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It’s not just the independent rep that believes having a written contract with their principals is imperative. That point was driven home recently when one manufacturer contacted Agency Sales magazine with the following thoughts.

“The executives of our company have always felt that it’s critically important to have our reps under written contract. Our approach is that we choose our reps very carefully. That means we spend a lot of time searching for reps, interviewing them, visiting them, and having them visit us and get to know our people. Figuratively, they become an integral part of our family, our organization. Having a contract ensures that both sides of the agreement are comfortable with the terms — it’s a little like a marriage. If a rep ever approached me and maintained that a handshake type of arrangement was acceptable, I wouldn’t take him seriously. On the other hand, I’d think he was playing around with us. The contract is a means for formalizing the relationship, and that’s important to us and should be for the rep.”

Before closing, the manufacturer added, “It’s a tough business world out there, and I believe there should never be any hesitation on the part of manufacturers and manufacturers’ reps to enter into a contract. The contract simply spells out the rules of the understanding. I would be foolhardy to proceed without one.”

Always Revisit the Relationship

In a recent conversation we had with a manufacturer, the subject of building a strong relationship between manufacturer and rep was raised. This manufacturer admitted that he was fairly new to the use of manufacturers’ reps, but despite the newness, he was certainly up on the need for a written contract, and he knew exactly what it was he wanted from his field sales force. Things got a little confusing, however, when the subject changed to what steps to take to nurture and strengthen the relationship between the two.

The best advice we could offer was something we had heard from another manufacturer years ago. It went something like “In any relationship, it’s incumbent upon both sides to constantly revisit the terms of the relationship throughout the business cycle. Why is that so important? Because situations and people change. You go to sleep one night and wake up the next morning, and without announcement, you find the relationship isn’t built on the same foundation you thought it was. You feel you’re being taken advantage of.

“The important point to remember here is that in any strong and lasting relationship, all parties must pay attention. Reevaluate and constantly ask questions concerning the relationship. Converse often and ask and answer the telling questions concerning what the relationship is all about.”

Importance of Staying in Touch

Here’s a scenario that’s been repeated with regularity: “I’m the sales manager for a manufacturing firm. I’ve got my reps in place and they do a good job for me, but here’s the problem. Often when I’m on the road and out of touch with the reps for extended periods of time, I know I often feel something is missing when I’m not in the office. I’m well aware that technology and all its tools have made it easier to stay in touch, but I still feel that there has to be more that can be done to stay in touch.”

As described, this is a concern that had to be addressed from day one in the manufacturer-rep relationship. In other words, you can’t begin by hiring a young, inexperienced network of reps and expect that they’re going to work well on their own. Instead, from the very beginning if you recognize the fact that you’re not going to be there to mentor them, be sure you’ve hired experienced sales professionals to work the territory. They can work on their own and be expected to turn in expected results even when you’re out of touch.

Next in line in order of importance are the considerations of training and performance measurements. The training we’re talking about here is not only in your specific line of products but also sales training. Reps armed with a comprehensive background in how to nurture relationships and anticipate customer needs are the ones you should be looking for. Obviously, they’ve then got to be prepared with thorough product training and that’s the manufacturer’s job — to ensure they’re constantly kept up to date with existing and new product offerings.

Then, how do you and they measure whether they are cutting it in the field? Teamwork and communication are the keys here. Goals can’t be unilateral, they can only be set and met by jointly agreeing upon what potential a territory holds, and then gauging how well the rep can perform there. Communication, the second part of the equation, is a two-way street. The rep should be expected to regularly let you know how he’s performing and, likewise, the manufacturer should let him know on a regular basis whether his performance is what you expect. Here’s where technology is so valuable. Email, voicemail, even the good old-fashioned telephone are the tools to employ that will fill the void when one or both are on the road and out of touch.

All these steps are great, but they still can’t replace the value of face-to-face contact. That’s the view of one manufacturer who emphasized how important it was for the manufacturer to establish and strengthen personal relationships with the rep network. “There’s nothing like visits in the field and regularly scheduled sales meetings (at least annually), to let your reps know you’re there and you continue to be interested in and supportive of their efforts.”

Preparing for the Move

Making the move from a direct to an outsourced (i.e., independent) sales force is hardly one that should be taken lightly. According to one manufacturer, a lot more goes into making the decision and then implementing the move than many might expect.

“First of all,” according to one manufacturer, “the preparation for such a move from direct to independent agencies should actually begin even before the final decision is made. It’s commonly maintained that a major reason for using agencies is that they reduce a manufacturer’s fixed sales overhead to zero. In other words, it doesn’t cost you anything until a sale is made, and then the only cost is the commission.

“But saving money should hardly be the major — and only — consideration. What should drive the decision is the answer to the question: Who can do the job of selling better — the direct or independent sales force? Once the answer is given — and in our case, it was in favor of using reps, then all of our personnel who would be involved in working with reps were given a voice in our decision making process.

“By everyone, I mean clerical personnel all the way up to our higher-level managers who would be working directly with the agencies. This was done on our part to guarantee ‘buy-in’ on the part of all who would be in regular contact working with our reps.”

That subject of buy-in was emphasized by the manufacturer, who continued, “It’s critically important that the entire management team of our company be committed to the rep business model. For instance, if the sales manager, who more times than not will just be there for a couple of years, has been instructed by his superiors to sign on reps, then what’s his level of commitment? Will that sales manager be an ally for the reps when the time comes? That’s why up and down the line all personnel have to be communicated to that reps are a valuable component of our company’s sales and marketing efforts.”

The manufacturer continued to describe steps taken to handle the actual transition from direct to independent sales staff. But the major point was the need to plan and execute the move in an efficient manner. “It might seem like a lot of work to make such a move, but the fact is everyone in our organization had to be ready for it. But our experience showed that since we planned well, we were ready to hit the ground running once we made the switch.”

Preparing Inside Staff

When a manufacturer described one of the major steps he took immediately after making the switch from a direct to an independent sales organization, you knew he was serious about making the change work.

According to the manufacturer, “I knew I couldn’t just flip a switch and make the move. Once I decided upon using a network of reps, I knew I had to accustom my inside sales force to work with the outsourced reps. Ultimately, I felt I had to put my people in the field in touch to meet and work with reps just so they’d know how the job was going to get done. But first, we needed some time for them to get to know each other via phone, email, etc. After about two months I asked the agencies we were working with if some of our inside people could visit with them. Once I had explained my methodology to them, none of the agencies refused. As for my people, I made sure they were all prepared to meet the reps.”

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