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Reps don’t work for free.

That was a major message emanating from a MANA special interest group discussion for reps who sell in international markets earlier this year. The reps who participated in the far-ranging teleconference were adamant that their levels of expertise and the time they spend to develop business for principals were too valuable to be contributed free of charge.

For instance, according to one rep, “I’m not going to spend an unlimited amount of time and money to develop business for principals without being compensated for my efforts.” To counter the desire of many principals to have their reps only be paid once they make a sale, reps who participated in the call explained that they use a variety of approaches to convince prospective and existing principals to act in a different manner. Among the approaches used are:

• Payment of a business development fee (or as this rep defined it “an export development fee”) where no existing business is the case —

In the discussion of this approach that is widely advocating for those reps working solely on the domestic front, one rep noted, “I deal in the automotive market and my lead times are usually in excess of six months — more properly in the range of two to two-and-a-half years. I’m simply not going to be spinning my wheels for that length of time without some compensation. I look at it this way: usually they (the principals) have no desire to hire a local salesperson. They simply don’t want to invest in order to hire a local, professional salesperson. That’s why I require a retainer or sales development fee usually in the range of $4,000 per month. Even if they pay that much, it’s really only a fraction of what it could cost them to hire a full-time salesperson.”

Further explaining his approach, the rep said that “If the manufacturer pays me the fee for six months, there’s a chance after that time expires that he will receive a report from me that states, ‘You’re not going to be successful in, for instance, Asia.’ I’m right up front about it. I let them know whether they’re going to make it or not. But, having paid me, you have received a comprehensive marketing study saying why you will or won’t have success. You can fight me on this and don’t pay me. That’s okay with me. Instead, what you’ve done is to pay your money — probably in excess of the retainer you’d pay me, to United Airlines and Marriott and any other service provider. All you get out of it is a lot of jet lag. Remember, Marriott and United Airlines don’t care how well your meetings go. I do.

“Now, as a part of what they receive from me for that retainer in order to let them know I’m working on their behalf, I send them progress reports and Excel sheets every week providing a summary of what’s going on. In addition, every other week, we have conference calls to answer all their questions. They see me and they have my notes, they know I’m working hard for them. They’ve really got a finger on my pulse.

“Look at it this way — We’re less expensive than a direct hire would ever be, and we perform at a higher level.”

• Payment of both a retainer and a commission —

This approach by one rep really got the attention of the other participants on the call. According to the rep who pursues this approach, “A full 90 percent of my business is international. In order to be successful, I’ve made it a habit to charge principals both a retainer and an agreed-upon commission. I don’t really have that many lines, but if I took on business with only commission compensation, I know I could have more than 200 lines to represent. But, that’s not what I want. I’ll admit, it takes more time to convince a principal to pay $3,000 to $5,000 monthly, plus commission, but it works for me.”

He continued, “I don’t really care for retainers because I don’t want the principal to be sending me a check that he doesn’t want to send me. At the same time, I don’t want to receive that check that he doesn’t want to send me. On the other hand, I love commission checks because there’s no roof, no limit, to how much you can earn.

“Here’s a description of an agreement I might have with a principal: “I require $3,000-$5,000 monthly to work for a principal when there’s no business in the territory. However, if during the first or any succeeding month, the business I generate exceeds the amount of the retainer, that amount is deducted from the monthly retainer. This agreement remains in place for a specified period of time. In other words, the commission immediately offsets an amount of the retainer. Sure, I agree this might be considered some sort of double payment, but it works for me and for my principals.”

Asked if there’s been any pushback to his approach, the rep responded, “Sure sometimes, but I don’t care. These are my terms. Having said that, you want to be respectful in your approach with prospective principals and you have to make sure that both they and you are satisfied with the arrangement. You have to be sure to let them know that they’re getting value for paying. This arrangement really motivates me to work for my principals because after six months or so, I want to make sure I’m still working for them and the checks keep coming in.”

Compensation wasn’t the only subject covered during the special interest group call. Among the other subjects covered were:

• Finding international principals — There appeared to be agreement that international trade shows were the ideal environment to locate prospective principals. One rep volunteered, “I don’t have any difficulty finding principals, usually they find me.”
• The need for written contracts — Just as reps operating domestically, this group of reps was adamant that having a written document prepared by a rep-savvy attorney was the only way to go to business with an international supplier. It was emphasized that MANA’s list of attorneys was a preferable way to locate an attorney. It was also cited by several reps that in their experience, principals operating on the international stage were very reliable.
• Supplemental staff — Having local “boots on the street” was stressed for any reps working internationally. Among the examples where reps cited they found reliable people to work for them in foreign countries were: “12 years ago I moved my operations from Vietnam to Singapore. To do that I hired an ex-military man to run my operations.” Another rep explained that he hired a retired nurse to work for him selling medical supplies in Dubai. Commenting on the benefits of having these local “feet on the street,” one rep said, “I like having people out there working for me while I’m sleeping.”
• Languages of commerce — The group emphasized that while English tends to remain the language of commerce, in order to be successful in Latin and South America, Spanish appears to be mandatory.
• Business referrals — On the subject of rewarding individuals who refer business to them, one rep kicked off the discussion by saying, “I have written referral agreements in place, but nothing ever seems to come of them.” When she heard that, another rep explained, “I have an informal referral policy that I refer to as ‘beer money.’ If someone refers business to me and it’s a successful referral, I’ll send them one percent of the commission for the life of the project. While this might not be much in most cases, the first time I did this the contract was so large, I sent a check for $8,000 to the individual who referred it to me.”

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