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A call to MANA headquarters from an independent agent was the starting point for a timely discussion on the viability of the independent manufacturers’ representative business model.

This manufacturers’ representative’s point was that with e-commerce sites like www.instrumart.com (instruments and sensors) and www.usabluebook.com (equipment supplier for water and wastewater operations), customers now buy what they need online from these and other sites at low cost. They don’t need manufacturers’ representatives calling on them. Following the call, the subject was discussed by the MANA LinkedIn discussion group.

One of the first respondents to the question opted for the view that the business model isn’t necessarily broken, but changed; and with that change the need for the agent to constantly prove his worth is more important than ever before. Here’s his view: “The model has changed, for sure. The old-style 20th century peddler-rep is no longer needed. A manufacturers’ rep has no value to the customer if he isn’t adding value to the products he sells. A hundred years ago, reps were the essential intermediary, but now the rep has to change with the times in order to prove his worth. If all the rep is doing is selling standard catalog products that the customer can buy from a website, all he’s doing is wasting both the customers’ and his own time. However, I believe a product-savvy rep can find creative ways to add value and make him- (or her-) self a valuable resource for his customers. Plants today have little or no technical staff. That’s a good starting point. A rep who can fill that void should do well.”

Next up an agent dwells on the need to prove worth in the field: “We have a principal whose products are not only no longer sold by reps or salespeople but they have also done away with catalogs. Their products are ‘bought’ rather than ‘sold’ and so the model has always been focused around making sure the customer calls you when they need the doohickey rather than convincing them to buy your doohickey. As a result, our time as their ‘rep’ involves maintaining their Google adword keywords and responding to requests for more information. However, for more pioneering products, how would the customer ever know of the offering if it wasn’t for the rep? There could be product lines where the reps’ responsibility goes from selling to creating demand and servicing, but the grand majority of products still require reps and always will.”

Taking the subject to a new level another participant in the conversation noted that today the independent manufacturers’ representative had better be much more than a salesperson if he or she wants to be successful. “Yes, in today’s world the manufacturers’ representative needs to be a solution provider. We need to work to understand the customers’ various issues — both technical and often commercial. We need to provide solutions, and even if the product we are representing is only part of the solution, we need to help provide resources to fill in the gaps so that we are providing a true value proposition to the customer.”

Taking a look at the buying-selling landscape, an industry consultant places a good deal of responsibility for buying wisely on the shoulders of the customer. He explained, “USA Blue Book, Granger, Instrument Catalogs, etc., have been competition for independent manufacturers’ representatives for more than 40 years. A good sales rep makes sure his customer using the ‘cash-and-carry’ mode of procurement fully understands the responsibility and liability they place on themselves. Product and system application is on them. Ordering the correct model numbers is on them. Ordering the right size and capacity is on them. Then maybe they got it right, then what about the hassle of defective product returns? Who does the start up? And lastly, the financial paper trail and how long it takes to correct all of that. That is just the tip of the iceberg of the problems a customer will encounter buying on ‘low cost’ as their only procurement policy. In the end they actually spend more vs. how hassle-free it is for customers to buy through independent agents. The manufacturers’ rep model is not broken. Sales reps have to sell instead of giving up.”

Market, territory and customer knowledge were all cited by two final participants in the discussion:

• “A rep that has tribal knowledge, knows the nuances of the product he is selling, and is not afraid to make cold calls via phone and in person will never die (factory guys rarely do and millennials will not do this). You must know the market so you can bring your principal’s product to the lowest-hanging fruit opportunities the quickest. Best and most long-term market penetration comes from face-to-face contact with prospects.”
• “I very much agree with the added-value strategy presented by others. For the customer, our agency conducts employee training clinics, assists with marketing strategies and monitors sell-throughs to assist buyers with inventory control. The selling process starts when the order is written. All parties must meet their objectives for the transaction to be considered a success. For the principal, our value is in providing as much market ‘intel’ as possible. Customer needs vary by distribution channel and geographic region. The more we share the more valuable we are. Things change fast and we must all adapt to stay relevant.”

Questions Manufacturers Need Answered

Consultant Mike Dunlap offered a bit of an historical perspective on the independent representative business model when he recently asked manufacturers if they really knew their agents. At the same time, he offers a number of questions that manufacturers ought to know the answers to if they want to improve their relationships and the performance of their agents in the field.

Dunlap ([email protected]), principal of Michael A. Dunlap & Associates, LLC, a business consulting services firm that focuses on issues that primarily involve the office and commercial furniture industries, noted that the use of outside salespeople to bring products and services to the marketplace is a multi-centuries old, time-honored tradition.

First by water or horse and wagon, by the latter 19th and early 20th centuries, railroads opened opportunities allowing the often maligned “traveling salesman” to expand his offerings and territories. They reduced their loads by simply carrying samples and catalogs; the shipments of goods would came later from more distant or foreign places by truck, rail and other means.

Automobile travel gave sales professionals new freedom, allowing personal visits to even more remote places than the rail system provided (and perhaps spawned generations of “traveling salesman” jokes). Air travel further expanded sales opportunities, effectively reducing distances and shrinking time from source-to-customer.

Of course, the Internet and e-commerce have reduced hours to micro-seconds and long distances are managed by logistics and supply chain experts that move products faster than we can blink. To some in the business world, it might appear that personal human contact in the sales process is obsolete, or at best, much less than necessary.

Men and women engaged in this business of independent sales have been described as “manufacturer’s agents,” “outside reps,” “independent reps,” “outsourced sales,” or more recently “business development consultants.” Whether they are part of a large organization or a one-person office, a common thread is that each represents the interests of multiple sources, perhaps to many different end-uses, and almost always paid only by commission.

Like everything, the function of the outsourced independent sales profession has changed radically and it continues to evolve. Let’s assume that your organization has been very successful using independent salespeople. You are convinced that your company is better than your competition, you have the best people, and your reps are maximizing their efforts on your behalf.

But, like almost every organization, there are always opportunities for improvement. Let’s start with some questions:

• Do you know where you rank in terms of how much time and effort each of them spends on your company’s behalf?
• Do you know how many other principals they represent and what lines they carry?
• Do you know how effective your marketing efforts are from each territory, region or market?
• Do you know how well they interact and work with members of your internal team?
• Are you happy with the level of communication you have with each of your reps?
• Do you know what your reps need from you to be more successful with more sales for your company?
• Would you like your reps to be more productive and effective?
• Are you receiving unfiltered information from your best connection to your customers?

If you answered “Yes” to each of these questions, then you probably don’t need any help. But if you answered “No,” then you might want to consider taking some action. One approach to connecting with your sales reps is conducting an in-depth independent personal survey with them.

Time and cost will vary depending upon how many rep firms and individuals you have in your organization. Typically it takes about six weeks and is conducted by phone.