Over the course of a year of communicating with and meeting in person with manufacturers, there are some questions that are asked over and over.

Among the most commonly posed are:

• Having chosen an agency to go to market with, how do I know I’ve made the correct choice?
• Having chosen that agency, how can the manufacturer be sure they are going to get their fair share of the rep’s effort and time in the field?

Thankfully, Agency Sales magazine has any number of manufacturers we can call upon to address those concerns. Taking those questions in order, one long-standing manufacturer member of MANA explained, “While it might sound somewhat flippant to answer that question with a question, let me offer that how do you know you’ve made the right decision when you’ve hired a direct salesperson?

“You’ll never know until you get a chance to grade their performance. Performance is the measure. But, when appointing an agency, you can fairly quickly get detailed measures of performance. For instance, the agency you choose should be able to provide you with very specific performance information on the principals that it already works with. Don’t ask for information that another principal might consider proprietary, but you can inquire as to the increases in business. You can ask about market penetration. You can ask about coverage. And you can ask about growth in the territory since the agency took on the line.

“All of this information will assist you in making your decisions. And remember, you can get this kind of information on a number of different lines represented by the agent.

“Any information you get on a salaried sales employee will relate only to the company or companies he or she has been employed by. Also, it will be hard to determine whether the effort of a salaried employee is due to personal initiative, or the result of a lot of combined effort with the home office.

“Agents, on the other hand, are pretty much autonomous and can usually point specifically to their own efforts that have paid off.”

On the second question as to whether the manufacturer is getting sufficient attention from their chosen agency, another manufacturer weighed in with the following.

“The most appropriate answer to this question is that it’s the quality of effort and attention the manufacturers gets — not the time. And you can get that quality effort and attention by being a ‘partner’ with your agencies, rather than just treating them as someone who has products to sell.

“The manufacturer-agency relationship is truly a partnership. You will be working with sales companies, not just individuals. You should be prepared to give them all the help you might ordinarily provide to a team of salaried salespeople. By that I mean the manufacturer should be prepared to support/advertise/promote their products. If trade shows are appropriate for your products and your market, you should use them and bring your agents in to man the booths when the shows are in their territories. In addition, you should produce top-quality product literature. Create regular product publicity. And you should do a good job of qualifying the leads your efforts generate before you send them on to your agents.

“In short, you should do everything to promote your products and support the agent that you would ordinarily do if you were selling by any other method. As you can see, it really isn’t a question of getting more of your agents’ time, it’s helping your agent make the most of the time that he or she spends when face-to-face with customers and prospects.”

Paying Commissions for Repeat Sales

During a roundtable session at an industry meeting that manufacturers and reps participated in early this year, panel members were asked the following question by a manufacturer new to working with reps: “Naturally I can appreciate paying a commission for a sale. On the other hand, I question whether I should have to pay an agent a commission for repeat sales that go on year after year.”

One manufacturer on the panel jumped at the opportunity to draw upon his years of experience with reps by noting the following: “Let me put the shoe on the other foot by asking whether you would consider firing a salaried salesperson once he or she brought in a big sale that included substantial reorder business?

“I’d venture to say that the immediate answer is ‘No.’ And, if in following up I asked why they wouldn’t fire that salaried salesperson, we’re probably going to be told that the person is needed to ‘hold hands’ with the customer.

“That person is needed to see that the company’s business continues to go smoothly, and to see that no competitors are able to walk away with the account.

“Well, the same holds true with reps. And that’s why commissions are paid on repeat business. Quite apart from the reasons we already stated, it’s still more economical. You are paying commissions on income. If the money wasn’t coming in, you wouldn’t be paying commission.”

Benefits of Rep Association Membership

A rep firm that was recently profiled in Agency Sales notes that they are members of 12 associations, three of which are industry-specific rep organizations. When we recently asked a manufacturer if he sees any benefits to his agencies belonging to industry associations he was quick to note the benefits. “When a rep makes an effort to associate himself and his agency with top-performers (manufacturers and reps) in his field, that’s an example of what we’re looking for in a marketing partner. Furthermore, the rep who joins the industry-specific association is showing us that he has made a real commitment to that industry — he wants to continue building relationships, and he’s going to be serving that industry for the long haul. We’ve followed many of those reps’ examples and we’ve become involved in a number of associations. It’s generally from that universe that we pick a new rep when we have to fill a hole in our organization.”

The Way to Resign a Line

When a rep notified one of his long-standing manufacturers that he was resigning the line, the manufacturer initially was taken aback. After communicating with the rep, however, the lights went on and he realized and appreciated why the decision was made.

While emphasizing how the rep and manufacturer were — and still are — good personal friends, the manufacturer explained that the rep felt he was having to spend too much time, effort and money in servicing the company. According to the manufacturer, “The rep educated me to the fact that he had a rule of thumb that if it costs him 75 cents to make a dollar with a given line, that’s a positive. Something in the area of 65 cents and you’re really in great shape. Any more than 75 cents, however, and you’ve got a real problem.

The manufacturer continued that the rep also made efforts to evaluate the manufacturer’s backup in terms of inside sales support, product samples, literature, news product development, etc. “On the one hand, the manufacturer told us he was impressed and complimented this rep on the efforts he made to communicate with him. He also was impressed with the professional approach the rep took in terminating the relationship. “One reason we left on such good terms was the fact that in severing the relationship, the rep went out of his way to recommend three reps in the territory that he felt could serve us well. We followed up with each of those agencies, chose one, and have formed a profitable relationship going on five years now.”

A Vote for Longevity

It’s not unusual for us to hear from manufacturers who years ago made the commitment to an outsourced sales force. Typical is this input from one manufacturer.

“We’re constantly evaluating our rep sales force. In doing so, I take pride in the fact that we have several agencies that we’ve worked with for more than 35 years. If I could point to anything that has contributed to our long-standing success with these firms, the first thing I’d mention is that this is proof positive of our efforts to work very hard at sustaining the relationships we currently enjoy. If anything, I’d compare it to a marriage. Most of us can relate to that analogy. When something goes wrong and you begin picking on each other, that’s the first step in the direction of a divorce. We’ve avoided that tendency by employing open communication with our reps — including the regular consultation with our rep council. When they or we have a problem, we throw it on the table immediately, discuss it and come up with a solution. We never allow anything to fester. That’s a little bit like never treating an open wound.

“If I could add anything to this discussion, I’d have to point to our mutual appreciation for the importance of face-to-face contact with customers, our respect for our philosophy of partnering and a true appreciation for each other’s problems.”

Always Asking for Input

Complementing that view, another manufacturer recently offered that “When we conduct our national sales meetings, which are usually annual, I always begin our meetings by asking our reps to let me know everything that’s happening in their territories and to describe how we, as the manufacturer, are meeting their needs. I’ve been surprised on occasion with some of the things they’ve told me, but I’ll be quick to note that when they let me know something needs to be corrected, I can’t do it fast enough.”

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