Let’s face it: things are not the way they used to be, and it’s highly unlikely they will ever go back to being what they were. So what are you going to do about it? Doing what you’ve always done in the past is not going to cut it anymore. Maybe it will keep you from going under, but that’s not what you really want, is it? Wouldn’t you much rather prosper and enjoy making a decent living as a professional outsourced sales company?
To do that, if you haven’t done so already, you are going to have to change. Not just change for the sake of changing, but real transformational change that creates a new and different future. It’s not just about doing things better or simply doing more. It’s about truly being different.
This issue features an article titled “Increased Costs Place More Pressure on Reps” that illustrates this point. There’s no doubt that, during these economic times, principals are asking their manufacturers’ agents to do more than they have in the past. An unintended consequence is that, in some instances, a manufacturers’ agent may decide it’s no longer profitable to represent a principal and terminate the relationship. This may not be the outcome either wanted.
What about creating a different outcome? The reason manufacturers want their reps to do more is that they are cutting back on staff. Why not ask the manufacturer to compensate the rep for the extra work? It would cost them less than retaining staff, and it will keep the relationship in place — a win-win for both parties.
Over the next few months, MANA is going to take a look at ways of helping our members learn how to create new outcomes for the manufacturers’ agents of the future. As I read the stories in Agency Sales about members that are trying and succeeding with different ways of relating with principals, I can’t help but believe strongly that there is a great deal of collective wisdom within the MANA membership — a wisdom we should tap into in order to create these new outcomes.
We don’t profess to know exactly where this will take us, what the professional sales company of the future will look like, or even what will be different. If we did, we’d just tell you and be done with it. We are confident that, through the collective intelligence of the MANA membership, a new vision for the profession will be created, one that will allow all of you to get back to enjoying what you do and to prosper.
One of the feature articles this month is about developing new markets and territories. The thrust of the article is that manufacturers’ reps of today need to be developing new markets if they are to succeed and grow. When you develop these new markets, potential principals will typically have no existing business to turn over to the rep. The reality is that it always takes more time for the rep to develop new markets, and more time equates to more cost. Why should the manufacturers’ rep take time away from helping customers who already provide income to the rep, in order to work where the income may only possibly come sometime in the distant future?
Developing new markets is a risk. What if the company that wants the manufacturers’ rep to invest their time and effort goes out of business or gets sold to a new owner who has different ideas about how to set up the sales force? In these cases, the rep will have made a substantial investment in the territory for which there is no return, causing a loss for the rep.
For many years, manufacturers’ reps would not take on missionary lines because of the costs and associated risks. Fortunately, more creative people have come up with ideas that help share the risk and cost of pioneering, so the results can be win-win for both parties. As a result, more manufacturers are able to enjoy the benefits of outsourcing the sales function. Conversely, manufacturers’ reps are able to take on the pioneering efforts of some good products with a much higher probability for return on their investment.
For those who believe manufacturers’ reps should get paid commissions only, regardless, our recommendation is to maybe rethink that position. There’s no doubt they will be able to find a rep to take on the line, but they need to ask themselves, “Is this the most effective manufacturers’ rep business I could have signed up?” Think of how much additional business a more professional rep could have brought in. Investing a few thousand dollars a month for a year to work with the professional rep, likely would have brought in much more business. By the way, that’s far less costly than hiring direct salespeople.
You’ve already invested a great deal of money on product development, factory and equipment and fixed cost of salaried factory personnel. Why would you not be willing to invest a little up-front cost in each sales territory to get the best available sales firm? Earning the business is 50% of the battle today, and you want to invest 0% of your total capital in that area? That does not make much sense.
Keep an open mind, and build an arrangement that works well for both of you during the pioneering stage. The result could turn out to be a long-term, mutually profitable relationship for both of you. It doesn’t get any better than that.
In their recent book, Tribal Leadership, authors Dave Logan, John King, and Halee Fischer-Wright talk about the development of “triads,” three-way relationships in level four and level five organizations — the ones that are highly successful. In levels three and lower, the relationships are two-way. There’s a certain dynamic that occurs in a triad that doesn’t occur in a one-on-one or even in a four-way relationship.
In many of these triads, one of the members acts as a broker, introducing the other two parties in the triad to each other and facilitating the creation of the relationships. As a manufacturers’ rep, you may focus on your relationships with your customers and your relationships with your principals. Have you thought about creating a triad? Rather than one relationship with your customer and another with the principal, what about acting as the broker and creating a three-way relationship? In talking with some very successful MANA members, it appears that’s the way they do it. The customer, the principal, and the manufacturers’ rep are each part of the triad, all partners invested in the relationship. Getting “face time” in these relationships is never an issue.
In talking with other members, we sense more separate relationships: one between them and the customer and another between them and the principal. In our conversations with these reps, it appears they are struggling more, and getting face time is an issue (if you want to learn more about this concept, you can download a free audio version of Tribal Leadership. Just Google the title and one of the search results will tell you where to do this).
What about another triad, one that includes MANA, the manufacturers’ reps and their manufacturers? This triad would focus on developing that relationship, which in turn would facilitate the development of the other triad that includes the customer. MANA would act as the broker, connecting manufacturers’ reps and manufacturers and facilitating that relationship through our educational programs and business counseling.
The current reality is that MANA members mostly belong for only the first part of the mission: manufacturers’ reps looking for lines to represent and manufacturers looking for manufacturers’ reps to sell their products. Let’s work together to create the triad that leads to a different reality, the one that makes your businesses more successful.
This month’s Agency Sales feature is the “Rep of the Future.” If you look back at the history of the manufacturers’ rep business, since its inception over a century ago it has changed significantly. Given the current sales environment, it’s a sure bet things will continue to change at an even faster pace. All of us in the rep business would love to have a crystal ball that could give us a clear picture of what things will look like just a few years down the road.
That crystal ball unfortunately only exists in fiction. There is no way to … Read the rest
MANA and reps come to the rescue, aiding principals in understanding how to develop mutually beneficial relationships.
We are hearing a lot lately about manufacturers that “get it.” When I had my manufacturers’ rep business, I was fortunate to work with several principals that “got it,” and without exception, they were very successful companies. I began thinking, “What is it about these companies that makes them this way?”
About 15 years ago, I was interviewing a prospective principal that came highly recommended by a fellow rep. He told me it was a great company, one that got it. We reached … Read the rest
When a manufacturer contacts a manufacturers’ rep to see if they’re interested in repping the line, in the mind of the rep, it’s a two-step process.
First step is to look at the product or service and determine if it is something that helps the manufacturers’ reps customer base. If it is, then the rep goes to step two, which is looking at the company to determine the potential for long-term and mutually profitable relationships.
Our MANA manufacturers’ rep members work very hard to develop a reputation with their customers of being trusted problem solvers. After all, we each like … Read the rest
Single-person rep agencies face some unique challenges. A check of the MANA membership shows that one-person rep agencies make up just a little over 20 percent of the total. One in five MANA rep businesses is a single-person operation.
A further analysis of the data shows that about 75 percent of these established their businesses in 2006 or later. In other words, they are start-ups, and start-ups by nature tend to be small. Their big challenge is surviving the first few years. The revenues tend to be small and in the first year don’t come close to covering expenses.
They … Read the rest
As a rep, when you think of marketing you probably think of your customers first. After all, they’re the ones who place the orders that bring in commission checks. How many of you realize though, that marketing your rep firm to your principals might be far more important? Think about it — how often do you hear in this business that it’s the only field where you can get fired for doing too good of a job? When the commission checks start getting big, there’s a feeling back at the principal’s office that you’re making more money than they are. … Read the rest
Owners of professional sales companies must have some funds budgeted for legal services. Practicing law on your own can be very, very expensive. That’s the message this former rep received after attending this year’s MANA Legal Forum.
For example, the first issue discussed by the 15 attorneys who participated dealt with the question: “If a rep is terminated by a principal and the principal agrees to pay all the commissions due per the wording of the agreement, can the rep collect additional revenues?”
Although the expected answer was “no,” the presentation by Barbara Kramer, Gerald Newman and Adam Glazer emphasized … Read the rest