Lamps are different, but light is the same. — Rumi, 1207-1273 AD

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Travel across the Atlantic Ocean, and you’ll often discover that things abroad may seem the same, but also different. And, in the process of learning about things from international lands that are the same but also different, you may develop a deeper understanding of the familiar things from home.

For example, on both sides of the Atlantic, commission-based outsourced sales forces are a popular, cost-effective way for manufacturers to go to market. In North America, manufacturers’ representatives; and in Europe, commercial agents.

Are manufacturers’ reps and their European counterparts both the same but different? Research conducted by MANA, the International United Commercial Agents and Brokers (IUCAB), and Professor Trond Bergestuen at the University of Wisconsin-Eau Claire, says “Yes.” He adds that studying those differences can shed light on how manufacturer-salesforce relationships on either side can be more successful.

How were outsourced sales forces the same on both sides of the Atlantic? For example, Bergestuen’s research showed that the average firm had been in business for more than 20 years and had worked with their most important principal for most of that time.

How were they different? Average U.S. manufacturers’ rep firms employed six salespeople and represented 12 principals. Average European commercial agents that responded employed two salespeople, and five to six principals.

What can these counterparts learn from each other? U.S. firms can give some thought as to whether or not paring down to a smaller size might make a better work-life balance. Europeans can give some thought to whether or not merging smaller firms might create a bigger firm with greater income potential.

Another area of difference was in manufacturers’ reps’ perceptions of their principals. North Americans more commonly tended to find their principals’ training programs more useful and offer praise for a job well done than their European counterparts.

In some European countries, commercial agents also reported that their commission rates were less satisfactory than their U.S. counterparts. In others, such as the UK and Ireland, satisfaction with commission results was about the same as U.S. manufacturers’ reps reported.

Communicating these findings to manufacturers who sell through European commercial agents might trigger improvements in training programs, more recognition being given for special achievements, and giving thought to the possibility of lifting commission rates in countries that fall below average.

North American manufacturers’ reps gave their principals higher scores for fairness, trust, and support in the relationship between the agency and principal than European commercial agents. North American manufacturers’ reps had more friendly personal relationships with principals and were more likely than commercial agents to agree with statements such as:

• The principal takes a personal interest in me.
• I receive fair treatment from the principal.
• The principal is approachable.
• I have complete trust that my principal will treat me fairly.

Sparse personal relationships are not uniform across Europe, with manufacturers in the UK, Ireland, Austria, and Germany most likely to have personal relationships with their commercial agents, and manufacturers in Italy least likely to do so.

Manufacturers’ reps sometimes say that personal relationships with principals can be more important than commission rates, so manufacturers who don’t develop personal relationships with their outsourced sales forces are losing out on a powerful incentive that could get them more mindshare from manufacturers’ reps and commercial agents.

The area with one of most significant differences between Europe and the United States is that European manufacturers are much more likely to bypass their commercial agents and service selected territories through in-house sales employees to avoid paying commission to commercial agents.

European commercial agents reported that 71 percent of their largest principals handle some territories with in-house sales employees instead of commercial agents. Just 45 percent of U.S. manufacturers’ reps make the same complaint.

The pattern is similar for non-commissionable house accounts inside the commercial agent’s territory. House accounts were reported by 39 percent of European commercial agents, and 23 percent of U.S. manufacturers’ reps. There were significant differences within Europe. For example, in Italy, 48 percent of commercial agents have house accounts in their territories, but just 23 percent of German commercial agents report this practice.

Territories handled by in-house sales employees and territories with house accounts have proven to have a significant chilling effect on the relationship between manufacturers and outsourced sales forces. This chilling effect could be one of the reasons that commercial agents are more critical of their principals and have fewer strong personal relationships within those companies than manufacturers’ reps. This practice is not uniform across Europe, with the most pronounced chilling effect reported in Italy and France and the least effect in Austria and Germany.

With this in mind, manufacturers on both sides of the Atlantic might want to reflect on the more subtle downsides of excluding manufacturers’ reps and commercial agents from particular territories or accounts and reconsider these policies.

Because U.S. manufacturers’ rep firms average six salespeople and European commercial agent firms average two salespeople, total sales per firm are much larger in the United States. Sales per salesperson, a more meaningful number, average 850,000 euros in Europe and the equivalent of 1.1 million euros in the United States. Within Europe, that range is from just below 700,000 euros in Italy to an average of 1,050,000 euros in Austria. Further research may reveal some of the underlying causes.

We expect that further comparisons of these similar business models will reveal more insights and opportunities for commercial agents and manufacturers’ reps to grow their businesses.

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