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.
The content for this month’s Agency Sales is “Sales Technologies That Work.” With all the technological developments we’ve seen in the past couple of decades, there’s no doubt that the technologies for helping close sales has evolved right along with the rest.
All the great and innovative technologies in the world won’t help much if the salesperson doesn’t have the right sense of purpose. What’s your sense of purpose when you’re with a customer? Are you there to close the sale, to make the commission? If you are, you may be wondering why it’s not working out quite the way you expected.
I was that way until one of my principals put his manufacturers’ reps through a four-day consultative sales course. The first morning, we discovered purpose. All 20 of us in that session were asked by the leader “What do you think the purpose of your business is?” To a person, the answer was in one form or another, it was about the money.
Four hours later, we learned we all were wrong. The real purpose of our businesses was to help our customers solve problems in the most economical long-term manner. We also learned that you can’t fake a sense of purpose; it has to be genuine and come from the heart. For me, while I rationally knew what I had learned was correct, it took a while longer and constant focus every time I visited a customer for that sense of purpose to move from my head to my heart.
That one lesson I learned from the course fundamentally transformed my sales career in a very positive manner. Once I developed and internalized that purpose, my sales (and commissions) took off. Without a doubt, it was the most important lesson I learned in my entire sales career.
So what’s it going to be for you? Are you calling on customers to make some commissions, to make a few bucks or are you there to help them solve problems? Your choice.
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