It was a little bit like a self-fulfilling prophecy when one manufacturer described the difficulty he continually faced in filling direct sales positions in a number of his territories. According to the manufacturer, “It seems as if they (factory direct salespeople) can’t wait to get out the door. We just get them trained and attuned to developing relationships in a territory and then they either take another position in our company or leave the company entirely. It’s like being on a merry-go-round that keeps spinning people off.”

This manufacturer is hardly alone in facing this problem. This has long been one of the most compelling reasons recommending the rep way of going to market. Among the major reasons that MANA and other rep associations maintain that reps serve the territory more cost-efficiently than a direct sales force is that they’re married to their businesses and their territories.  It’s no secret that the direct salesperson is often looking at where his next position will be. Not so with the rep. The rep is intent upon building his own business and establishing and nurturing his relationships in the territory.

The manufacturer in question might do well to take a look at reps as a good way off that merry-go-round.

PLANNING FOR THE FUTURE

“Am I overstepping my role as a principal if I ask reps to share with me their plans for the future?”That’s how one manufacturer opened a discussion on relationships between his company and his reps. What he was specifically concerned about was succession planning and how the lack of such plans would impact his continued role with his reps.

The manufacturer continued: “It’s been very gratifying to me that I don’t even have to address this question to a number of rep firms who from the very beginning have been more than forthcoming when it comes to communicating how they operate now and what their plans are for the future. These are the agencies who believe in — if not insist upon — joint planning, yearly evaluations (i.e., us of them, them of us), goal setting, etc. The others, and I’ll admit it’s a fairly small number, seem to bristle at the fact I want to know how they plan to continue our relationship into the future.”

MANA, ASM and any number of reps who have been interviewed by this publication over the years, would agree with this manufacturer’s observations. It all comes down to communication and planning. Just as the rep needs to know how the manufacturer plans to address the future, so too does the manufacturer need details that will impact how he/she will be able to meet the needs of a specific territory.

MORE ON HOUSE ACCOUNTS

The discussion of house accounts which appeared in last month’s issue of Agency Sales didn’t stop after publication of the article entitled “Successfully Dealing with House Accounts.”  After the article appeared in print, a couple of additional views were presented:

* A manufacturer offered: “I have always tried to allow reps to participate and to be compensated for their effort with ‘house accounts.’ If a principal ‘carves’ out house accounts, the question remains  what’s left for the rep — cats and dogs? It also seems to me that it (the existence of house accounts) suggests a lack of confidence in the rep. That being said, house accounts may provide a much lower commission rate for the rep as the principal may have done the early spade work, and is likely to contribute significant company resources, i.e. sales, marketing, engineering, operations, finance, quality and senior management participation to those house accounts.

* Another manufacturer with a long track record of working with reps explained, “I have worked with independent reps and rep agencies for 25 years and when they are told, “We need new business and our house accounts are ours,” this limits the agent’s income, which is solely commission-based. Keep in mind that reps have expenses, and if the manufacturer wishes a rep’s service to increase sales, then the manufacturer should help them succeed. The manufacturer can always send that rep the 30-day notice, which they often do even if the rep has done a good job. I do believe in some exceptions, such as a customer that has been with the manufacturer for at least 10 years or more, but if that manufacturer does wish the rep to deal with those accounts as well, such as to visit them, then the rep should be compensated for those accounts as well.”

* This is obviously a subject that manufacturers have opinions about as is evidenced by this final comment (also from a manufacturer): “Whenever we had a house account in existence before hiring a rep, the rep was fully informed. He/she was also fully made aware that the house account would become their account eventually (after proving themselves) with a reduced commission necessitated by the history of the account. Generally, with house accounts, the margins were exceedingly low to begin with. We wanted the rep to generate new business, primarily, and maintain the ‘house’ account secondarily. If he/she could add new business to the ‘house’ account, then a full commission (hopefully) could be paid.”

GETTING REPS TO RESPOND

When a manufacturer asked a group of reps how best to get reps to provide follow-up to leads developed at trade shows, there was no shortage of responses. Here’s how she presented her dilemma: “As a principal we often send out an Excel spreadsheet after trade shows requesting that the rep fill in certain fields (date and a few notes) to keep us aware of lead follow-up. Sometimes the reps respond; often they do not. We’re now planning to ask reps to also keep us aware of follow-up of non-trade show leads via a separate spreadsheet that we’ll format and send. What can we do better to encourage our reps to compete these items?”

That’s a simple enough question and hopefully some of the responses she received helped her solve the problem. Perhaps other manufacturers will find segments of the discussion that followed to be helpful. For instance:
* “I am a manufacturers’ rep and as such I feel it is my duty to be able to provide feedback to the principal on leads that they sent to me for my exclusive territory, but I and most reps will shy away from any form of mandatory reporting and form filling etc.

* “I do not know what questions you are asking in your questionnaire, but it might be better for you to arrange a time to phone the rep to go over the status of the leads you sent them and for you to write the notes in yourself from your conversation. Since you spent the money to acquire the leads for the rep, you have every right to ensure they are being followed up on. However, I would suggest that you try to switch from the ‘fill out my form’ strategy and implement instead ‘lets go over the leads I sent you’ strategy.
“If your rep does not want to provide any feed back on leads that you send them, then I would suggest a new rep. Hope it does not come to that.”
* “As a rep, and as an optimist, I look forward to receiving Excel spread sheets full of sales leads. However, many, probably most, of the ‘leads’ prove to be non-customers of various descriptions. Sometimes we can identify these before we waste any time on them, but sometimes it takes a little work before we realize it is a dead end. Some of the ‘customers’ can’t be reached, or can’t be found, prove to be low potential, or are already known to be low potential. In the interest of using everyone’s time wisely, we usually only report back on the leads with real potential. In reality, only a small percentage of trade show leads prove to be of any value. It is a waste of everybody’s time, including the principal’s, to report on the ‘leads’ which have been eliminated.”

* “As an independent rep for more than 12 years, this issue will always be present. FYI — I do follow up on leads and report back to factories. That being said, the bottom line question is: Is your rep producing? If you want control, then you need to hire a factory rep and pay the price. The reason manufacturers hire independent reps is to save on compensation and benefits. I have 10 lines to represent, I can’t complete reports for every line — no one can.”