Whether manufacturers know it or not, their reps are constantly evaluating the profitability of their lines. This can be done formally via a structured line profitability analysis (such as that taught in the MRERF CPMR curriculum) or informally, with the rep actually measuring how much time he spends on a line and then asking himself if it’s really worth the effort. Depending upon the analysis of accumulated data, what inevitably can result is a parting of the ways.
Two reps recently reported to us the results of their decisions concerning some of their lines. According to the first rep, “Ours was a fairly simple decision. We contacted two of our principals and thanked them for their support in the past but let them know that economically it was no longer feasible for us to represent them. These were two fairly sizeable lines, one of which represented 20 percent of our agency’s income and the other 10 percent. While they might have brought in quite a bit in commissions, the downside was that each of them commanded about 30 percent of our selling time. It just didn’t make sense for us to continue that way.”
The rep adds: “One of them just about blew a gasket. He said to us, ‘Reps don’t quit us, we fire reps.’ Be that as it may, we quit, and we’re better off financially. I’d like to think that we parted ways as business friends, but I’m not so sure about the one who was so upset with us.”
The second rep explains that his agency informed his principals of a change in lines via direct announcement. The rep explained that, “based on direct feedback from the industry, effective immediately, the firm was reducing the quantity of lines we represent to a limited number of premier manufacturers.”
In order to facilitate that move, the agency announced they were resigning five lines and explained that the move allowed the agency to reposition its “resources and assets.” The announcement continued: “This will enable us to dramatically increase customer service, end-user activity, specification and demand creation. With fewer lines to sell, our salespeople will have a more focused product expertise, enabling them to effectively drive new product sales, which is crucial to distributor sales growth and profitability.”
Our purpose in communicating these two instances to our manufacturer readers is to emphasize that just as you manufacturers should constantly be evaluating your rep firms — many manufacturers perform this exercise on an annual basis — your rep firms are evaluating the relationships they have with you.
Wearing the Other Person’s Shoes
If you’re a manufacturer and have spent some time on the other side (the rep side) of the desk, you might find the views of one rep interesting. According to the rep, “Whenever I’m working with a new sales manager and the first words out of his mouth are, ‘I used to be a rep,’ I write times two on a sheet of paper.”
By “times two” he means this former rep’s expectations are going to be double the business that truly exists in the territory.
He continues, “These former reps are adamant that whatever didn’t work out for them as a rep is going to work now. It doesn’t make any sense to me, but that’s the way they think.”
If anything, he urges reps-turned-manufacturers to be more practical in their approach to working with their former peers, “And, remember, whatever mistakes you might have made in your former career don’t need to be repeated now.”
Giving Credit Where Credit Is Due
A rep was a little less than enthusiastic when he related the latest effort one of his manufacturers was taking to keep the lines of communication open. According to the rep, the principal in question was paying all expenses for the rep to travel to a warm-weather site for a one-on-one session with no holds barred. It seems the manufacturer was looking for some objective, critical comments on how he — the manufacturer — was perceived in the territory and how he was relating to his reps in general.
The cause for the rep’s discontent was that he had been through this exercise before. “While I’m face-to-face with the manufacturer, he feigns interest in what I’m saying, but once the meeting ends, nothing ever changes.”
Now, that’s a good reason to be a little down; however, the rep was reminded that at least the manufacturer was trying. And, as long as the manufacturer was willing to try, the rep should reciprocate, in the hopes that this time would be different and the manufacturer would truly listen to and take to heart what the rep had to say. Or, how about this — why not thank the manufacturer for his continued interest, but remind him that you’ve been through this exercise before? Wouldn’t it be in the best interest of both if, for a change, some action was taken as a result of the meeting? In any event, give the manufacturer some credit for continuing to care.
Sales Speak for Themselves
Who needs written reports? One manufacturer’s answer was, “If I want a written report, then I’ll ask for it. There’s no greater waste of time than for me than to have my regional managers beat the stew out of our reps to let us know what’s going on the territory. When the sales come in, that’s how I know what’s happening. My reps are so good, they’ll let me know when there’s something important happening.”
Providing Support Whenever Needed
A major reason one relatively small manufacturer established a nationwide rep network was the fact that he didn’t really have the revenues to support a direct sales force. As a result, years ago he made the commitment to reps. And as the years have gone by and his revenues have grown considerably, he’s become convinced that reps are the way for him to go. However, he’s made one internal adjustment that he never anticipated from day one — and it has resulted in better performance from his reps.
Because his company has reps in all of the time zones of the United States, the reps in these territories need back-up support at a variety of times during the business day. “To meet that need,” he explains, “we hired a team of inside salespeople who work flexible hours to ensure there’s always someone here to assist the rep. One group will work a morning shift, and the other takes over during the afternoon and the early-evening hours for the western states. What has happened is that no call for assistance is ever left unanswered. We’ve found that since the reps know they always have backup, they’re much more incented to go the extra mile for us.”
Breaking the Camel’s Back
A marketing manager remarked that, just like the rest of us, his management team has required him to take on more and more duties — without a corresponding investment in marketing. As he explained it: “Most of the increased activity has had to be borne by our reps. At first, they were willing, but I knew that wasn’t going to last forever. As we kept on heaping more and more responsibilities on their shoulders, we reached the point where two of our better agents told us that they were dropping the line. When I relayed this to management, their response was that there are probably plenty of other reps in the territory who would like to add our line. I was directed to seek them out, which I did. Things didn’t turn out as management had anticipated. The prospective reps had already heard about how we were operating and they turned us down. Management’s response? ‘There are probably others we can go to.’ My problem is that management doesn’t see that this wasted time is losing us sales. I hope the bottom-liners have had their day.”
We do too. Operating efficiently is one thing, but doing it in this manner defies logic.
Hiring New Agents
Since the previous item pointed out that one manufacturer in particular is constantly looking for new reps, here’s something to keep in mind: Don’t look for someone who is just like you. You (whomever is doing the hiring) may be very successful and think that your way is the only way, but flexibility and diversity ought to be buzzwords here. Apart from missing out on the strengths that someone like you might not have, appointing an agent in your own image tends to build an organization that will lack the strength of diversity. Appointing agents is a critical step in building a strong company. Do it carefully, and don’t be surprised if you find that the agents you talk with are interviewing you as you interview them. When each knows the strengths and weaknesses of the other, the potential for success is multiplied.
As you progress through the process, keep in mind that reps, just as anyone else, are never created the same. For instance, some are the craftsman type who are usually very product-oriented and are often engineers who have turned to selling. Then there are the entrepreneur types who are focused on building the business. Let’s add the bureaucrat types who look at business from the perspective of being a strong leader.
There is no right or wrong type of rep. What you’re looking for is the best fit for you and the relationship that you want to grow.
