Last week a MANA rep member thanked me for MANA’s work to champion Shared Market Development Fees (SMDF). In recent years, said the rep, manufacturers have become more and more receptive to SMDF, which he credited to MANA’s efforts to familiarize manufacturers with SMDF.
SMDF are monthly payments a manufacturer pays to a rep when the manufacturer needs that rep to pioneer a territory without existing sales. Because it can take a year for the first commissionable sales to close where that manufacturer’s product is unknown, the manufacturer pays part of the rep’s costs for pioneering activities.
MANA began championing SMDF because manufacturers with no market presence often ask reps to introduce unknown brands into their territories without compensation because: “You’re in there anyway, just add us to your sales call.”
“No,” MANA explained to manufacturers. “Customers give reps limited time during a sales call. So they lose income if they take time from a principal that generates commission income to talk about a principal that doesn’t.”
Later, we discovered that SMDF might benefit manufacturers even more than reps.
Why? Because professional reps with full line cards were always out of reach to manufacturers with lines that required pioneering. But SMDF can make reps who would never before have considered pioneering a line accessible to manufacturers who want the best reps to launch their brands.
Win-win for reps and manufacturers. That is what MANA is all about.
What else has MANA learned about SMDF? Written SMDF agreements are crucial so each party knows the other’s expectations, for example:
How many sales calls on the manufacturer’s behalf does the principal expect?
Does the manufacturer expect a monthly report on the rep’s activities? How detailed and how formal does that report need to be? Would phone calls and texts suffice?
MANA is proud to have moved the needle on SMDF. Want to share your SMDF experiences or suggest how MANA can move that needle further? Reach out to me at email@example.com.