That dreaded phrase you hear on the initial contact with a prospective principal. How do you handle it? What do you say? Do you go on with the negotiations or end the conversation? What questions should you ask? How persistent should you be? Do you try to sell the prospective principal on how a manufacturers’ representative can benefit his company at this account?

These are just a few of the many questions that go through your mind when this potentially negative phrase “We have house accounts” comes up in the negotiations with a prospective principal. Reps have as many answers to these questions as there are questions. Everyone has an opinion on this topic, and as most of us have been through this at one time or another in our rep careers, we freely give our advice.

I am not sure there is a clear-cut answer on how to handle house accounts. It probably should be an independent decision by the agency owner. The decision could be based on where the agency and its sales reps are in their careers: a start-up agency, a growing agency or a mature agency with older sales reps. I know when I started my agency that I was willing to represent just about anyone to get some income coming in. As my agency matures, the thought of not representing companies with house accounts changes with each prospective principal. Do I want to represent this company? Will it give me an “in” into an account? Will it help the reps that work with my agency? Are we willing to work on an account basis or do we want an exclusive territory? Will the principal pay a fee for us to handle any issues at the account? This is a good way for an agency to get revenue for its services at house accounts.

We all have negotiated our way through the house account issue. Typically some sales managers have said that when your sales equal the sales given to the factory rep, then they will consider turning over the house account. Or that it is their management’s decision to keep this account as a house account since the principal’s owner and the house account customer are personal friends and have been doing business together for many years. Remember, it is your decision as the agency owner to accept or reject these arguments. Years ago and maybe even today it was a real stigma if your line list included principals that had house accounts. Be open-minded. Recently, I started to represent a company that had a few house accounts. They were in the same business as my principal and I would not have felt comfortable calling on them anyway.

As I said earlier, house accounts should be an independent and personal decision of the agency owner. You must decide what is best for you and your sales force. It is always easier to negotiate from a point where you have substantially increased the manufacturer’s business by two or threefold. And sometimes, the principal even realizes that you can do a better job at servicing the account than they can.

In today’s business climate, we have to think out of the box. Try and do things that you normally would not. Be proactive. And most of all, have a great day selling!