Manufacturers have a choice when it comes to selling their products or services. They can hire direct (W2) sales employees or outsource the sales function to independent manufacturers’ representatives (1099 Independent Contractors). Which makes the most sense?
Some people use economics to make the choice. Which alternative costs more?
When you hire a sales employee, you cover their basic compensation (salary, bonus), their health insurance plus all the withholding associated with the compensation (Social Security contributions, Medicare, etc.).
When you outsource the sales function to an independent manufacturers’ representative, you only pay them a commission when they book orders for … Read the rest
When you reach out to manufacturers’ representatives and work on creating a business relationship, one topic that comes up in the negotiations is “exclusivity.” Professional manufacturers’ representatives that perform well for the companies they represent will not sign an agreement without some form of exclusivity.
First, let’s define “exclusivity.” Exclusivity means the manufacturers’ representative gets credit for all sales in the defined territory, Yes, that means sometimes they may get credit for an order they played no part in getting. But those orders make up for orders the rep did all the work to earn but didn’t get because the … Read the rest
Sales are about relationships. Take any sales course today and you learn your purpose is not to get purchase orders but to help customers solve problems. If the customer senses that, they start to trust you and they go on to buy from you.
MANA strongly supports the concept that professional manufacturers’ representatives need to also treat the manufacturers they represent as customers. The relationship you create with your principals needs to be high-trust. When your principal trusts you, you work together as partners. The result? You increase orders, a benefit for both of you.
The same holds true for … Read the rest
During the last decade, we saw many changes. Our activity level substantially increased and how we communicate with each other continues to evolve (social media, texting). Like a “New Year Resolution,” how about creating some “New Decade Resolutions” to help adapt to these changes?
The challenge you face relates to your activity level increase. What motivates you to take time from your busy schedule to invest in making plans on what changes you need to make to adapt? To get you out of the rut in which you find yourself and on to a different path, one that leads to … Read the rest
Why is this important? We all know the definition of insanity, where we keep doing the same things over and over again and expect the results to change. To change the results, we need to act differently.
We can change in a couple of ways. Go with our gut instinct and hope it turns out okay. The alternative? Get guidance from an experienced person, someone who knows and understands the issue, and use this knowledge and experience to significantly improve results.
What makes this so challenging in today’s world is we are all so busy we don’t have time for … Read the rest
A look at our membership shows significant diversity. Our largest member employs 53 outside sales employees, the average is five employees and 20 percent are one-person operations. Forty-one members started their manufacturers’ representative businesses within the past two years. Our average member started their rep firms 33 years ago and our oldest member started in 1918. MANA manufacturers’ rep members sell into diverse markets as well, from OEM accounts, reseller (wholesalers, distributors, retailers) accounts, government accounts and end-user accounts. We really do have a diverse membership.
Diversity exists in one other important area as well, and that is how professionally … Read the rest
When I owned my manufacturers’ representative business back in the last millennium, my principals wanted one thing from me — orders! Our members now tell me principals still want orders, but other activities as well — filling out online CRM reports, market research, succession plans, and more. What’s a rep to do?
Last year, I made a presentation to 20 roofing manufacturers’ representatives. During the Q&A, one participant asked, “Are principals asking MANA members to fill out online CRM reports?” I asked the group, “How many of you have principals who asked you to fill these out?” Half the hands … Read the rest
Back in 1988, I started a manufacturers’ representative business. Back then, we used fax machines to communicate with each other and thought that was high-tech.
The world and consequently the manufacturers’ representative business changed significantly since then. The question we want to address is, “How has it changed recently and how do we help our MANA members successfully adapt?”
Technology made a huge impact on how manufacturers’ representatives operate today. We all know that, and you adapted and use it effectively. Websites, e-mails, social media, smartphones, tablets, apps, etc. pose no serious challenges. As a matter of fact, technology provides … Read the rest
When a manufacturer approaches a prospective manufacturers’ representative, the manufacturers’ representative wants to learn two things. First, does this company supply a product or service my customers need? If yes, the next thing they want to learn is, do they understand the professional way to work with us?
What do we mean by that?
Before coming to MANA, I owned a manufacturers’ representative business. Prior to that, I worked as a sales manager for a company that sold through independent manufacturers’ representatives. That experience, along with what I learned here at MANA, taught me there are three kinds of principals. … Read the rest
Save the Life of Your Manufacturer-Rep Relationship
In June I attended the MANA Attorney Forum and AMRA (Alliance of Manufacturers’ Representative Associations) meetings. At both events, I heard a recurring theme: when high-quality manufacturers create relationships with professional manufacturers’ representatives, the results way exceed expectations. Unfortunately, I also heard about the other types of relationships, the ones where a management change results in disappointment for both parties. Two totally diverse groups; rep-savvy attorneys in one, association executives in the other, both with the same message.
What motivates someone to take something that works and change it so it doesn’t? What … Read the rest
One of this month’s articles deals with the relationships manufacturers’ representatives create with customers. As I read the initial draft of the article, it brought back memories of when I had my manufacturers’ representative business; specifically, what happened right after I signed an agreement with a new principal.
I graduated from college with a mechanical engineering degree. My first job was as an assistant to the plant engineer at an instant coffee plant. Thirteen years later, I left the coffee business and began a sales career. In 1988, I started my own manufacturers’ representative business.
Shortly after I signed an … Read the rest
People ask me quite frequently, “Why should I join MANA? What does a MANA membership do for me?”
When I started at MANA after retiring from a long sales career, I reverted back to the approach I learned when I first started in sales. Those of you who have been around long enough may remember the “Features and Benefits” approach that sales training companies taught then. So, back then I answered, “MANA offers a directory of manufacturers and that helps you find principals to represent.”
Today, I answer the question quite differently.
Over the 15 years I’ve worked at MANA, … Read the rest
As a MANA member, you can learn from other members’ best practices, a membership benefit. Let’s face it: we live in a changing world and the change accelerates every day. New issues come up and to survive and grow, you need to learn to effectively deal with them. What worked in the past no longer does. Why not tap into the other members’ collective wisdom and knowledge for solutions?
The Agency Sales magazine articles you read provide information on how members deal with some issues. Members also post discussion questions on the MANA LinkedIn group and other members respond with … Read the rest
Most multiple-person manufacturers’ representatives sell their businesses when they retire. While they owned the business, they created value in the business, value they exchange for dollars they add to their retirement accounts. The manufacturers’ representatives’ principals retain sales continuity in the territory; the new owner fulfills the dream of operating their own business. Works out well for all of them, doesn’t it?
For single-person manufacturers’ representatives, we see a different story. Rarely, if ever, do they sell their businesses when they retire. We hear two stories when we talk with them. They decide they no longer want to work and … Read the rest
Most of the time, manufacturers’ representatives and manufacturers get along fine. Sure, there are minor issues, but the two resolve those quickly and life moves on. Sometimes disputes become major and disruptive, to the point where business activity significantly reduces while the two parties battle with each other — definitely not a desirable situation.
What approach works to settle the differences? That depends. Do both parties want to resolve the problem and move on? If, so can they discuss the issue unemotionally and look for an alternative to either side’s stand that meets the goals? Sometimes you need to be … Read the rest
About a third of the new agent members who join MANA every month are start-ups. By start-up, we mean they have been in business anywhere from one year to just preparing to start. I call all new members who join each month and I learn from these calls that start-ups share similar backgrounds. They previously worked as a direct salesperson for a company. They know how to sell. The customers they sold to, and plan to sell to, know them, trust them, and buy from them.
However, they lack skills to professionally run a business because they never owned a … Read the rest
About 10 years ago, MANA led a dozen manufacturers’ representative members on a trade delegation to the Hannover Fair in Germany. The night before the fair opened, we hosted a dinner for the delegation so they could get to know each other. We asked each to get up and say something about themselves and their manufacturers’ representative business.
One told us he needed to find several replacement lines, that’s why he came. He went on to say he participated in the Manufacturers’ Representatives’ Educational Research Foundation’s (MRERF) Certified Representatives’ Professional Manufacturers’ Representative (CPMR) program. One course taught him how to … Read the rest
Spend time as a manufacturers’ representative, you eventually learn you can lose an important line for doing too good of a job. What? They fire you for being too good? Yes, it does happen. While most manufacturers understand and appreciate the value their manufacturers’ representative partners provide, a few see it differently.
They look at the commission check they send the manufacturers’ representative and conclude they save money if they employed a direct salesperson. From a pure accounting point, that makes sense. They assume the direct salesperson brings in the same order value as the manufacturers’ representative. How valid is … Read the rest
I periodically receive phone calls from MANA manufacturer members telling me a prospective manufacturers’ rep requested a fee to take on their line. “I thought reps work on a commission basis only, what’s this about?” they ask.
If the manufacturer has little or no business in the territory, it takes more time to develop the business. And, time equals money. While customers trust the rep you want and buy from him or her, they also trust and buy from other salespeople who call on them. The manufacturers’ rep with the missionary line has to work really hard to replace the … Read the rest
This Agency Sales issue focuses on how manufacturers’ agents and manufacturers learn to become “ideal” partners with each other.
First, let me answer the question, “Why does that matter?”
Manufacturers’ agents want to represent the highest quality principals willing to work with them. To them, the “ideal” principal equals a quality principal. The higher quality the principals they represent, the more “ideal” and the more they sell and the more successful the business becomes.
Manufacturers want to sign up the most professional manufacturers’ agent willing to work with them. To them, the “ideal” manufacturers’ agent equals a highly professional manufacturers’ … Read the rest
MANA defines itself as The Association for Professional Manufacturers’ Reps and Those Who Aspire to Be Professional, and Their Manufacturer Partners.
What do we mean by professional and why is it important for you to be professional?
Let’s discuss the importance of your being professional first. A “natural selection” process exists when manufacturers’ reps and manufacturers connect with each other. A Fortune 500 company won’t set up a relationship with a one-person rep who just started his business three months ago. Nor will a 25-person, 30-year-old rep agency sign an agreement with a start-up manufacturer with only five million dollars … Read the rest
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Manufacturers’ reps come in all sizes and shapes. At one end of the spectrum you find truly professional business people. At the other end you find salespeople who pay their own expenses. Major reasons for belonging to MANA are the resources we provide to help members move up the professionalism scale. Some members take this path, others stay put.
Higher-level professionalism brings many benefits: higher quality principals, higher profits, higher value to the agency when you sell it. With rational reasons like these, why do some want to stay put? What blocks them from moving up the professionalism ladder?
Their emotional side blocks the change. Maybe they fear the challenge; maybe they lack the self-confidence. The risks overcome the rewards. Maybe they want to be perfect and that leads to the three Ps: perfection, procrastination and finally paralysis. They feel alone.
Being a MANA member provides support to help overcome these emotional obstacles, not the resources such as workshops, webinars, teleforums and publications that provide the how-to, but others. Being a MANA member means you are not alone. You belong to a community that helps you get out of the rut. Remember, the only difference between a rut and a grave is the length of the hole.
How, you ask? Call the MANA office, where real live friendly people still answer the phones, and ask for me. Join the MANA group on LinkedIn. We recently created small groups that meet monthly by phone — join one. We can connect you with a local mentor. With their support, start moving up the professionalism ladder. Let the rewards overcome the risks.
On page 9, MANA announces Charles Cohon as the new MANA President and CEO. I compliment and thank the search committee, Dave Ice, Ed Reese, John Roba and Richard Sinclair, on a thorough and outstanding job. MANA members owe a debt of gratitude to these volunteer members who spent countless hours on a search. All of us at the MANA office look forward to working and supporting Charley as he leads MANA. The search committee could not have made a better selection. Thank you!
I started my professional career as an engineer at Hills Brothers Coffee. Twelve years later I left and went into sales for a small distributor. My boss sent me to the Dale Carnegie Sales School. Those old enough remember back then it was “features and benefits.” That worked and I made a living.
In 1994, as a manufacturers’ rep, I signed an agreement with a new principal. They required all of their manufacturers’ reps to go through a consultative selling course. Even though they paid my
expenses, I went dragging my heels. I sold for over 20 years, I was a pro, and nobody could teach me how to sell.
Wrong! In four days, I bought into the consultative selling approach, hook, line and sinker. I significantly changed how I worked with customers.
I no longer “sold” them anything. I helped them solve problems. If I successfully solved their problems, I earned commissions. Not only that, but the customers came back to me when they needed my help solving new problems. I earned more commissions.
I felt far more comfortable and confident in this new role as a problem solver. Sales grew significantly. I realized that my line card had to represent companies that enhanced my reputation as a problem solver. I avoided those that turned me into a problem creator. Those principals who enhanced my problem solving reputation worked with their reps as partners. We worked as a team. We trusted each other and our customers trusted us.
Consultative selling requires hard work and dedication but is well worth the effort. You develop a sense of purpose that feels great. That sense of purpose has to be genuine; customers spot a phony a mile away. You earn their trust and you never let them down.
The number of manufacturers’ reps I speak with who never took any formal sales training never ceases to amaze me. Find someone in your area that offers a consultative course and sign up. You will not regret the decision. You are never too old to learn. I thank that principal for making me and their other reps take the course. They invested quite a bit in this program but they reaped a huge return.
Ironically, as I write this editorial, I saw an article on page 10 by Tom Wentz of Corporate Performance Systems, Inc. Turns out, he taught the consultative selling course I attended 16 years ago.
One of MANA’s highest priorities is helping manufacturers’ reps and manufacturers develop mutually profitable, interdependent and long-lasting relationships. Part of the process includes relationship reviews — rep and principal should constantly be reviewing each other’s performance with the goal of improving the relationship.
Improving the relationship involves both of you. On our own, we fail to see how others perceive our performance. We think we do okay, but unless someone comments on how we do something, we never know. We may do something we think is fine and it drives the other party nuts. They don’t say anything, and the relationship suffers.
An effective way to start the review process is for both parties to agree that they share the common goal — to improve the relationship. They agree also not to play the blame game.
We improve relationships in many ways. We act in a trustworthy and ethical manner, which certainly helps. Consider others, though. What about communication? Do you exchange useful and pertinent information that really helps the other party? You know where I’m going on this one already, don’t you? If the manufacturer requires call reports, replacing those with the exchange of useful information goes a long way to improve the relationship. An honest and open dialogue on what information is needed and why it’s needed creates a much better way of working with each other.
Other areas where we work with each other are territory visits by the principal. Plan those well and the relationship grows. “Wing it,” and the opposite happens.
As a former manufacturers’ rep, I experienced great relationships with some (not all) of my principals. I know they exist; I also hear this from current MANA members. Yet, when I speak with other members, I sense they believe really great relationships with principals are not possible. Change that belief and attitude. Give it a try; you may be very pleasantly surprised.
Prior to coming to work at MANA in 2000, I was a manufacturers’ rep. Recently, I spoke with a fellow rep who shared several lines with me. We talked about one of our mutual principals, one that had been a favorite of ours. The owner understood relationships. He took care of his employees, he took care of his customers, and he worked as a partner with his reps. That company led the market.
A year after I signed my agreement with the principal, he retired and sold the business to a large corporation. The new general manager recognized that the system worked, so he made no changes. I continued representing them until I changed careers.
I worked with several other principals who believed in the same philosophy; partner with each other, we are not adversaries. These were extremely successful companies and the success was mutual.
Do you have this type of relationship with each other? If not, why not? Is the trust level an issue? Or is it because of a belief structure that says these relationships are mythical; they really don’t exist? Is it lack of knowledge of how to work with each other? Whatever the issue, work on it to allow the relationship to evolve into a real partnership.
Repairing the relationship takes time and effort, but look at it as an investment that brings a huge return.
Compare working with each other to the alternative, where you don’t work together as partners. The results are different. You expend more effort and energy in protecting your turf and less in helping customers. Guess which approach creates higher success levels?
Which leads me back to that favorite principal of ours — the new general manager who led the company when I represented them retired. His replacement had the other philosophy, and the company is no longer the industry leader. They lost a number of their top performing manufacturers’ reps who now represent the competitors. They have also lost key employees. Please don’t let it happen to you — it’s not a pretty sight.
Back in September we touched on the issue of change; why manufacturers’ reps need to act differently if they want to grow in the current reality. From there, MANA decided to put together a program to make this happen. We call it In Search of Excellence — Lessons from the Best Rep-Manufacturer Relationships.
The program borrows from the 1981 best-selling In Search of Excellence book that Robert Waterman and Tom Peters wrote (Harper & Row). The questions the authors ask apply today just as much as they did when they wrote the book. The solutions apply as well.
What do manufacturers’ reps gain from participating in the new MANA program? As they move from their current reality towards a different outcome, they develop a different and more effective relationship with principals and customers. The new principal and customer relationships result in growth and increased mutual profitability. They gain the ability to control their territory. They earn respect.
A significant number of highly professional and successful manufacturers’ rep business owners belong to MANA. They exemplify the desired outcome, the goal of the program. They lead; the other MANA members follow to move toward the desired outcome. The process never ends; the leaders innovate, the others follow and they benefit. The entire membership moves in a positive direction. The manufacturers, the manufacturers’ reps and the customers benefit.
We scheduled the first of these programs in Southern California on Friday, February 11, 2011. (See the back cover of this magazine for details). MANA plans to offer the same program in other cities later in the year.
We join associations for many reasons. One is to learn what other members do to be successful. We believe this program does exactly that. You have to take the initiative and participate; you do not learn by osmosis. Attend In Search of Excellence — Lessons from the Best Rep-Manufacturer Relationships in a city near you. Get a big return on your dues investment.
As the manufacturer views the marketplace, he’s always got two goals firmly in his sights — achieving increased sales and profits. To reach those goals he relies upon the services of a professional sales force. That’s where the choices begin. He can go either of two ways when it comes to interfacing with prospects and customers:
- Hire direct employees.
- Outsource the sales function by contracting with an independent manufacturers’ rep agency.
Regardless of which path is followed, the manufacturer must be mindful of the fact that management of an outsourced sales force is significantly different from managing employees. How the … Read the rest
If you have read Jim Collins’ book Good to Great, one trait he found in companies who went from good to great was having “the right people on the bus.” Having the right people on the bus translates to having the right people working for you. For a manufacturers’ rep firm, your outside sales force is a critical part of the organization.
This month, Agency Sales magazine looks at compensation programs. There are many ways to compensate salespeople and each has its strengths and weaknesses. Regardless of the plan, there is one common rule that must be followed: it must work for both the business owner as well as the salesperson. If it works for one but not the other, it will ultimately fail. It’s not much different from the relationships between manufacturers and manufacturers’ reps. Those have to work for both as well.
Do you work as business partners with principals? Do you have a relationship where there is a high level of trust and respect? Works really well, doesn’t it? Do you have the same type of relationship with your salespeople? The concept should work as well with them. It is interesting to note the similarities in the two levels of relationships. The compensation program offered by principals motivates the manufacturers’ rep business; your compensation plan for employees should do the same.
Make sure you have the right people on your bus, compensate them fairly and treat them in a trustworthy manner, with respect. Works wonders for those who have the trust and respect, maybe it’s time to put the concept to the test in your business if you don’t.
Speaking of the manufacturer-manufacturers’ rep relationship and trust and respect, the MANA educational effort in 2011 will focus on just that. We are planning an integrated program for our members, reps and manufacturers, which will help to develop high trust and respect relationships.
This month Agency Sales magazine focuses on legal issues. Like others, there is a vast difference between the true professionals in the business and those reps working towards that level. The true professionals know that agreements between manufacturers’ reps and their principals must work for both parties. Otherwise they ultimately do not work for either. What If the principal offers an agreement that does not meet this criterion? The professional will push back and negotiate an agreement that does. This significantly increases the probability the relationship will succeed. By pushing back, the manufacturers’ rep gains respect in the eyes of the principal.
Compare this to the novice manufacturers’ rep. When the prospective principal sends the agreement, the thing they usually do is sign and return it. They may not even read it. Please, don’t be intimidated. While the dollar impact at the time of signing may be insignificant, years later when it is, significant sums will be at stake. Don’t be telling yourself then, “If I could only do this over again…”
We also hear from members that they just want a really simple agreement, a one pager. When you initiate the relationship with the other person, there may be a very high level of trust between the two of you. What happens when that other person leaves the firm and is replaced by someone with vastly different ideas and attitudes about manufacturers’ reps? What if they decide to terminate the agreement? What if in the meantime, you have built up a significant level of business for this principal? How you worded the agreement way back when will have a significant impact on your residual compensation. Will that simple one pager really adequately cover all the bases?
We also hear from members they don’t believe the agreement is worth the paper it’s printed on. Not true, we’ve seen a number of members who over the years have won judgments valued at hundreds of thousand dollars because they had well-written agreements. They’ve also adequately protected themselves when product liability issues arise.
Which brings me to my last point. MANA has 28 really knowledgeable and experienced attorneys as members. They are here to help both manufacturers and manufacturers’ reps create mutually beneficial agreements. These agreements accurately reflect in legal language, the terms negotiated by both parties. Our professional members ask for legal help when they review agreements. Why not follow their lead and do the same? A great way to become more professional and gain more respect.