The vice president of sales and marketing for a manufacturing firm was quick to cite his early career as an independent manufacturers’ representative as the major reason for his current success in working with reps.

According to the manufacturer, “When I started at ground level as a rep, I was doing changeovers in auto parts stores. I knew that if I began by doing everything I could I would eventually get out there in the field. That’s exactly what happened and I wound up being the agency’s top guy and took over an entire region for them. I knew that you had to start somewhere to get to that point. As a result of that background, I fully understand what a rep should bring to the party.”

As an example of how a rep can add value to his relationships, he cited one experience when his agency was working on a grand opening for a customer. “The customer was impressed by the fact we were jumping through hoops for them and doing more than what was required. At that time, the question occurred to me why don’t other agencies do as much as we were doing? The answer is simply that that’s the difference between reps and agencies. As a manufacturer, it’s the rep who will jump through hoops that I want to partner with.”

He continued that what that background provided him was a well-grounded “gut feeling” about what makes a top-performing rep tick. As he described it, “I often know what they’re thinking before they do.”

Does all this mean that it’s easier for this manufacturer to pick reps to partner with than it is for other manufacturers? “It just might be. Many times I know I can work with someone even before we talk about line lists and everything else you have to cover when considering an agency. I want reps who know how to exercise autonomy over their lines and their territory.

“I have close to 10 territories that I oversee. I don’t have the time to manage the territory for the rep. If I did have the time, then I’d hire direct people and manage it myself. That’s why I want and need reps. I want them to have and to show the skills they need to participate in the process.”

He concluded his thoughts on working with reps by noting, “If there’s one thing I follow religiously it’s that I don’t overdo it when it comes to communication. Communication is great as long as what you require is not paralyzing. I don’t ask the reps to respond to everything I do. When I call with a question, it’s usually something that’s relatively easy for them to answer or research. I always try to remain respectful of their time.”

Incentives Get Reps’ Attention

In today’s super-competitive environment any number of manufacturers have found that it’s much easier to manufacture a product than it is to reach potential customers. In most cases, at least the high cost of manufacturing is within their control — impacting the market may prove a much more difficult task.

One of the major problems manufacturers face is that of getting their product or service to market in an efficient and economical manner. To achieve that goal, the manufacturers’ first step is the proper selection of an independent sales force that will professionally reflect the manufacturer in the marketplace.

It’s hardly unheard of, however, for manufacturers to report that developing a rep prospect list is much easier than actually getting the attention of the agents on that list. It should come as no surprise that the best reps are often not looking for a line — they’ve already got the lines they want. The question remains how to get the agent’s attention, particularly if you are a small manufacturer, have no existing business in the territory or have a new product line that will require a good deal of development work. Addressing those concerns, some manufacturers with good track records offer the following:

• Some principals offer temporary retainers under the circumstances listed above. These temporary marketing subsidies don’t cover the rep’s profit, or even all of his costs. What they do, however, is to demonstrate to the agent that you respect the fact that some extraordinary efforts and costs are involved with work with your line.
• Increase the normal industry commission rate for some period of time in order to help the rep cover the cost of doing missionary work.
• Introduce a longer post-termination commission clause in the new agent’s contract. Many agents have put their heart and soul into a new line only to have the manufacturer replace them with a direct salesperson once the volume in a territory becomes substantial. It’s the manufacturer’s right to do this of course, but a promise of one year’s commission after termination will certainly help the rep justify the risk of this happening after he pioneers your line.
• Finally some manufacturers report that they’ve had luck with taking on the less-experienced or smaller agencies, as long as the owner(s) has substantial industry experience in the territory in question while the rep was a corporate salesperson.

Paying Advances on Commissions

In the course of a conversation with a manufacturer on the subject of paying an advance on commissions, the manufacturer offered his thoughts on the subject when long lead times are involved. According to the manufacturer, “I would understand the situation of asking for an advance on commissions, but would probably not agree to the advance. I feel that with delays the manufacturer is probably dealing with their own cash flow issues. He had money invested in labor and material trying to fill the order and could have large out-of-pocket expenses that are already sunk into the project. Additionally, our company, quite like many others, does not pay our own direct sales force until invoices are paid. I think that paying on shipment is already an advance on commissions as the money is being forwarded in good faith.”

Commissions — Continued

“A fair rep earns a fair commission. A good rep earns a good commission. And finally, a manufacturer winds up writing very large checks to a great rep.” Those words served as the introduction for a discussion on the subject of “rep paranoia” at a late fall gathering of manufacturers who go to market with independent manufacturers’ representatives. It’s an old story we hear time and again from reps. Here’s how it goes: “I did a great job for the manufacturer and pretty soon he got tired of writing me big checks — so he replaced me with a direct salesperson.” In fairness this doesn’t always happen, and those in attendance agreed with the president of one manufacturing firm who said: “It’s the rep who has established relations with the customer. It’s our job to assure him that we value his effort and communicate to him that all we’re interested in is him earning as much as he can, because that means we’re all earning more.”

Solving a Salesperson Problem?

What if an agency a manufacturer works with does a great job; however, there’s one problem? What happens when there’s a problem with just one salesperson — i.e., he doesn’t communicate, make the proper number of calls, etc.?

The key to solving this problem is ascertaining the level of influence that the manufacturer might have with the agency. If influence can be exerted, try counseling the salesperson yourself or ask the owner of the agency to do so. If that approach doesn’t work, how about persuading the agency owner to replace the salesperson?

Is the Agency Right for You?

A manufacturer contacted Agency Sales magazine recently and posed the deceptively simple question: How can I determine if an agency is well-managed?

There are a couple of ways to answer that question:

• Among their lines, how many are top lines?
• What’s the level of quality of the owner and salespeople?
• Consider the tenure of the agency in their marketplace.
• Additional considerations might be: who are their customers, what do other reps and manufacturers think of them, do they carry lines that are complementary to your own?

Armed with the answers to those questions gives you a start at making an evaluation.

The Importance of Strengthening Relationships

A short article that recently appeared in an association newsletter served as a valuable reminder of how important good relations are between reps and their manufacturers — even in the face of changing dynamics brought about by the continued growth of electronic commerce: “Certainly electronic commerce, when used properly, assists in the areas of communication and in facilitating the ordering process. But, isn’t electronic commerce simply a newer means for conducting business? At the same time, isn’t the real concern with electronic commerce the need for the rep to continue to communicate his value-add to manufacturers and by extension to their customers and to avoid the much-talked-about term ‘disintermediation’? And what better way to achieve both goals than to strengthen the personal relationships between manufacturers and reps?”

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