For an independent manufacturers’ representative agency to operate profitably there needs to be a balance between the primary and secondary group of principals. The primary group is composed of manufacturers that normally account for 75 to 80 percent of total sales and profits and the secondary group accounts for the balance.

Although the primary group does not change often, you can expect the secondary group to be adjusted often during a career. Occasionally a secondary principal can be developed and grow to become one of the primary principals. Never discount the value of any of your secondary manufacturers.

My agency, Marcor Associates, was a multi-person agency for the first 17 years. For the balance of my 46-year career, I operated alone. Over the 46 years, I had the honor of representing more than 40 different manufacturers. At one time or another only seven of these companies were in the stable of major manufacturers. I represented only two of them for most of my career.

The only constant in business is change. So it is with principals. They come and go for many reasons. Managing both the primary and secondary groups is one of the major challenges of any rep agency.

The most important aspect of managing both primary and secondary principals is building a long-term personal relationship with each. There is higher turnover in secondary principals. This group requires different management techniques. The focus of this article pertains to managing secondary principals in a single-person agency.

Secondary principals are critical to the profitability as well as the long-term viability of an agency. I never met another rep who did not have at least a few secondary manufacturers. I always represented two or three primary manufacturers and up to four or five secondary manufacturers to assure Marcor Associates had diversity to cover the up and down sales years.

The source for these manufacturers came mostly by word of mouth from rep friends or from the other manufacturers I represented. MANA’s RepFinder® is also an excellent source.

To efficiently manage secondary manufacturers, who each may not account for more than five to 10 percent of sales, it is important that each meets certain criteria.

1. The products must be marketed and sold to the same types of customers as the primary manufacturers’ products. These products are normally presented on a sales call after one of the primary principals’ products has been discussed. To be productive and respect the time of your customer, do not discuss more than one or two secondary principals in a sales call.
2. You might represent a principal that has little or no sales volume in your territory, but there must be a clear understanding between the rep and this principal about the sales strategy, time and effort to be undertaken. Since most manufacturers in the commercial construction industry have minimal sales data, particularly for smaller geographic territories, I depended on personal market research to determine sales potential. The demand for this product may be strong enough that with the appropriate effort by the rep, the principal could grow to become part of your primary group.
3. There can be periods of years where for any number of reasons an agency does not have the luxury of a strong group of primary manufacturers. In this instance, an agency is looking for secondary manufacturers, one or two of which can be built into primary manufacturers.
4. Both primary and secondary principals were listed on my line card. The total number of principals must be limited to a number a rep can devote the appropriate level of sales effort for each of them.
5. It is critical to regularly perform a profitability analysis, particularly for the secondary principals. Maintaining a strong personal relationship with principals requires honest discussions about the sales volume versus the effort required to develop this sales volume. Secondary manufacturers come and go for many reasons, but never burn bridges — part on friendly terms.

Summary

A profitable agency must maintain a stable of solid secondary principals to complement the primary principals that drive sales. Manage these accounts wisely. Remember, one of the secondary group may develop into a primary principal. You never know which one.

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