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Prior to the COVID-19 lockdown, a group of manufacturers and reps got together to discuss, among other topics, line profitability analysis.

One rep was more than ready to examine the subject as he arrived at the meeting with a list of the criteria he regularly used when he annually evaluated his manufacturers. Among a fairly lengthy list of his considerations were the following:

• What has the manufacturer done to keep the agency aware of competitive factors in the territory?
• Has the principal provided his agencies with complete, comprehensive and practical product literature — in either printed or web-based form?
• Has there been a history of the principal supplying case histories and product application information that will assist the rep in his sales efforts?
• What effort has the principal consistently made to keep the rep involved in product development? Has the principal questioned the rep regarding what new products customers will respond to?
• Has the manufacturer historically paid commissions on time?
• Is the manufacturer’s credit policy practical?
• Are the manufacturer’s customer service policies effective?
• Is the principal’s commission system in keeping with those paid by others within the same industry? Has the principal responded promptly to questions and requests from his rep sales force?
• Whenever the agency offers comments to the manufacturer, does the latter give them a fair hearing or dismiss them out of hand?
• In general, has the principal been supportive of the rep in the territory? Have field visits been helpful and supportive?
• Has the principal supported the rep’s efforts in the territory with promotional backup?
• Has the principal explained his rep policies and enforced them equitably?
• And perhaps, most important, has the rep found it to be a financially viable relationship with the principal? Is it worthwhile for him to continue making sales calls on behalf of the principal?

The Importance of an Agency’s Size

When the national sales manager for a manufacturer was asked to comment on what size agency she felt was best for her company, she noted that “for a mid- to small-sized manufacturer such as ourselves the one- to three-man agency has proven to be ideal. Our track record with agencies that size has been excellent for the more than 25 years we’ve worked with reps. I’m convinced that the reason it works so well is that we’re always going to be important to the rep in terms of income. Because of that, we’re going to get time in front of the customers that results in the sales that we plan for. I’m not sure that would be the case with a much larger agency.”

Better Late Than Never

That was the message delivered by one manufacturer when it came time for him to describe how and why his company finally concluded it should put together a rep council.

According to the manufacturer, “To say we should have made the move to a rep council years ago is an understatement. For the longest time, we regularly boasted about our relations and communication with reps. Added to that was the fact we felt we truly listened to them. We didn’t want to be surrounded by a group of ‘yes men,’ and we wanted people who could provide constructive criticism with the goal of making us better.

“What happened, however, was that over the years, too many of the comments we received just fell through the cracks. We didn’t have any structure in place to take action to make changes. Finally, one of our longest standing reps voiced a level of frustration at our lack of action in a certain area that affected him. He forcefully suggested the establishment of a formal rep council that would meet annually and provide the kind of feedback that would improve our relationship. Furthermore, he said the effort could only succeed if we included a post-meeting action plan, complete with dates by which certain agreed-upon tasks would be completed. We’ve only been working with the council for a little over two years now, and that means we’ve only had a couple of meetings. But I’ve got to admit that the improvement in our relationships has been immediate, and throughout the year when we’re not meeting, the reps in the council constantly submit ideas, suggestions, etc., that will make up the agenda for the next meeting.”

Sharing Costs

For the last several years, there have been innumerable profiles of MANA-member agencies in the pages of Agency Sales. In the course of interviewing the owners of agencies, inevitably the question of shared territorial development fees has raised its head. Recently, when several manufacturers were asked for their views of that subject, their overall view was offered by one manufacturer who said, “We simply tell the rep that this isn’t the way we usually begin a relationship with a rep. What we’re looking for is bottom-line performance to show us that we’ve aligned ourselves with the right rep in order to get the job done.”

In fairness to the manufacturers engaged in this conversation, they listened patiently and agreed somewhat with the reps’ point of view — once it was put on the table. “When a well-established rep that has consistently proven his worth in the marketplace explained his ‘real-world’ experience, I had to pay attention,” said one manufacturer. “Here’s what he had to say. Since I was new to the territory, with little or no existing business, how much time did I think he’d put into my product line? Unless there was some commitment (i.e., financial) on my part to ‘incent’ him, I probably wasn’t going to get the attention I felt I deserved. Presented in that light, I knew where he was coming from.”

All of the manufacturers admitted that they’re hearing more and more of these requests from their reps, and the truth of the matter is they’re paying more attention to it than they did before.

Building and Nurturing Relationships

In the course of a lengthy conversation with a manufacturer who boasted of a long relationship with his network of outsourced reps, the manufacturer admitted that since his product line — just as the lines of other manufacturers — has grown, changed and expanded, so too must the abilities of the rep change in order to effectively represent him. In this manufacturer’s view, reps must be able to “create demand and develop new markets all the while selling and servicing more sophisticated end users and distributors while combating fierce competition coming at them from all sides. In addition, reps today need to be sharper, leaner, technologically savvy, financially sound, marketers, outstanding in sales, and flat-out sound business people.”

He wasn’t done yet when it came to enumerating the capabilities he’s long sought — and thankfully found — in his reps. Reps also must:

• Be trustworthy, honest and loyal.
• Possess a knowledgeable and service-driven staff.
• Provide pre- and post-sale service.
• Be organized and respectful of time — theirs, their customers’ and their principals’.
• Have a passionate commitment to the marketplace and the growth of the business.
• Represent attractive and synergistic product lines.

Questions Manufacturers Should Keep in Mind

An email survey of manufacturers — followed by a phone call — who sell via reps, posed a fairly simple question: “What do you think is the most important thing you want to know about an agency you’re going to partner with?”

Predictably near the top of the most common responses were how long the agency had been in business, the markets it served, number of personnel, and rate of personnel turnover. However, some of the other more common areas of interest were these:

• What do you need/expect from us in order to perform your job properly?
• What are your plans for the future? What do you think your agency will look like in three to five years? And, longer than that, what are your long-term plans?
• Who in your agency is going to become our expert or our advocate?
• What are your plans for our line in the near and long-term future? Where does our line rank as a priority among your other lines?
• What is the objective/philosophy of your agency? (It’s important that it is similar to ours.)
• Where do we fit in your agency/business philosophy?

The Cost of Value-Added Service

Earlier this year during the course of an hour-long MANAchat devoted to the subject of reps’ effectively communicating with customers during the COVID-19 lockdown, one rep explained how important it was for her agency to be paid by manufacturers for various non-selling services (e.g., marketing studies, etc.). When we related that conversation to one manufacturer, he voiced a certain level of surprise that so many of his reps were also approaching him with the message that they needed financial support in order to develop new territories, take new products to market in territories where they hadn’t been seen before, and devote more time to their line than they might have in the past.

This manufacturer should be credited in that he maintained an open mind on the subject and, in fact, was willing to listen as his reps explained that they were looking for the manufacturer to share in the costs of selling. This “sharing” takes the form of pioneering contacts, high commissions for a specific period of time, long post-termination commission or territorial development cost.

When the conversation was completed, the manufacturer admitted that he was convinced that there’s a real movement afoot to put an end to the days of free services. “Given the economics of business today, manufacturers should expect more of their reps to approach them on this basis.”

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