Joe Figueroa points to a singular event that sent him on his way to opening his own rep agency close to 20 years ago.

As the president of Latin America Sales Company, Inc., (LASCO) Middleton, Massachusetts, recalls it, “In 1997 a light went on when I was sitting in a sales meeting for the manufacturer I worked for. As they explained how they were going to answer customer calls, I knew I could do the job much better than they could.

“Here’s how they explained their plan: When customers called, a new voice mail system would ensure that we didn’t have to pick up the call. Instead of having a human being there to answer questions, callers would be presented with various commands that would direct them to ways to obtain the information they were looking for, ending with the direction, ‘For more information, visit our website.’”

It was then as Figueroa describes it, “A light bulb went off in my head. Most large corporations don’t have human beings answer the phone anymore. It was just another sign of how difficult it was to establish human contact. All I had to do was have a human being always available to answer customer calls.”

At the same time, he notes, “It was just about that same time that I determined being a direct salesperson didn’t really fit my needs. Everything was much more policy driven and the ability to deal with the customer was being taken away from me. As an example, it was becoming more and more difficult to quote a price without checking with the home office. The process involved was impossible. I figured I was at a point in my career where I saw the perfect window for myself to sell for principals and avoid all the process hurdles that were being built. I saw a real opportunity for myself and my prospective customers.”

That beginning takes us to the present, where LASCO today sits as “an agency that specializes in the replacement of HD truck parts. We primarily serve the Latin American markets and some other export markets such as Australia and South Africa. We are a full-service provider agency whereby we manage most all aspects of the sales and order process and follow up with logistics. Since all our sales are done overseas, it requires a substantial amount of coordination and follow-up.”

Agency Services

A sampling of how the agency serves its customer base can be seen by visiting its website (www.lascotruckparts.com) where among its detailed services are the following:

• Assist manufacturers in the regular collection of payments from buyers (distributors).
• Assist freight forwarders and suppliers with documentation necessary for export sales.
• Help process shipping discrepancies and warranty claims between suppliers, distributors, and shipping companies.
• Provide distributors and end-users with product training on all of the brands we represent (in Spanish or English, as requested).
• Perform joint field sales calls with distributor sales representatives to develop pull-though sales for the brands we represent.
• Train fleets and end-users on product maintenance and installation.
• Perform part interchanges, cross referencing, and part identification.
• Place orders with suppliers on behalf of distributors.
• Follow up on status of orders and perform package tracking with transport companies.
• Quote direct manufacturer prices to distributors.
• Help distributors establish appropriate credit terms with suppliers as needed or allowed.
• Provide technical assistance on related parts we represent.
• Identify and order hard-to-find parts.
• Assist with same-day emergency orders.
• Orient distributors on freight forwarders available for their specific country.

In addition to Figueroa, the staff providing those services include three direct salespeople and three to four subcontracted agencies and salespersons to sell in specific territories. In addition LASCO has three internal customer service representatives.

Finding the Right Niche

Figueroa recalls that “When I started the agency in 2000, most manufacturers in my industry already were working with an agency or if they were going to make a change, they’d replace their existing agency with another established rep firm. I was fortunate in that I recognized the niche I occupied in the market. I had the ability to expand in global markets that many manufacturers were already in. I had worked in 18 different countries and I understood the countries and the way that business was conducted in each. I found that most manufacturers were very lax in their international activities. Many of the medium to smaller manufacturers were selling their products through exporters. I was able to bypass the middle man and go directly from the manufacturer to the distributor customer. Add to that, I was bilingual in the countries I was dealing with and already enjoyed a good reputation and the trust of the customers.”

When it comes to finding principals or having principals find his agency, Figueroa explains, “The most common way we find new principals is word-of-mouth and the rep council (Heavy Duty Manufacturers’ Representative Council — HDMRC) I belong to. We also occasionally pursue new lines that we feel would be a good fit to our portfolio of products and most of these are located in the course of industry trade shows/conferences. Usually principals that approach us are recommendations from other principals or rep agencies, or they may attend our rep council meetings.”

To firm up his relationship with manufacturers, Figueroa explains, “We have a business and succession plan and share both with our principals. We also have a once-a-year formal sales meeting where we discuss our sales plan. With regards to sharing our business plan with the principals, we do this initially when we get a new product line and then only review the business plans with them when we renegotiate our sales agreements and during annual one-on-one meetings with most of our principals.”

He adds that with the succession plan, “One exists, and I have a minority partner who is buying out the agency over the next five to eight years.”

Written Contracts

If business and succession plans are critical elements in LASCO’s relationships with principals, so too are the existence of and use of written contracts. According to Figueroa, “We won’t work with any principal that doesn’t have a written sales agreement. As for those that don’t, we won’t even start with them. I tell them we simply can’t conduct business without a formal written agreement. There are some agreements that ask me to conduct some research for them. If it’s something that I’m interested in, then we can do that without a contract through the use of a pre-made survey that I have. Having said that, we like to renew our contracts every year. Some of our principals don’t see the need for the annual renewal, but I do it because I want them to know that we’re working with a written agreement. At the end of a year, if they don’t send me one, I’ll ask them to follow up.”

Discussion of contracts leads to the subject of accepting or not accepting pioneering work from prospective principals. Figueroa says, “We do some amount of pioneering work for our principals. We have on occasion requested and/or billed for our services to survey and develop a market, as well as to offer market intelligence and language translations. We have a defined process to determine if a new principal is worth our commitment, and this is done by completing a market survey first to determine the principal’s product is a viable opportunity in our markets.”

Business Changes

Figueroa concurs with many of his rep peers when he notes that he’s experienced any number of changes in the way the rep business has been conducted over the years. Among the changes he has experienced, he points to the impact of the Internet and foreign competition.

“Activity on the Internet has changed things dramatically,” he says. “Today you have manufacturers who are selling either direct or on the Internet, often via Amazon. If the customer needs something in an emergency, they can buy it from Amazon with no freight payment. That gives them an alternative to buying direct from the manufacturer. It also allows the customers to perform price comparisons as they make their buying decision. All they have to do is enter the part number or manufacturer’s name and they can find the product they desire in a variety of places. On the one hand, this can allow a customer to locate better pricing; but on the other hand, they may be making the purchase without all the information they need about the product. They fail to read the fine print that tells them that the product may or may not be exactly what they need. This obviously can result in a problem for both the manufacturer and the customer.”

Foreign Competition

When it comes to the impact of foreign competition, “This is an even greater concern. There are many U.S.-based manufacturers that put their brand name on a product, but the fact is many of the components making up that product are manufactured overseas (i.e., China). It may appear, for instance, that an engine block is made in the United States, but the components such as rings and gaskets come from an Asian supplier subject to the tariffs. This is something that affects me more than others. As a result, one of the first things my customer base will say is ‘I’m not buying through you. I’ll be looking for other suppliers.’”

He adds that one thing the current administration has done initially as it applies tariffs is to be very careful when it comes to placing tariffs on products that the consumer public doesn’t necessarily see. That, however, is changing. Once the tariffs start affecting products sold in Home Depot or Lowe’s, the public will feel it.”

If the Internet and foreign competition have combined to impact how LASCO’s business is conducted over the years, Figueroa adds one more variable to the discussion. “Something else that has changed is the fact that some principals are attempting to redefine the role of sales rep agencies. There is a common belief that the Internet can take over some of the responsibilities and therefore they can justify reducing the commissions paid. Increased numbers of suppliers are creating websites where the customers can purchase directly and bypass the rep agency. They can even offer a Q&A service and technical support that was traditionally the responsibility of the sales reps.

“I’m finding that this happens all the time. I’ll hear from a principal that ‘Don’t you know that your distributors don’t have to contact you or send you an e-mail about their order? All they have to do is enter our Internet portal and bypass you. As a result, instead of paying you five percent commission, we’ll cut the commission to four percent.’

“When I’m presented with that scenario, I respond that ‘I understand what you’re saying, but I can’t accept the terms you’re proposing. You’ll have to find another rep agency that can provide the level of service that I offer. But keep in mind that I speak to your customers in their native language. When they communicate in a foreign language, I do the translation. Then there are the logistics of tracking an order that is sent through a freight forwarder. I have to follow that order all the way down to its destination. If the order is sent from Chicago, for instance, what happens if it doesn’t get there? Or, how about if only half the order gets there? Then once it’s in the destination country, I have to get the needed documents proving that everything has been shipped. Then I check with the customer to make sure there’s not a claim. I process more than 100 of these orders each week. Good luck finding someone else who can do that!”

Why MANA?

As he navigates these and other challenges that he and other reps face as they conduct business, Figueroa is quick to note how valuable his membership in MANA has been. When asked how and why he found and joined the association, he explains that MANA President and CEO Charley Cohon was a feature presenter “at one of our very first rep council meetings. I was so surprised that such an organization even existed and found that it was simply the best source of information and guidance for any professional in the rep agency business. Most of my previous knowledge of sales rep agencies came from knowing other rep agencies and picking their brains for information as to how a rep agency worked. I found that many of the opinions were passed along from generation to generation without much formal information available to read about the process and educate myself on so many aspects of being a professional sales rep agency. I wish I had known about MANA prior to getting started.

“What MANA has done for me — as well as my colleagues that are part of our rep council (HDMRC) — is of incredible value. Everything from Agency Sales magazine, to the tools offered on the website, to the many teleforums, videos and seminars offered, and the availability of MANA professionals to present at our rep council meetings is a wealth of knowledge about rep agencies. I would not have grown our agency to its present level of professionalism without the valuable information that we have learned from MANA.”

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High Praise for Rep Organization

If in the accompanying article, Joe Figueroa, president of LASCO, is high in his praise for the contributions that MANA has made to his agency, he’s equally complimentary of the Heavy Duty Manufacturers’ Representative Council (HDMRC) of which he is a member. HDMRC is a part of the Heavy Duty Manufacturers’ Association (HDMA) whose mission is to advance the commercial vehicle supplier industry and the business interests of its members.

The purpose of HDMRC is to discuss shared issues in the heavy duty industry. Council members, who are also members of MANA, participate to remain up-to-date on key issues and trends, as well as to better themselves as manufacturers’ representatives in the markets they serve. HDMRC membership is made up of premier management teams that currently represent HDMA member companies. The council has a limit of 50-55 members and biannual meetings consist of council members only and anti-trust counsel, who participate in meetings and activities.

In discussing the council, Figueroa notes, “In general, there are no formal academic courses in colleges that actually teach you how to be an independent manufacturers’ representative. When I started my own agency I luckily was mentored by another rep in his late 70s. As good as he was, he was relatively uniformed about emerging technologies that impacted the profession. I went on to interview with friends who were also starting their own agencies who had much more information on technology but little experience when it came to networking and making connections. This lack of formal education for the profession has created an environment where you have to learn from those already in the profession or take it upon yourself to access MANA and Agency Sales magazine where problems, trends, and best practices are discussed. Due to the limited number of resources available to reps, an organization such as HDMRC is an ideal environment for learning.

“In the course of our meetings, we’ve been able to discuss industry concerns such as common problems/challenges, CRM, accounting questions and how best to tell our story to manufacturers.” He added that “In our last meeting we were fortunate to have a MANA attorney as a guest speaker, and it was one of the very best presentations we have had regarding the legal aspects of our agency business. We have also had great presentations by MANA’s President and CEO Charley Cohon which have been very helpful for our rep council organization.”

While promoting the benefits of membership in both MANA and HDMRC, Figueroa urged other reps in his industry to learn about both organizations and determine for themselves how membership could benefit their own firms.

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