps working with sub‑reps were evident over the course of a MANAchat. High on the list of those similarities were how and where do reps find sub-reps, and once found how do you work with them effectively and pay them fairly?

The problems that reps face in finding sub-reps were evident early on in the conversation when the question was raised “Why would a rep firm want/need to engage with a sub-rep?’

In answer the group of reps participating in the chat emphasized that often a manufacturer will place demands on their rep firm that require the firm to seek extra help or coverage that they can’t normally provide with existing staff. In addition, demands from the territory might require additional feet on the street which the agency — many times a single-person operation — can’t provide personnel-wise. When these events occur, it may be time to seek help in the presence of a sub-rep.

The situation was probably best described by one rep who explained, “We operate in California, and it’s expensive to work and live here. We’ve reached out to more than 12 rep firms to work on a sub-rep basis and only two got back to us. Whatever you propose to a sub-rep has to be worth their while or they’re not going to get back to you at all.”

Then the question was posed of how and where to find sub-reps. “The biggest challenge I’ve faced when it comes to finding them,” according to one rep, “is to locate reps who are really invested in the business. I’ve been working with sub-reps for more than five years and have had mixed results. Over that period of time, I’ve only had three that have really panned out.”

Admittedly the term “mixed results” fits many of the reps’ experiences working with sub-reps, but when the relationship does work out it can prove to be very beneficial to both parties. As an example, a rep firm recently profiled by Agency Sales described his successful beginning as a rep as owing itself to the successful relationships he had sub-repping for three other rep firms. Once the sub-rep got on his feet, he was able to gain direct lines for himself and left the sub-repping relationships on good terms.

Finding Sub-Reps

When it comes to locating potentially good sub-reps, one rep on the chat explained, “I work primarily with medical devices, and I’ve made it a habit to regularly attend their industry’s annual meeting. It all comes down to networking. Meetings like this are always populated with valuable potential sub-reps.”

Another rep noted that when he was seeking to hire some sub-reps “I contacted a woman who previously was in purchasing for a large manufacturer. She had dealt with more than 20 rep firms over her career. She was familiar with who reps were and what they did. She was a natural fit for me. She did a great job when it came to chasing them down.”

In addition to good old-fashioned networking, another rep touted the use of LinkedIn when it came to locating potential sub-reps. “We had a company contact us to sub-rep for them primarily because when they found us on LinkedIn, they learned that we repped several synergistic lines. I’ve worked with them for several years and it’s worked out very well.”

The last rep quoted raised an important subject that was of interest to all the other reps on the chat. According to one rep, “It’s important that when you consider working with a sub-rep that his lines are synergistic with your lines. Just as a principal values your line of synergistic products, so should you take that into account when considering whether to work with an agency on a sub-rep basis. You want to make sure that the lines he’s repping for you have an ample opportunity to be considered by his customers.”

If a rep is lucky enough to link up with other agencies on a sub-rep basis, they are then faced with a number of questions they have to answer:

• How are sub-reps paid?

When the subject of compensating sub-reps was raised, a variety of suggestions were offered. “There are many ways to skin the cat,” offered one rep. “In general, commission splits that were mentioned ranged from 25%–75%, 30%–70% and 40%–60%, with the larger portion going to the rep. However, it was offered that “If I’m the one who has to pick up the phone to verify the customer, mail them a brochure, and then direct the opportunity to the sub-rep, I’m going to receive a larger part of the commission.”

Another important part of the conversation was that you want to make sure the sub-rep has some business to work with — “No one wants to work for free.”

• Competing lines?

One rep who used to work as a sub-rep but is on his own now offered the following view of competing lines: “It’s inevitable that the subject of the sub‑rep carrying competing lines is going to come up. I have my own base lines and they (the sub-rep) have their own lines. There’s always going to be some new product that is going to be added. As soon as the sub-rep adds a new product that may be a great opportunity for him, you can have a problem. That’s a subject that has to be discussed up front with any sub-rep you’re dealing with. We’ve been able to solve that with constant and good communication up front.”

• How are they compensated for travel and expenses?

“My sub-rep pays for his own travel and expenses.” Another rep noted that when he worked as a sub-rep, “I never took on anything that involved airfare. I also never submitted expenses. I covered those myself.”

• How much time will they spend on their sub-rep lines?

“Once again, this is just like our relationship with our principals. If I’m giving someone (a sub-rep) a lead and they do the grunt work and they have another product they can sell, that means more contact time with the customer for me. What I’m looking for in a sub-rep is someone who is a constant contact with potential customers. That’s good for me as long as I keep an eye on it. It all comes down to hiring the right people.”

• Are contracts necessary?

“Just as you must have a written contract with your principals, so too should you have one with your sub-reps. The sub-rep is not a direct employee of yours, just as you are not a direct employee of your principal. Keep that in mind. Remember what you’re striving for here with your sub-rep is a strategic partnership. You’re working together on strategic planning and completing sales.”

Then there’s the subject of “What if you hire a sub-rep and they don’t do the work?” You have to have a termination clause written into your agreement so you can cancel the relationship. If the sub-rep is getting a good-sized check from you, then that means something is going on. If you’re paying him little or nothing, goals obviously are not being met. It’s really no different than the agreement we have with our principals.

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