A principal presented the following dilemma:

“After trade shows we often send out an Excel spreadsheet 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 complete these items?”

As presented, this was a subject for discussion that reps warmed to immediately. For instance:

• “I am a manufacturers’ rep and as such I feel it is my duty to be able to providefeedback 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. However, I would suggest that you try to switch from the ‘fill out my form’ strategy and implement instead ‘let’s go over the leads I sent you’ strategy.
If your rep does not want to provide any feedback 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 spreadsheets 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 of 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’ that have been eliminated.”

• And finally, from another manufacturer: “We are preparing to implement a new version of our CRM and our intention is to send all ‘A’ leads (we have established criteria to classify leads as A, B or C) directly to the rep for follow-up and we will pre-qualify the B and C leads. If the B or C leads are significant, we forward them to the rep. We want our reps working from the top down — that’s where they can provide the best value.”

SOMETHING A MANUFACTURER SHOULD KNOW

For every action there is a reaction, and that’s exactly what happens when a manufacturer makes an inquiry of a rep. That point was made only too well on the MANA LinkedIn Discussion Board when a rep asked the following: “One of my lines’ competitors tried to hire me. I declined out of loyalty to my current principal. Is it unprofessional or bad manners to share that with my current principal?”
What’s important here is that reps react — one way or another — to questions of that type. Here’s some of the feedback that manufacturers might find interesting:
• “There is nothing to be gained from telling anyone about this other than feeding the flames of paranoia. Take the inquiry as a compliment and leave it like that.”
• “In one regard, you are actually obligated to share this information. Not only is this entity one of your line’s competitors, it is one of your competitors. This type of market intelligence — a competitive line seeking a new rep — is important for the factory you state you have ‘loyalty’ to. Assuming two things here:
— they approached you, and
— you did not sign a NDA with the inquiring factory after they approached you, you can and should share whatever you uncovered including the competitor’s sales goals, commission rates, and more.”
•  “Loyalty works both ways and is built on trust through open and honest discussion. Shared information is paramount in maintaining that relationship especially where the competition is concerned. I suspect your loyalty to this principal was built on trust and both could benefit from a discussion about the competitor’s unscrupulous attempts to hire you. I suggest you open that discussion as the competition is likely vulnerable in your region and you may be able to gain some market share.”
•  “A competitor seeking new representation can be important market info you may wish to share with a manufacturer, however, would your manufacturer share with you if they were seeking to replace your agency?”
•  “You are obligated to tell your current principal. I represent companies in industries where everyone has worked for the competitors at least once. They all know each other and they talk to each other. If my principal found out that a competitor tried to hire me and I didn’t tell him, his confidence in me would be destroyed.”

LOOKING BEFORE YOU LEAP

Before a manufacturer attempts to have reps appear to be something they are not (i.e., a factory direct salesperson) some words to the wise follow (also from MANA’s LinkedIn discussion). When a MANA member presented an issue regarding principals who wanted the manufacturers’ rep to appear as a factory direct rep to customers, he asked:
•  “How does the manufacturers’ rep protect the corporate veil?
•  “How do the contracts change from a synergistic multi-line rep to an outsourced direct salesperson?
•  “How does he address the independent contractor relationship?”
It didn’t take long for reps to weigh in with some feedback that should be valuable to manufacturers moving forward. For instance:

• “This request (from the manufacturer) is an egregious affront to your ability to function as an independent rep. How can you meet accounts and effectively present multi-line solutions?

A rep’s basic value proposition is being able to provide multi-line recommendations to the resellers within their network.
“A factory that wants its independent reps to ‘appear’ as factory reps, is actually revealing its lack of respect for the rep model. This tactic shows that this factory believes its customers prefer factory reps over independent reps. It also shows us that this factory believes factory reps are better than independent reps. It doesn’t take Nostradamus to predict that somewhere down the road this line will decide to ‘go direct.’
“Let’s address the two specific questions:

1. “How do the contracts change from a synergistic multi-line rep to an outsourced direct salesperson?“A standard rep agreement should be acceptable for this situation, but it appears that this factory will probably include clauses defining its expectations. And again, from the limited information we have, it is my opinion that this factory does not value the rep model.“It is possible that the factory may be seeking to have the rep totally dedicated to its line, yet avoid an employee relationship in order to avoid payroll taxes/benefits, etc. “Repping only one line is fine, assuming the income potential is a match to the level the rep firm once generated, or expects to generate, from its multiple lines. However, I suspect it won’t be too long before the line starts imposing various management controls over this rep, i.e., reports, meetings, procedures, etc., all which will not sit well with the IRS and others.
2. “How does he address the independent contractor relationship? “Our assumptions are stated above. If they are on track, the risk of violating tax/employment laws is extremely high for the factory orchestrating this charade. This line will likely ask for conditions and arrangements beyond the normal/legal independent contractor relationship.”Or, how about this reaction: “I have three experiences with this topic of which one was bad and two were good. I will start with the bad one and finish on a high note with two that were good. It all depends upon the situation and terms and conditions negotiated.

•  “Bad experience: This happened when I was brand new to the rep business and was worried if I could even make ends meet. Therefore, I agreed to appear as a company employee with company e-mail and company business card, but I had to pay all my own costs. I quickly realized that I had to report weekly and every e-mail I wrote was scrutinized and dissected and I should have said this or done that, or even replied faster and more forcefully, etc. It was micromanagement at its worst. I could not even mention to customers that I was a rep with other lines. Obviously this did not last, and it was a fast and brutal education from which I have benefited.”

•  Good experiences: “I have two, and they have a lot in common. Both were university start-up companies and had absolutely no sales experience, thus I was contracted by both to put together a sales database and establish an international distributor and sales force as well as start the process of training an inside salesperson. For this work I invoiced them for a monthly fee, a smaller than usual commission (they did not have much money) and all out-of-pocket travel expenses. In both cases I used their company e-mail so that it did not confuse the international reps that I was bringing on board and to ensure that they had full records of everything that had taken place. I wanted them to see what was being done and how it was being done. The contract was written so that over time I would convert to full commission and I would use my own e-mail account. Essentially I agreed to be a rep for them, but I had to put their sales machine in place first for me in order to accomplish that, thus they were billed for that service.

“My advice is that it all comes down to the terms and conditions negotiated and the reason for using their e-mail and carrying their business cards. If the reasons are for controlling the rep or for tax evasion, then I would say the rep should walk away. If it is for some other reason that does make sense, such as missionary work for a start-up company where the company is paying for some other service than just commission, then I think it can work to everyone’s benefit. In short it is not a ‘yes’ or a ‘no’, but a ‘why’ and a ‘how.’

•  And finally, another rep asks: “Do they (the manufacturer) want to pay your travel, sales, insurance, office and phone expenses? Or, just appear to pay them? This devalues the worth of your ability to present multiple lines to your customers and makes the independent status unclear. Be very cautious, I would not even get started.”