© Artur Gabrysiak | Dreamstime.com

“When it comes to contracts, ‘win-win’ is a terrific philosophy to strive for.” That’s how one manufacturer opened a conversation on negotiating contracts with his independent manufacturers’ representatives. He goes on to say, however, that “I’d be less than honest if I wasn’t always striving for the agreement that would truly benefit me. And, I’ve got to believe most reps feel the very same way.”

With that as a prelude, he goes on to note how surprised he’s been over the years at the number of agents who simply sign the contract that his company offers them. “I’ll admit it’s changed a bit, but from the rep’s point of view I’d recommend that more of them should take a close look at what their principals are proposing and then make sure there’s enough there to benefit them long-term.”

He goes on to say that the little bit of change he’s noticed is probably due to “MANA’s constant drumbeating in two areas: first, the importance of having a written contract; and second, having an attorney who is knowledgeable about the rep way of going to market take a close look at the contract. A great deal of assistance in this area is available from MANA in the form of the suggested agreements for reps to use with their principals.”

With those words of advice, he continues to be surprised at how many agents historically have failed to push back during the negotiation process: “It’s at the very beginning of a relationship that it’s especially important for both sides to have a clear understanding of what is expected of the other. And there’s no better way to achieve that clear understanding than in a written contract.”

Communication as a Preventative

A manufacturer admits he was taken aback when one of his long-standing independent manufacturers’ representatives abruptly let him know he was selling the business and retiring. The short notice of the announcement placed the manufacturer at a disadvantage for two reasons: first he had to decide whether he would stay with the agency under its new ownership; second, he had to quickly identify and act on his options for the future.

After his initial displeasure, however, the manufacturer admitted that while he faulted the agent for not letting him know about his plans, “I was also at fault. I’ve asked myself several times, why didn’t I regularly inquire of this rep and all my other reps concerning what their plans for the future were?”

To ensure that this never happens again, the manufacturer has implemented a plan whereby he annually asks agents what their plans and goals for the future are. “A couple of things have happened as a result. Several of my reps have told me that this has gotten them to think more about the future — something that they weren’t doing enough of. Next, my reps have told me that my asking about their plans shows a genuine interest on my part as to their well-being. They appreciate the interest and have reciprocated by regularly communicating with me on any and all matters of importance.”

Value in Staying Out of the Way

In the midst of a semiannual face-to-face visit with one of his independent representatives, a manufacturer relates how he was taken to task for what the agent claimed was his controlling nature. According to the manufacturer, “The rep maintained that I was attempting to control all too much of his time and effort. He said I required too many reports on various accounts and was constantly asking how much time he was putting on my line. His complaints took the breath out of me, but in all honesty there was something in what he said.

“His words caused me to look back on some advice I had received from a mentor years ago. When I first joined the company and began working with reps, my boss explained to me that once I was charged with working with reps, my job was to support them in their efforts and provide them with all they needed to get the job done. Once I did that, I was supposed to get out of the way and let the rep work. Those words were as true then as they are today.

“I told the rep I appreciated his honesty, not to mention his continued efforts on my behalf. I can’t say I stay completely out of my reps’ way now, but I’ve changed my stance considerably and relationships have greatly improved.”

The Effectiveness of Telecommunications

When one of his agents asked for a postponement of an annual face-to-face meeting a manufacturer was told that several customers in the territory had important projects pending and the agent felt his presence was more important there than at the manufacturer’s home office. Not completely letting go of the need for an in-person get together, the manufacturer came up with a suggestion. “I asked the rep if he had the time to visit with me via Skype. I’ve had a couple of such sessions with other reps and found them to be very valuable.

“Here’s the real reason I didn’t want to let go of the face-to-face meeting — I can tell a great deal about what someone is thinking by their body language. It’s just not the same if you speak on the phone or exchange e-mails. Thankfully this rep, and others for that matter, have now opted for the Skype get-togethers that usually take place at the end of the business day on an agreed-upon Friday. They save us all a lot of time, money and effort and everyone seems satisfied. At least, I haven’t heard any complaints yet.”

Talking to a Convert

“I’ve got to admit that I’m old school,” began one manufacturer describing an interaction with one of his recently signed independent manufacturers’ representatives. “I’ve always been a believer in the philosophy that reps work for commissions. They’re a variable cost and they only get paid when they sell something. That changed recently, however, when my new rep signed on for a territory I was looking to develop. We didn’t have any business in the territory but I saw potential. My and my company’s history has been one where we’ve always worked with reps, so going that route was a natural for me. I told the new agent there was no existing business and that opened the floodgates for a discussion on the subject of shared-territorial development fees. His approach was to agree with me that there was potential. He then asked me if I thought there was real value in developing the territory. I agreed and then he asked if there was value in that process, shouldn’t someone pay for the development? He had me there and I agreed. Then he asked who should bear the brunt of the investment for that development? He added since he was already expected to invest time, money and effort, shouldn’t I do my part by supporting his effort financially? I couldn’t help but agree — thus I began my first (and probably not my last) venture in supporting my reps’ efforts to establish a foothold in the territory.

“This conversation took place about nine months ago, and already I’m seeing the wisdom and practicality of what we agreed upon.”

Asking for Less and Getting More

In response to the question, “How do you get more of your reps’ time?” a manufacturer responded surprisingly that he’s learned to ask less of them. “I know self praise isn’t all that attractive, but I’ve got to say that my company has done an excellent job of creating our rep network. We’ve carefully chosen our reps, and the best things I can say about them is that they are productive and professional. Having said that, I learned long ago to stay off their backs. I’m looking for results at the end of the month; therefore, I make fairly few requests of them. Their performance speaks for itself. I take great pride in the fact that I don’t ask for or want sales call reports. On the other hand, when one of our reps calls us with questions or has a request, we jump on it and don’t keep them waiting. This approach has worked well for us for years.”

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