Make Agreements Agreeable

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We have another great issue of Agency Sales focused on Rep-Principal agreements. MANA wants to help both parties reach fair and reasonable terms in their contracts. Last month, we had a very successful teleforum with Nicki Weiss on this topic, and we discussed how the word “negotiate” can sometimes create a negative beginning to your talks. Practice some Stephen Covey: begin with the end in mind, and think win-win. Think of what is good for the other party and what is equitable. Winning a negotiation isn’t always winning.

MANA makes some great tools available to our members. We offer a Manual for the Creation of a Rep-Principal Agreement that is available in the member area of our website. It has great tips on the very important parts to be included in agreements. There are also three different template agreements that you can download, modify and print. MANA members also have access to a list of 26 attorneys who are very knowledgeable and are truly “rep” lawyers.

On another topic, I wanted to provide MANA updates in a format familiar to our members. May 1, 2010 marks the beginning ofMANA’s 63rd year of promoting, protecting,educating and connecting manufacturers’ reps and manufacturers. The MANA team has made many recent changes and great accomplishments:

  • We held our first ever marketing and sales conference, MANAFest’09 — a huge success.
  • Made major upgrades to our flagship publication, Agency Sales magazine, the voice of reps.
  • We purchased the MANA building in Aliso Viejo, Orange County, California.
  • We completely rebranded MANA with a new strategic plan, logo, and a new mission and vision.
  • We enhanced our educational program offerings with teleforums, professional development forums in cities throughout North America, webinars, new and updated publications — notably the Manual for the Creation of a Rep-Principal Agreement.
  • We revamped the rep directory database and launched the new RepFinder.
  •  We participated in many industry specific tradeshows with the new MANA booth.
  • We presented to many manufacturer groups (associations and companies) and continued to promote the rep function to all manufacturers, new and old, large and small.
  • Enhanced MANA Tele-counseling with more advice for all members.
  • Like many companies, we did all of that with a 30%+ reduction to our workforce. As we move into our new fiscal year, we are embarking on a new strategic plan focused on several key elements.
  • Member relevance: reviewing our products and services, rejuvenating some, developing new ones and constantly working on getting feedback from you, our customers.
  • Virtually virtual: utilizing new association management software, new IT and infrastructure to become more web-centric and to provide social networking communities (“tribes”) for you.
  • Association management: working to expand our service offerings to other associations.

So, tell someone about MANA, get a new member to join (rep or manufacturer). Help us to grow and continue supporting this great function and the best way to sell — with reps!

Looking to the Future

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When I learned of this month’s Agency Sales theme, I first pictured George Jetson with Astro in his back seat making sales calls, and Luke Sky-walker selling lightsabers with an exclusive territory of three galaxies and no house accounts. Then I thought, maybe we should just focus on the near future, perhaps even just this decade.

The rep of the future will be more technologically equipped, better trained, highly educated and more professional. Not only will they know more about their products, but also about the key business aspects of their own rep agency, such as planning, operations, marketing and selling. However, one key element that will stay the same, as it always has, is the importance of the rep’s relationships with their customers.

A rep is the ultimate communications expert. We live in a culture of information addiction. Enhanced with the latest communication devices, the rep of the future will continue to succeed by doing what great reps do: moving information quickly, accurately and reliably. The focus will remain on answering every customer and principal question immediately, and solving every problem quickly and thoroughly.

Expanding their businesses with the use of social media networks, emerging video technologies and online meetings, reps will seek out every new tool that could possibly create new business opportunities. The rep of the future will strive for inefficiencies in all aspects of their agency with respect to time management, travel, office locations, and overall costs. Nevertheless, they will maintain a sales focus — the most performance-based model of selling there is.

The rep of the future will become even more customer-centric and have a greater determination to build stronger relationships at all accounts, big and small. Reps with vision will “follow” their customers to all corners of the business world to solve the continued issues of globalization, outsourcing, mergers and acquisitions. They will make whatever change necessary to have a more global/ international business model, with a heightened emphasis on opportunities in Asia and Europe.

Keep in mind that our customers don’t demand much — only more, better and faster, for less. We must continue to deliver. As you position your agency and yourself toward becoming the rep of the future, remember that it’s all about the customer. Look, learn, and seek out new things that enhance professional success. Network and share with other reps; we can all become better.

You are the rep of the future — so be it!

Truly Successful Manufacturer-Rep Relationships: Collaboration, Cooperation and Communication

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Are you right for success in the rep world?

Our recent MANA survey resulted in some fresh new ideas about what reps and manufacturers expect and want from MANA. There were lots of comments about helping both parties come together and understand each other better. Thanks for the ideas about improved collaboration, better cooperation and the key to it all: clear communication.

These are easy words that require fairly difficult and consistent actions. We have talked about selecting the right rep, getting and setting clear expectations and being on the same team. In recent times, all of us have been tested to determine which relationships are long term, and who had the persistence and patience to continue to see it through. Doing the right thing and doing it well has never been more important.

It’s easy to blame and judge others on your team. In fact, I think we have really created low levels of trust and high levels of blame. This is not part of a winning recipe. We will all have good days and bad days, and we will make mistakes. It’s the only way we grow. Growth is all about new, and new is all about change, so do something different. You must!

MANA can really help. We’re in the business of promoting the rep function and, as obvious as it sounds, we do it for the good of mutual success — for reps and manufacturers. We know clearly that outsourcing sales to a professional manufacturers’ rep is the best method to take products to market. The intellectual property of manufacturers’ reps is the knowledge of and relationships with their customers. This is what they do best.

The Q1 2010 focus of Agency Sales has been on the partnership between manufacturers and reps. Hopefully we are not reiterating too much, nor simplifying this seemingly magical recipe of truth, trust and respect. Success is really about building relationships into partnerships that sustain and survive through the good and the bad times. YOU make the relationship work.

It’s all about open and honest communication, fair and reasonable collaboration on expectations and goals and true cooperation by both rep and manufacturer that focus on the number one person in your lives: the customer! (OK, maybe the number two person.)

The Recipe for Growing Sales

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The main ingredient for grow­ing sales is the right relationships; it’s all about having the right part­ner.

Here at MANA, one of our greatest goals is to help members build strong relationships so they can grow their businesses. After years in the industry, we have devel­oped some key practices for doing just that.

When looking for the right partner, you must treat the search, interview and selection as though you are hiring a key executive for your own company. This ensures that the key values and standards held by your company are present in your new partnership.

Cultivating these new connections is the critical first step. We often recommend several great tactics to get you started, including using the MANA RepFinder database; advertising in Agency Sales; asking other reps, customers and distributors; and building a solid initial list of potential colleagues from which to work.

Next do your research. View their websites and line cards to determine fit, synergies and complementary products. This is your opportunity to gain as much information as possible before you reach out to them.

Now call them! As many of you have experienced, its not likely that a potential new business partner is going to respond to just another email that appears to be no different than the hundreds of others they’ve received this month. Pick up the phone, talk to them, and if they are not interested, ask them, “Do you know someone else that might be a good fit for us?” People know people in the business — manufacturers and reps.

After calling and narrowing your list again, get on an airplane and go visit! You must get eye-to-eye with each candidate; see their people and operations; thoroughly discuss the territory, targets, marketing efforts and expectations; and candidly share information about strengths and weaknesses. Also review your products, policies, people and the terms and conditions of your Principal-Rep Agreement contracts. Know exactly what you’re looking for and go prepared. A second round of interviews in-territory can be of great benefit also. Bring more of your team, or invite the final candidate(s) to visit your headquarters.

Then, make your decision. Now the real work begins for everyone on the team. Keep your new relationship growing and healthy. Lead and motivate; don’t manage and control. Once you have teamed up, set mutual goals and expectations. Develop strategies for breaking down any obstacles to capturing new sales in emerging markets and with new accounts or growing business at your existing accounts. The total focus needs to be on the customer. Be patient, be persistent, but most of all, be fair and reasonable.

In these times of required change, the need for strong, dynamic partnerships is abundant. Be proactive, grow together and keep planning for success. Stay focused on income-generating efforts that help to build a more mutually beneficial enterprise.

Best of success for enhancing and establishing the right relationships and growing sales in 2010.

Principle Centered Principals

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What are the best habits and practices of the principals we represent? We often say that there are only two types of manufacturers when it comes to reps, those who “get it” and those who don’t.

There are a lot of great manufacturers, and many of them are strong supporters and members of MANA. These “best” manufacturers have a top down and total team directed dedication and commitment to the successful partnership with outsourced professional field sales (Independent manufacturers’ representatives). They understand the recipe for mutual success and focus on the ultimate goal — sales growth.

There are many great things that the best principals do and have:

  • The owner, president, CEO believe in the rep function.
  • Truly partner with reps, and don’t perceive reps as the “necessary evil.”
  • Mutual trust and respect for, and with their reps.
  • In general, they “get it” and recognize that nothing happens until they get an order!
  • Provide great sales tools, samples, literature, RFQ forms, spec sheets, etc.
  • Develop strong marketing plans and advertising for their products.
  • Distribute solid leads to the reps.
  • Research new business opportunities with their reps.
  • Share sales success stories with all their reps (“SOS” — Selling On Successes).
  • Have great information systems with respect to sales reports, commission statements, etc.
  • Have great operational systems overall, they never say “our system won’t let us.”
  • Are dedicated to knocking down barriers and obstacles that prevent sales.
  • Are focused on the customer and work to satisfy their wants and needs.

In highly successful relationships between the best principals and reps, mutually agreed upon goals and sales targets are set. There is clear agreement on the expectations, from both sides. These strategies, goals and expectations are kept in focus, and reviewed periodically throughout the year. Both the principal and the rep are pushing hard toward the ultimate goal — growing sales at existing accounts and developing business at new accounts. They work in harmony. This may sound idealistic, and I don’t want to make this sound easy. This type of relationship, between the best principals and the right reps, does not occur often enough. It takes time, energy and commitment to make the relationship work. The best principals also really take their time when selecting a new rep firm for a territory. They know it is about finding the right rep for their company. not all rep-principal marriages work!

In these difficult times we find that people do desperate things. don’t do that. Be a principal with solid principles. Be truthful, have trust and respect for everyone. now is the perfect time to work on solidifying your good relationships and to build new relationships for 2010.

Happy New Year! May you create prosperity and happiness in 2010.

Good Selling.

What Are You Doing Differently?

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I have talked with and met with thousands of reps over the last three years, and I have asked many times, “What are the biggest challenges facing your rep firm?” I have also asked, “How is your business?” Most have answered “down,” but some in the room say “Up!” Of course, I ask why.

Those reps reply with a common thread of doing things differently, making difficult changes and diversifying their businesses. Most also respond with the two words that have seemed to escape some people: “hard work.” Yes, more sales calls, more cold calls, new accounts, and new directions: also known as “change.” You must change. Some ideas and strategies that MANA has provided (that we know lead to success) are the following:

  • Professional development and rep educational opportunities — make yourself better.
  • Networking with other reps at MANAFest, at local all-rep meetings, and MANA Professional Development Forums.
  • Diversifying your product offerings, focusing on your customers’ wants and needs.
  • Representing foreign manufacturers and even buying/selling products.
  • Selling services to customers, and/or getting fees for services from manufacturers.
  • Over-communicating to all customers, manufacturers, dealers/ distributors and your team.
  • Making more sales calls, seeing more people, making more connections.
  • Using social media and social networks to enhance relationships in all areas.
  • Greatly improving time management by examining all you do and implementing new tools.
  • Focusing on performance and results, and planning and visualizing successful outcomes.

I often ask reps a couple more questions: “Do you have a mission statement? Do you conduct strategic planning?” It’s amazing how few do.

This is the perfect time of year to set aside several days and get away from the office, turn off your laptop and cell phone, and even turn off your reactive brain for a moment. Write or re-write your mission statement. Do a S.W.O.T. analysis, and conduct a what should we stop-start-continue exercise.

Conduct line profitability and time analysis of what you and your team do. Look at your sales tools, look at your systems, and look at everything and determine if it’s necessary or just nice. Look at making some change.

It’s OK, and it won’t hurt, I promise. I recall my days as a rep — we are so reactive, and we really don’t get to proactively plan what we are doing. This distracts us from focusing on important, proactive things.

MANA has templates and formats for strategic planning, and we can help. We will be conducting a webinar, “Strategic Planning for Any Size Rep Firm.” Please look for these details.

Remember, MANA is here for you, and we are your unified choice and the voice of the manufacturers’ rep function. Happy holidays and best of luck for planning a successful 2010.

Is the Generation Gap Gone?

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Keeping your business healthy — and sustaining this industry — requires a deep understanding of how the generations can work together.

Generations are very interesting, and to me, people in general are even more fascinating. It’s really what makes our world spin. There are countless books and presentations by generationalists, offering explorations of the personalities of generations. Although the ranges of years vary (as well as the analysis of behaviors and attributes), the information boils down to this:

Born Between Generation Key Aspects
1925-1945 War (“Silent”) Hard workers, traditional, radio babies
1946-1964 Baby Boomers Long work hours, team players, large population
1965-1976 Generation X Latchkey kids, question everything, not joiners
1977-1998 Millennia (“Gen Y”) Multi-task, civic-minded, value education, technology

For the first time in history we have four generations working sideby- side in the workplace. This dynamic can create substantial issues relating to teamwork, compatibility and productivity due to the varied personalities and their individual needs and wants.

I see this as a huge opportunity to obtain a wonderful cross section of different perspectives and views on life. You need to embrace all generational players of this extremely diverse team, especially in our current situation of rapid change and uncertainty. What better way to target all potential markets and customers!

In the rep world, we often hear that finding, hiring and keeping good salespeople is one of the “biggest challenges facing reps today.” In years past, we used to see many more 2nd and 3rd generation rep companies; this is not so today. My theory on this is twofold: 1) the kids come to mom or dad and say, “Hey, you are always so worried about losing a line, and you are always at some sales meeting, or entertaining customers or principals… Why would I want that?” Or 2) the mom or dad wearily looks the kids in the eye and says, “Go to med school!” We need to help this tradition get back on track. It is possible, and the multi-generational family business does work; there are many successful MANA members who are family businesses.

Moving forward, we have to better understand the upcoming generations and also understand their specific abilities relative to our risk/ reward business. The term “sales” doesn’t always generate great perceptions, but it will continue to be a sound career choice as our society and culture change. We all need to educate industries, associations and academia on manufacturers’ reps.

As part of this effort, MANA is working with the University Sales Education Foundation (USEF, see www.saleseducationfoundation.org), which has helped 37 colleges and universities create formal sales curriculums, so students can earn a degree in sales. The schools are listed on the USEF site. This is a great program that will enhance awareness of sales in academia, while likely improving the perception of what it means to work in sales, especially for future generations.

I invite you to reach across the generational aisle and grab hold of someone one-third your age (or three times your age), set down your laptop and PDA, stop your e-mail and your Twittering and go share a cup of coffee. You might be surprised what you learn — and what you have in common.

Good Selling.

Rep Contracts: Simple, Clear, Fair

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Maybe it seems too obvious, but I think that there are some real basic things that manufacturers and reps need to observe and do when creating an agreement for representation.

The things that both parties need to strive to have:

  • An agreement that is simple, yet complete.
  • An agreement that covers all the needs of both parties and clearly states expectations.
  • An agreement that is fair, equitable, and balanced, not one-sided.

Let’s recall another obvious fact: reps are not attorneys, and neither are the sales managers that are usually involved with the negotiation of the contracts. We’re sales folks, and that’s what we do well: sell! There is a certain need for professional help when it comes to the construction of an agreement that fits the above criteria.

Some tips for manufacturers when it comes to representative agreements:

  • Listen to what is important for the representative firm to have in the contract.
  • Don’t establish an agreement that creates problems if there is a significant sales growth in the future.
  • Avoid any house accounts unless there is an extremely valid reason.
  • Be open to suggestions for new and different clauses, and don’t say, “all our agreements have to be the same.”
  • Don’t hide behind, “it’s up to our legal department.” If something makes sense, get it in the contract.

Some tips for representatives when it comes to representative agreements:

  • Listen to what is important for the manufacturer to have in the contract.
  • Don’t “negotiate to negotiate” — focus on the things that are important and make sense.
  • Think openly and with a win-win attitude as to not get stuck in the negotiations. Try new stuff!
  • Review your existing contracts annually, to be certain that they are up-to-date and applicable.
  • Use a MANA attorney for the process. (The list of MANA Rep Attorneys is available to all MANA members.)

Another great tool for both parties is the new, and continually updated, A Manual for the Creation of a Rep-Principal Agreement. This is available in the members section of our website under “Contract Guidelines.” We also have some great reports relative to starting a new rep-principal relationship.

Remember that this first step in the process is very critical, so take your time. Establishing a great Representative Agreement is the best way to create a high level of trust, and get the relationship off to a great start.

I don’t know about you, but I’m getting tired of hearing all about the “turbulent times” and “recession economy” and “how bad it is…” I think that we all know where we are. The real question is what are we going to do about it? Reps need to push themselves more to make more sales calls, find new opportunities and new accounts, and really listen to what the major customers need and want. Manufacturers need to not cut commissions. Recall that if a rep territory is down 50% in sales, they already took a 50% reduction in commission revenue. If you cut the commission by 20% (5% to 4%, or 10% to 8%), they effectively are getting hit with a 60% reduction to their company’s commission revenue.

What we all need to do is get out of our comfort zones, communicate more, enhance the teamwork between the factory and the representative, and be positive and optimistic with new ideas and different approaches and solutions. And, more than ever, MANA matters: promote the function and have passion for your profession.

Effective Sales Meetings in an Ever-Changing World

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Recalling lots of sales meetings in my 22 years as a rep, plus speaking at national sales meetings over the course of the last three years, I have seen some lavish venues — Las Vegas, Mexico, Maui — and many have really been fun. (One of the best was the annual Epson Components national sales meeting at the Ritz Carlton Kapalua, Maui, in January!) I’ve also attended many sales meetings conducted in business venues where the focus was almost entirely on business — and that’s okay too.

There are many reasons why to have a sales meeting (and sometimes they aren’t even necessary) but I think the circumstances of the last ten years have shaped a completely different agenda for having manufacturers and reps meet.

First, let’s tackle the why in having a sales meeting. Whether it’s a national, international, regional, or even a Rep Firm sales meeting, the focus should always be on SALES. As obvious as this may appear, sometimes we need to remind everyone of the fact — “Heck, it is a ‘Sales Meeting,’ right?” If you really think about it, in the Manufacturers – Reps world, the total focus should be on SALES period — growing sales, maintaining customers’ sales, and finding new customers to grow sales. It’s all about NBOs (New Business Opportunities).

A large portion of the meeting should be dedicated to addressing the manner in which each party is going to do everything to (1) focus on the customers’ needs and problems, (2) make business processes easy, and (3) work together to keep those customers happy (and find new ones). The agenda, schedule and presentations should be decided upon with inputs from reps, perhaps from the manufacturer’s rep council. Pre-planning and a dress rehearsal of the entire program are essential for conducting a great sales meeting.

Product presentations need to be concise. I’m not a big fan of “product” training — what manufacturers really need to do is show reps where to sell the product and how it successfully fits into the customer’s application or need. It’s really more about “application” training — showing reps where and how to sell it. The best example of this was a really good one-day sales meeting that our rep firm used to attend. The product engineer would present for 30 minutes or less and then the marketing/product manager would talk for 15 minutes about the types of customers and/or industries (often reviewing 4 or 5 customers) with major application successes. The manufacturer would cover 5 or 6 products which were either new or were focus products for the company — and this would really capture and keep the reps’ attention (successful and new products).

In recent years, we’ve seen webinars on product/application training really becoming more popular; I think these are a great follow-up tool and source of reinforcement for what was learned at the sales meetings. I’m not sure that an annual meeting is always necessary; it may be more fitting to have a sales meeting every 2 to 3 years, in which case the webinars make good fillers for the in-between years.

Meeting location is important; today I’m more of a fan of having it near the factory for three primary reasons:

  • “Rookie” reps (those new to the line or new to the rep firm) could come in a day early for Rookie Rep Training.
  • All the reps should have a brief factory tour to see what’s new (you always learn something on those tours).
  • The factory people get to mingle with the reps and should be invited to some of the evening dinners to get to know the reps better, and vice-versa. Establishing and/or enhancing these relationships is an integral component of increased sales success.

(Keep in mind, all of the above only makes sense IF the factory is still here in North America!)

There should also be some time during the sales meeting for candid and open dialogue. This town hall style question and answer period is good for reps to learn about future strategic directions and for manufacturers to hear what’s really going on in the field. Sometimes a pre-survey of the reps facilitates more candid discussions. There should also be a wrap-up meeting where the president/CEO/owner gives an overview and announces rep awards, followed by some resounding motivation on how the manufacturer-rep team is focused on mutual success.

Don’t forget to have some good productive fun too!

Rep vs. Direct — Always an Interesting Story

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During the year I get lots of opportunities to talk to manufacturers. These range from phone conversations to presenting at national sales meetings to conducting manufacturers in-house seminars, but they mostly occur when I give presentations to manufacturers’ associations, where we engage in great dialogue about this topic — rep vs. direct. Can you guess which side I stand firmly on?

Certainly there are situations where it really makes sense to have a direct sales force, or a hybrid sales force comprised of both direct and independent reps. The most common reasons I hear in support of this option are generally “our product is too technical” or involve issues of being able to control their salespeople. Large organizations certainly are more likely to have a direct sales force, but this is not always true. The key is to have the right sales reps, whether direct or rep.

Note that I am very confident that the manufacturers who are reading this article are not the ones who really need to read it. We know that our MANA manufacturer members “get it.”

Ok, so why reps? Why do MANA manufacturer members outsource their field sales to our professional rep members? There are several key advantages for successful sales growth with reps:

  • Multi-line selling: Reps have more than one product and company to sell, which gets them in to see many diverse customers, often providing opportunity to present their other lines. The complementary and synergistic nature of the line card then allows manufacturers to gain leverage from the rep’s other lines. This is a huge advantage for the customer who can purchase multiple products from one rep, further enhancing the relationship via the level of sales.
  • Customer knowledge and relationship: This is the intellectual property of reps. They have grown these customer relationships wide and deep, and really know their customers’ needs, wants and how to best solve their problems. Reps are problem-solving, solution-seeking, marketing salespeople. Typically the Reps have been in a territory for a long time and have ‘grown up’ with these customers.
  • Reps only get paid for success: Manufacturers only pay when reps successfully sell — this creates the ultimate motivation for the rep.
  • Market intelligence: Good reps are solid businesspeople and know their market and industry very well. They can act as a great resource for their manufacturers to give advice on what other lines are doing with sales and marketing strategies, and also offer solid ideas about new product introductions. Reps are the eyes and ears of the manufacturers.

My great friend, who recently passed away, talked and wrote about the three ‘myths’ surrounding reps and how strong and wrong these perceptions are engrained. Bob Trinkle’s three myths are:

  1. Reps are an additional channel in sales. Not true: A salesperson, whether direct or rep is needed to sell stuff. The rep is the same as a direct person and should be treated as an extension of the factory. The best manufacturers do this, and treat their reps with respect and mutual trust.
  2. Manufacturers don’t get the reps “mind share.” Time spent on a line is the wrong thing to measure. Manufacturers sometimes ask reps to do crazy things (like create useless reports) thinking that this will help them get more of the rep’s time, which translates to more attention and then more sales. Would someone really care if I spent 10% of my time on their line and sold $2 million vs. spending 20% and selling only $1 million? I hope not. I would recommend that you help the rep have more selling time, be easy to deal with, and measure sales dollars instead of time spent. Remember also that the other lines that a rep carries are not competitors for your time; these lines very often provide leverage for a manufacturer who gets pulled into a customer via another product line interest.
  3. There is some level or break-even point where it makes sense to terminate the rep and go direct. This is a terrible misconception. This cost analysis is usually incredibly inaccurate and leaves out many costs that are built-in to the independent rep model. Recall that if the rep is getting paid lots of money, it must mean that the manufacturer is getting tons of revenue since the rep operates on just a small percentage of the total sales. See the solid comments from my friend Glenn Thompson in the feature article about liking to send reps big checks and about paying higher than average commissions on time.

Reps are running a business. Commission does not equal income and in many cases the total earnings of all employees at a rep firm is about 50-60% of the total commission dollars received. The other 40-50% goes to ever-increasing rep expenses like health care, automobile, travel and entertainment, technology updates, etc.…

Re-reading this, I’m asking myself, “Gee, are reps the greatest thing since sliced bread?” Certainly not, and of course there are some not-so-good reps out there. The key is to find, hire and motivate the right reps — the great reps — the MANA reps!

Create solid business partnerships built on trust and respect, and help knock down obstacles that block sales from happening. Be easy to deal with, say “yes we can” and have some productive fun. You will succeed! Good luck and good selling.

A Marriage Made in Seven

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The seven steps and the seven key ingredients to a successful rep-manufacturer “marriage.”

We often refer to the rep-manufacturer relationship as a “marriage” and it makes sense. Like the commitment we make in any relationship, there are certain necessary steps to take along the path to success:

  1. We meet: Reps and manufacturers connect via MANA, a trade show, or a rep search.
  2. We date: We talk, we get to know each other, we learn about each others’ wants and needs.
  3. We court: We are getting more serious, and we determine if we will stay together.
  4. We engage: Now we have told each other that we really are ready to make a commitment.
  5. We marry: We sign up, and with blissful optimism, we start the wonderful honeymoon period.
  6. Years 1 & 2: This may be more like years 1-7 in marriage; we really know each other now.
  7. Life-long success: We continue to grow together, prosper, share success — and life is good.

Why is the divorce rate so high? Why doesn’t the rep-principal relationship last forever? One reason is the fact that it is so easy to get out of the relationship. But the underlying reason is that we selected the wrong partner to begin with. At MANA, it is our job to help educate manufacturers on finding the right rep and to educate the rep on how to select the right manu­facturer and build stable and long lasting relationships. The goal is to make commitments that succeed and last.

When it comes to the subject of manufacturers’ representatives, there are only two types of manufacturers: the ones who “get it” and the ones who “don’t get it.” Let me tell you a story about one manufacturer that doesn’t get it.

Last year, I talked with a rep who was quite upset. the rep told me the story about developing a very big account over a long period of time, and of what happened when the company recognized that they were about to win a three year deal for $10 million in sales per year (do I have your attention now?). As it got closer, the principal informed the rep that it would be a 2% commission instead of the normal 5%, even though pricing had been submitted already with a very ample margin to pay the 5%. After some short discussions, the rep agreed to the 2%. The rep successfully obtained the order, $10,000,000 this year, with a contract for 2 more years at $10,000,000 each year. Yea! There would be lots more work to do, to start the shipments, monitor quality, expedite, etc.

After the champagne was empty, and the principal looked at the commission dollars, they coerced a Junior Buyer into agree­ing that it would be better if they handled the account “direct” (it hurts me to even type the word). $30,000,000 total over the 3 years at 2% was lots of money — $200,000 per year, to be exact. Everyone knew it was the rep’s relationship with, and knowledge of the account that created the win. The principal would never have had a sniff at this opportunity. Then, they offered the rep a finder’s fee of $10,000 and told the rep that they could continue to pursue a similar large opportunity at another account which was very close in likeness to this one. Wow, that’s motivating! This manufacturer clearly does not “get it” and is also forgetting about the $9.8 million that they would get each year as a result of the rep’s efforts. The manufacturer was too greedy and too selfish to pay the mere 2% ($200,000). Guess what happened next?

All manufacturers are not bad — and we have many great manufacturer members of MANA. And to be fair, I would never try to convince you that every rep is the greatest thing since sliced bread — of course there are some bad reps too. But mostly, when it doesn’t work, it’s a bad fit from both sides. You may have picked the wrong partner and as a result, the marriage failed. So what are the seven key ingredients to a successful rep-principal “marriage”? Well, I’m glad you asked:

  1. We have mutual trust and respect for each other, and this is how we treat one another, always.
  2. We have set clear expectations and agree to the goals, and we communicate candidly on progress.
  3. We are responsive to each others’ needs and requests, and provide information easily and quickly.
  4. We knock down obstacles quickly — those things that are blocking us from getting orders and growing (we adopt a ‘yes we can’ attitude when it comes to solving customer problems).
  5. We are focused on the customer, and continue to foster and promote a customer centric culture.
  6. We are patient and persistent with each other, in a patient and persistent way (we understand).
  7. We both like to have productive fun.

There are some great articles in this issue about the importance of building better rep-principal relationships. It’s not really that hard, and it’s mostly about clear expectations, candid communication, trust and respect. Do what you say you will do, do the right things, and do them well. You can succeed!

The Great Salespeople

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Do you have them on your team? How do you find them, hire them, train them and keep them?

If you think about it, Rep owners are quick to hire, and long to fire their salespeople. We don’t have a Human Resources Department (or person) to do the search, screening and selecting, and this causes some reps to neglect the very important steps of hiring a new salesperson:

  • Interview an ample amount of candidates. More is sometimes better, just to get you (back) in the groove of conducting a good interview process. Don’t rule out everyone by their resume, especially if it lacks some experience. We put ourselves in a box, and sometimes cause good candidates to not apply if we say, “10 years of proven sales success required.”
  • Interview well and hard. Don’t give the candidates a bunch of softball questions. Find out who they really are, and ask them tough questions and give them difficult hypothetical situations to see how they react. “Heck, don’t you have a bunch of history of tenuous meetings with customers and principals?”
  • Conduct a personality dynamic inventory. They are not expensive. See AxiomOne.com or call Mike Norton, or better yet, come see his presentation at MANAfest! This tool tells you unbelievably accurate information about your final candidates. It makes a solid yes/no recommendation on hiring people.
  • Reference checks are a must. Sometimes we get to this point, and we like the candidate so much, we just hire them. Don’t do this without extensive reference checks, including contacting people who are not on their reference list. If they told you that they called on specific customers or distributors, and you know these accounts — call them. Most people on their list are going to give them glowing reviews, and you might get more honesty from calling a candidate’s mother. Call all of their previous employers which typically are not listed as references.

OK, now you have hired them, what next? In the past, we used to say, “Here are the car keys, here’s your cell phone, here’s a bunch of literature and samples — now go sell a bunch of stuff!” Training is key, and even though it is tough to afford today, I strongly suggest that your salespeople visit all of your top factories. This is for application training, but it is more important that they meet and spend time with the people at that factory. (This is also key!) Take them on lots of sales calls with you and with your other salespeople (if you have others). Constant coaching is a must and you need to give them all of the tools to succeed. Continuous feedback and over communicating is the best.

In the times we face today, it’s tough to motivate even the best salespeople. Everyone in your firm needs to look for diversity and ways to differentiate your offerings and your position with customers. On an extremely positive note, there are lots of really good and talented salespeople looking for jobs today. Yep, I know, “how do you afford to hire them today?” Maybe there are some creative plans that you could work out with them, based on future dollars and successful growth. They are hungry — think about it!

Be open and honest with all of your employees, and be candid about their performance. Be certain that their expectations are clear, to them. Many employee issues are more related to the lack of clear expectations and performance objectives, rather than to them not having the capability and talent to do the job well.

Rep Education — Where Do I Find That?

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Rep education is both sales education and business operations education.

I had to chuckle when our Agency Sales team said that this month’s feature focus was “Rep Education.” I asked them if it would be okay for me to fill the page with the word “MANAfest!”

Reps are great communicators, great relationship builders, great ultra-multi-taskers, great visionaries, and most of all, great salespeople. I’m not so sure, however, that all reps are great business managers. And I’m certain that reps do not invest enough into their own continuing education and professional development, which in my opinion, is their number one weakness.

Rep Education, huh? I know you’re rolling your eyes. In the June 2008 issue of Agency Sales, the lead to my editorial was “Need advice? No thanks. I’m a rep — I already know everything.” I think that in many cases this attitude prevails, and we often hear, “I’ve been doing this (selling) for 30, 40 years…. Why would I need to learn anything new?” Taking a look at the current state of the economy, your industry, and very simply, the overall climate of the rep business, you really have to ask yourself: Am I prepared for the current challenges?

Gerhard Gschwandtner from Selling Power magazine says that “sales is the engine of the economy” in the 21st century. Are you a pacesetter in the racing pace of selling? Are you in the race, in the pits, or are you in the upper level of the stands? My father always says, “Some people make things happen, some people watch things happen, and some people stand there and wonder what happened” — which are you?

Are you up on all the tools of selling and successfully leading the business operations of your rep agency? Just like a carpenter, a plumber, or any tradesman, the tools, materials and techniques are greatly improved from years ago, and as is the case in the rep business, the tools improve every day.

Life-long learning is the key to success.

The Value of Legal Advice

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I think I need an attorney…

Here, at MANA headquarters, we get this phone call often. The calls are about business issues such as buying-selling a firm, or, more often, about rep-principal agreements. In this situation, you typically need an attorney at two points in time: 1) at the beginning of the relationship and agreement negotiation, and 2) at the end of the relationship when the contract is terminated.

Recall that in the beginning (and once the documents are signed), we all are in “agreement” with the terms and conditions and how each party will perform. Remember too that there is always certain risk, as there is in any new relationship. The legal concern of this new beginning is just one aspect of all of the risk factors. If your attorney says, “I have a doubt” about the agreement, don’t interpret that to mean, “Don’t sign it.” Attorneys are paid to have doubts! If your attorney, however, says, “Don’t sign it” — then don’t.

Contracts are really for contingencies and often times are not needed until either something changes or something goes wrong. Hopefully when you sign a new agreement or enter into a relationship with a new Principal, all goes well for years and years and you never need to take the agreement out of your (fire-proof) file cabinet. However, it is a good practice to do a quick annual review of all of your contracts to be certain that the terms and conditions are still applicable and up-to-date.

MANA has some great resources to assist you in all of the legal aspects of your business:

  • A Manual for the Creation of a Rep-Principal Agreement — a MANA publication updated by a committee of reps and our own Jerry Leth.
  • Phone consultation (15 minutes) with any MANA attorney — for free.
  • Phone consultation with us, the MANA staff (three ex-reps and lots of stories!).
  • MANAfest Conference, May 31 to June 3 — featuring a panel of MANA attorneys discussing the new agreement guidelines. The attorneys will also be available for one-on-one (private!), 30-minute consultations with you. (Hope to see you there!)

Reps are relationship experts and can usually tell if a new principal is going to be really good, good, just ok, or something less altogether. It’s important to spend time on the legal aspects of agreements and negotiations, but don’t forget to get out and sell.

Happy New Year?

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The Best Practices and Best Habits of the Best Reps in These Troubled Times

Let’s face it and start calling it like it is — our economy is in troubled times. The changes slated for the year ahead are uncertain, at best. These concerns reverberated loudly in the results of our recent Five Minute Survey (FMS). “The Economy and Uncertainty” far outranked the others as the biggest challenge for 2009. Upon seeing the responses, I immediately put a call in to Treasury Secretary Henry Paulson; unfortunately he told me that there is no rep bailout package!

Some salespeople have difficulty handling tough times or bad news. Those people would often rather stick their head in the sand and hope the difficulties will automatically improve or go away. Whether you grab it by the horns or opt for the duck-and-cover, learning how to gracefully handle change is one of the key habits of successful reps. Here’s my list of the best habits and best practices of the best reps. As you read through the list, I hope that you are able to
check off each item as something both you and your rep firm currently practice.

The best reps:

  • Are professional and ethical.
  • Act with integrity even in tough times when others maybe react desperately.
  • Are communications experts.
  • Realize that ‘sales is a contact sport’ and make more sales calls in tough times.
  • Network with lots of other reps.
  • Over-communicate with manufacturers in tough times.
  • Motivate themselves and motivate others.
  • Don’t blame or use excuses, and face the biggest challenges with new ideas.
  • Are not afraid to try something new and different.
  • Are change engaging.
  • Realize that business and industries always have cycles.
  • Accept the fact that they are in the ultimate risk/reward business.
  • Save for a rainy day when times are good.
  • Seek opportunities for their own professional development.
  • Know their industry, their market and especially know all of their accounts.
  • Know what their customers want (ask!).
  • Know their customers’ customer.
  • Invest in education for themselves and their employees.
  • Conduct annual strategic planning.
  • Have a succession plan for their business.

Continuously look for diversification opportunities with new products, new customers, new territories, buy-sell, selling services, becoming a “customer” representative, starting to assemble, and more.

Take a good look — be candid and open. We need to communicate and get the word out: manufacturers’ reps and outsourced professional field sales are still the best way to go to market. We need to promote and protect the function together. Invest in your future, network with reps, and remember that you are not in this alone.

So, go work harder, engage change, look for new and different opportunities, diversify, plan, be creative and look forward. Don’t strive to survive — opt to thrive! Create a reason to celebrate and have a safe, healthy and happy new year!

Shared Territory Development Costs

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Candid Advice for Manufacturers

As a manufacturer, one of the best things about using manufacturers’ reps is that you only pay for success. We generally preach this as a key benefit, but there is a scenario where it is not entirely true. The exception occurs when you have an arrangement to pay a shared territory development or pioneering fee to the rep.

Trust me — this is a good thing to do, and it will result in success if you create clear expectations and a mutually agreed upon plan for the pioneering territory. And, as a manufacturer, it is important to accept the fact that the rep selection process cannot be a whiz-bang ‘shoot from the hip’ type of deal.

To start, manufacturers need to carefully review all potential reps in a territory. From there, narrow the choices down so that there are 4-8 rep companies remaining. Then, get on an airplane and go interview each of the companies at their rep offices. Hiring a new rep to be your outsourced field sales force should be regarded in the same light as hiring a key executive for your company. Be sure that your interview plan includes meeting all employees, understanding the company’s business philosophy, examining their line card for synergy and leverage opportunities, and reviewing their customer base for compatibility. And most importantly, be sure that your plan will accommodate you in getting a good feel for them… the chemistry.

If you want really good reps, you may have to share the operational costs necessary to develop business for your products in their territory. If you find yourself in this scenario, agree upon a monthly shared territory development fee to be offset by any current commissions coming in, and set a fixed period of time for which the fee will be paid (usually 1-2 years). Also, set in writing the expectations that you have of each other. Determine what the rep will do for the fees, and what the rep will need from you, the manufacturer, to cultivate new business and grow sales. Communication and teamwork are the keys.

If everyone does their job effectively, sales from the newly acquired customers will result in commissions that offset the need for the fee. Reps are willing to work hard to launch a new line, and the best reps do it well.

Be open to the options and remember — a direct sales force would cost a bundle!

The Technology Age

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Refrigerators with TV’s, unbelievable virtual reality games, computers that are the size of a pen, pens that recognize and save your handwritten notes, software that converts your handwriting into your own font… wow!

Entertainment aside, there are some valuable tools that all reps should consider. To be a good road-warrior rep, here’s a short list of hardware technology you should have:

  • PDA-phone that gets e-mail.
  • Laptop.
  • Wireless/remote connection.
  • Personal recorder or device with message-to-self ability.
  • GPS system in your car.
  • Maybe a digital camera.

Taking it to the next level, advanced ideas might include a video camera, travel printer or all in one printer-fax-scanner, radar detector (or a helicopter!).

Important systems and software internal to your rep firm should include CRM software for reporting (remember that data is king). You want an easy method for salespeople to frequently update the database and a module in the database that includes new business opportunity tracking with emphasis on action items. You should also have a sales/commission tracking software with future payment analysis. Be sure to have redundant servers and/or uninterruptible power supplies actively in place.

It is also important to get industry and market data on your territory in order to better analyze trends and provide feedback and ideas to your principals.

Because we are bombarded with new technology and so much information, we must first determine what information is necessary. It is important to convert the information into useful data and then streamline it into valuable knowledge that will help you succeed at your specific mission. Try not to lose focus or get distracted by all the noisy information.

Reps are “communication experts.” And as an expert, you have to be able to easily access the data and information necessary to supply great knowledge — knowledge that is up to the minute, accurate and reliable. Remember to focus on the knowledge that is important to your customers. And remember, it’s still all about communication.

Buying or Selling Your Rep Firm

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The Buy-Sell process is not easy, my friends, but it’s not impossible to do! The key to success includes plenty of preparation and planning. In my years of experience as a rep, and in speaking on this topic and consulting to many rep firm buyers and sellers, I estimate that only about 50% have been successful. And the 50% that were successful usually experienced some glitches or underwent major changes during the buyout period.

What makes a successful Buy-Sell? A plan with good detail and clear expectations helps; always ask “what if,” and have solid contingency steps in place. The best plans start years in advance of the actual transition phase. As an owner of a rep firm, you should always maintain a succession/transition plan, even if you just recently took ownership of the company! Be vigilant in your planning — things will work out much better this way than if you were to suddenly say, “Hey, I’m thinking of retiring this year… now what?!”

My advice is to always start with the needs of the Seller. Next, look at what ‘type’ of Buy-Sell you have. There are two basic types of a rep firm buy-sell. One is an internal purchase where employees buy out the owner of the firm. The other is an external purchase where someone outside the company (typically another rep company) purchases the rep firm. Both can be tricky.

There are three parts of a typical Buy-Sell. The following example is called, “It is what it is.”

Valuation. This is usually the tough part and should be done first. It is the key point in which trust is established (or not!). In my opinion, there is no such thing as a ‘firm fixed’ deal with an established fixed price for the rep firm. With the volatility in the rep business these days, a firm fixed price just does not make sense, unless it is a quick sale, and the value is some fraction of one times annual commissions. I think that the ‘target’ price actually is one times annual commissions, unless there is some large asset or large liability involved. For our example, let’s say your firm has an annual commission revenue of $1,000,000. The ‘target’ value is just that, if nothing changes over the buyout time (how likely is that?).

Structure of the Deal. With the no firm fixed deal concept, the seller (owner) is paid 20% of the total annual commission per year, over 5 years. Or 10% over 10 years, or 14.29% over 7 years, or basically, whatever the buyer(s) can handle with respect to rep firm cash flow. Using the example of $1Mil and 5 years, the seller would get $200,000 (20%) per year for each year of the deal. That is, if nothing changes and the commission income remains at $1Mil for each of the five years. Not likely. In this, ‘no guarantee’ method, the buyers are only responsible for the percentage, and if income goes up or down, they still pay 20%, not a firm fixed monthly income. Successful buyer(s) should increase the business, and the seller would then receive MORE than the anticipated $1Mil over the five years. You may consider a cap to this, but that would also require the consideration of a minimum (floor) which IS guaranteed. There are several ways to structure these payments, not just a true stock purchase. With this method, the seller is paid exactly like a rep firm is paid commissions: by performance of the company.

Making it Work. Prepare for lots of time, and you will need to advise all of your manufacturers of the plan, and go to most of their offices/factories to explain the plan in detail, and emphasize why it is good for them. Your customers, distributors and dealers will be less concerned and less involved, and they will ask “will our parts still ship on time?” and “will our price still be the same?” None the less, you should (proudly) tell them about the transition and plans for the future and how the rep firm service level will remain the same (or get better) for them. Do not discount nor neglect the internal impacts — your TEAM. Be certain to over communicate with all of your employees about the plan, the transition, and how it will (positively) impact them and their jobs. Explain in detail the challenges they will face and expectations you have. This is vital to a successful transition.

Sellers: You must have ultimate trust in your buyers. You must ‘let go’ and not only transition the business, but also transition the extremely, successfully close relationships you have with the principals and customers. Let go, and get out of the way — let them (the buyers) call the shots.

Also, get professional help — and I don’t mean Dr. Phil or Jerry Springer. You should consult with your accountant, a good rep attorney, and perhaps even a tax attorney. MANA can help too, and we also have a list of 24 attorneys that are very experienced in this field.

Buying-Selling a rep firm can work. Remember to have a detailed plan (in advance), clear expectations, high levels of trust, and good contingency steps — and you will win. Good luck!

Selling Successes

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I absolutely love to hear reps tell stories of great selling situations and their resulting successes. Even if it was years ago, you can hear their enthusiasm, feel their passion, and see the excitement in their eyes as if it had just happened yesterday. Think of your own big hits and major wins in the rep business and let yourself drift into those emotions again. Do you remember the details and how it felt?

Today is certainly different — the big wins are much less frequent and much more difficult. Selling, in general, has changed, and many of you have made necessary adjustments to continue on the path of success. Human nature makes us creatures of habit, which in turn can make “change” difficult or uncomfortable at best.

Many people operate with a “scarcity” mentality and truly believe that there is not enough pie to go around. As a result, they feel the need to grab their pieces while they can. The good news is, today there are fewer rep companies, and fewer reps mean that there actually is enough pie to go around, especially for the good reps that survive and thrive.

Reps are skeptical animals. It can be difficult to get them to share good information about changes they’ve made, what they’re doing differently, and especially these days, to tell you about their sales successes. It’s important to remember, however, that your fellow reps are not your competitors. Your real competitor is direct sales. And this is precisely why you must share information, network, be part of the rep community, and actively participate in the association that strongly supports your function (MANA, or any one of our sister associations).

“So,” you ask, “where do I find and share all of these great ideas and success stories?”

Well, I’m glad you mentioned it. Here are a few places that you can start:

  • Agency Sales Magazine — Write to us if you have something to share or read articles from past issues.
  • Webinars, Teleforums, Blogs — Access great sales tips, success stories, new ways of doing things — by phone or internet.
  • Publications — Books, special reports, contract guidelines and manuals are available online and in print.
  • MANA Chapter Meetings and All Rep Events — A great opportunity to tell your story in person and learn from the experiences of your peers.
  • MANAfest 2009 — Save the date for this great learning experience — productive fun with fellow reps.

Links to all of these (and much more!) can be accessed in the Member Area of MANAonline.

So, have no fear. Go out and network, share freely, and compare selling successes — in the name of rep success!

The World at Work

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“Thinking globally” is not a new business strategy. Countries have been conducting trade across many borders for centuries. And regions of the world continue to merge in many aspects, including trade, business and economy, at a much faster pace each day.

There are also many barriers and imbalances which impact the equity of world business and bring to light the social and political positions of various regions and countries. Today we have constant reminders about higher costs relative
to a host of business and political situations.

Manufacturers are required to find the lowest labor cost locations or purchase from companies in these regions. Alternatively, they can closely analyze their own production and processes and make solid choices for improvements, efficiencies and automation. Either way, they must compete in a very price-focused marketplace. The margin squeeze is on — everywhere.

As we navigate through the business challenges of the current climate, it is important for us to understand the threats and available options, and to determine our strategies for success. It really is about information and communication.

Being aware of the global marketplace is important, but it is extremely difficult to find any one person who understands all about global business. We must share our knowledge and experiences so that we can all become more aware and understand, plan and succeed.

There are numerous reps that have been doing business with offshore manufacturers for many years and in all regions of the world. We need to tap into the MANA community for this knowledge and experience — the successes and the failures! It’s all about communication, and that’s what we strive to promote.

It Really Is All About You

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At the mid-year point of 2008, let’s collectively collect our thoughts and pause for a moment.

Why do you belong to MANA? There are many good reasons, and one is certainly because it’s the right thing to do. You belong because you support this wonderful profession that has been instrumental in creating your success. Belonging is also about the critical action of participating. You are MANA, and we want you to engage. We want you to network, share, and help reinforce the MANA community.

Within my short time at MANA, thus far (1½ years), I have had the opportunity to meet with many of you in person or to talk with you on the phone. Invariably, I hear the pride in your voices when you tell me that you’ve “been a member since….” or “been a member for __ years” or any one of the many other memorable MANA experiences. I hear the passion!

We have also heard lots about being more prepared in today’s ever-changing business climate. Manufacturers, especially, have told reps to do more planning, training, and educating. The Best in Class salespeople are those who are the most prepared and take the time for professional development.

MANA has many resources to assist you in these areas and the best is simply communication. More conversations, more information, more sharing and more networking. We learn from each other and we need you to share. We need your investment of time and we need your support in providing feedback. This is how we will solve your problems and the biggest challenges that we all face.

There’s quite a bit of apathy today. So have passion — about your job, about your company, about the rep function, about MANA. Plan, train, educate and get excited.

Go sell something — and let’s have some productive fun!

Advice?

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No thanks, I don’t need any — I already know everything.

Many people tell me that they have been in business for years, have grown their companies to great success, and then ask me “Why would I attend a conference, or go to a seminar, or network with others, or read a book?”

Advice is a great thing, and I have gotten lots of ideas, recommendations and counsel from many people in the rep industry. Most of it was great, and the worst I ever received was more humor than advice. When I first entered the rep business, my good friend Bill said, “The rep business is easy; it’s (only) about good lines and good people!” I believed him, although I’m not sure he had the word “only” in the sentence. His words are true, but there is much, much more to the business, as we are all now aware.

The best advice ever received was from my dad, Glenn, who said, “Sales is a contact sport.” How true that adage is (and has remained)! You need to continue to work harder to get face-to-face with your customers. In our rep firm, we used to measure the amount of real face time spent with customers; it was usually 20 percent or less. We worked hard to get more face time, especially with key decision-makers at our accounts. Even now, with the internet, customer defragmentation, mergers and acquisitions, it is still about relationships.

Creative Swiping

I firmly believe that the most successful people in business are the ones that always ask for advice and ideas. If you continue to ask and educate yourself, you will certainly learn new things to become a better and more professional salesperson. Most of the really effective sales and marketing tools and techniques that I employed in my rep days came from someone else, and with their permission, I did some creative swiping of some great ideas. Just a few of these golden nuggets were:

  • The Call Organizer: Jack Berman
  • VIP (Visiting Important Principal) Package: Gene Foster
  • Line Profitability Analysis: Dale Montgomery & Scott Lindberg
  • Year-End Letter to Principals: Bob Infanger

So, where do you go to get some good ideas? I’m glad you asked. Here are just a few ideas:

  • Agency Sales magazine: Great thoughts from great people.
  • MANA teleforums, webinars, blogs, special reports, and our website.
  • Educational events and seminars, and especially the CPMR and CSP programs.
  • Rep “no name” groups: Form a group with your rep friends and meet.
  • MANA telephone counseling: Just call us and see.
  • MANAFEST 2009 Conference, Las Vegas: May 31-June 3 of next year (the best place to go for advice!)

So my advice to you is to go get some. Get advice, give advice, creatively swipe and share your good ideas with others. Share and win. Equally important is to do something with the advice you get! It will make you better, make reps more professional, and raise the rep function higher.

Now go get some more face time with your customer — and sell something!

One

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Many (if not most) rep agencies started out as one-person rep firms. Starting and growing sales, increasing your customer base and adding new lines can be very exciting times. Often the most difficult thing for the new “one-person” firm to do, is to finally jump in — to make the difficult decision to just do it. All of the successful reps that have made this choice, say to me: “Gee, I wish I had done this years earlier!”

One-person reps have to do it all, thus quite literally earning the name “ultra multitaskers.” They are able to balance and juggle all aspects of running a professional manufacturers’ representative firm. They are pros at selling, managing principal relationships, tracking the financials, reporting, marketing the rep firm, and essentially, at satisfying everyone’s needs.

As success continues, the one-person rep firm faces many growth-related decisions. As they add new lines and new customers, their company grows and becomes more profitable. They then have to decide: Do I need to hire another person? Do I want to hire another person? Should I hire an inside sales/support person? Should I hire an outside salesperson (employee vs. 1099)? Should I consider a soft merge with another small rep company? Am I meeting the demands of my customers and satisfactorily growing sales for my principals?

One-person reps are great at time management. The best reps allow for and schedule in time to educate themselves, not only about the products they sell, but also on how to manage and run a successful and professional agency. Even though they are a one person company, they still do strategic and business planning, and know the critical importance of succession planning. (Succession planning is extremely difficult for the one-person rep firm, by the way.)

MANA can help with all needs and challenges faced by both one-person rep firms and large multi-office agencies. In addition to one-on-one support, we offer special reports, seminars, conferences and a wealth of information (on our website) to assist you. Please call on us to help you create even greater business success.

Good luck and good selling.

Successfully Planning a Succession Plan

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Succession Plan. The words inherently imply success, right?

In my own rep experience, and in consulting to many reps over the course of the past 10+ years on the topic of successfully selling a rep firm, I’ve found that less than half of succession plans succeed. My guess is that the number is closer to one-in-three plans that actually unfold as intended, and proceed through the term with success. Some make it through the process to the end, but find themselves plagued with turmoil, miscommunications and strained relationships, especially when the plan involves good friends or family members. The best defense against any of these misgivings is prevention — I recommend that you start early, and make a plan to plan.

Valuation — the starting point.

A good exit strategy requires significant efforts and involvement by all prospective parties, including the owner (seller), the buyer (heir apparent or employee) and a solid panel of advisors (an accountant, an attorney, rep friends, your association, etc.). This is the “starting point.” Plans always have a better chance of succeeding when the affected parties are fully engaged from the very first step. This provides increased directional clarity and comfort with timelines, and returns the focus to the important daily task of selling.

Structuring the deal — timing, payments and contingency specifics.

The timing of the plan is critical. Even if you are not going to start the plan for another 10 years (with the intention of retiring in 15), create it now and review, adapt and revise it every year. One of the biggest challenges of the process is managing the cash flow and simultaneously getting the fair value out of the rep company. Cash flow becomes an issue when the owner has fulfilled the day-to-day obligations and leaves the business. He continues to receive payments as part of the structure of the deal, but is no longer an active source of sales income. Rep firm operations must continue to run smoothly and quickly adjust to this change in cash flow.

Making it work — with employees of the rep firm, with principals, with everyone.

Obviously there are many potential downfalls when executing a plan of this nature. Another challenge to the process arises if the owner constructs a plan without considering input from the heir apparent buyer. In this ‘bossman’ scenario, the owner assumes that the prospective buyer will readily accept the terms and conditions put forth, basically because the owner has always run the rep firm, and always knows the best solution! Let this be a reminder to involve the buyer early on — it allows you to solicit opinions and positions, and to gage their willingness to create an equitable plan.

Once the plan is triggered and the owner is about five years out (+/-) from planned retirement, it’s important to begin communicating the plan externally. Be sure to communicate plan details to your manufacturers; they are often eager to see that you have a well-structured plan in place, and that it covers a specific time period for both the continuation of the rep firm and for their sales success. As part of your external plan communication, be sure to elevate the heir apparent buyer’s position and visibility within the sales environment; the prospective buyer should move into a more prominent decision-making roll.

A plan that is well done and done well-in-advance will increase your probability of success in meeting everyone’s needs. If you don’t have a plan yet, you might want to take some time out this weekend and jot down a few ideas. Don’t forget to consult with your rep friends, especially with those who are also considering a succession plan or who have a plan in place. Of particular value are those rep friends who have completed a succession of their rep firm. Be sure to consult with rep knowledgeable attorneys and accountants, and don’t hesitate to call MANA for help. After all, we want to see you relaxed and sipping piña coladas on a Caribbean beach — not worrying about the battery charge on the portable defibrillator in the top drawer of your desk!

Good luck!

Rep vs. Direct

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Hmmmmm… it’s an age-old question and a continuing debate. As the largest association of manufacturers’ reps in North America, I’m guessing you might already know MANA’s position on this issue. I think there are situations when a direct sales force makes more sense, so I would like to point out some benefits of using manufacturers’ reps, and also correct some of the misconceptions people have about reps.

Why reps? Why would a manufacturer choose to outsource the field sales function? Two major reasons:

  • Cost is the obvious and first thought: entry into a market, no direct fixed costs, easy.
  • Reps’ IP is less obvious: the Intellectual Property of a manufacturer’s rep is the knowledge of, and the relationship withthe customer. This is why reps create great success.

Why not Reps? Without a more complete understanding of reps, many manufacturers fall prey to a few myths. The following three myths are borrowed from my good friend Bob Trinkle, former rep, consultant, speaker and author of Outsourcing the Sales Function: the Real Costs of Field Sales:

  • Myth #1: “Reps are a channel.” Wrong! Reps are neither an additional nor an intermediary part of the channel. They are an alternative to or a substitute for direct sales. You must have salespeople.
  • Myth #2:“There is a break-even point of commissions to go direct.” Manufacturers sometimes think when commission levels reach a certain point, it makes sense to go direct. My first question is, “who developed the business and grew it to these new high levels?” There are so many costs that are not considered when these conversations start brewing between the CFO and the CEO (and in some cases, the CEO of today was the CFO yesterday).
  • Myth #3: “Getting increased mind share from the rep results in sales growth.” I think some manufacturers view the other product lines that reps carry as their competitors for the rep’s time. Manufacturers should recognize that they actually get more leverage from the other synergistic and complementary lines that reps have. And, it’s not about how much time a rep spends selling a line. All reps are measured by one thing — how much they sell. Activity does not always equal productivity and we don’t measure efforts, we measure results.

So, are all reps great? No, and it’s about alignment and communication. The manufacturer-representative “marriage” needs to have lots of time in the pre-selection, interview and hiring phases, much like hiring a very high-level key employee. Elements include an evaluation of complementary lines, an accurate matching of customer base and targets, a matching of company philosophies, and that overall “feel good” chemistry.

Strive for great communication and for the reps and manufacturers’ sales departments working together to knock down obstacles and barriers to maximize potential success at new business opportunities. Everyone should focus on the opportunities with the highest dollar potential and highest confidence that they will close in the next 30-60-90 days. Clear the way to make it happen. Manufacturers can become the emotional favorite of their reps by being very responsive and saying “yes, we can.”

The best reps are communication experts and ultra-multitaskers. Reps are the most performance-driven animal in the business jungle of today — they only get paid for success. Good reps know the market, the industry trends and their competition.

Growing with reps has resulted in many outstanding track records, and success with reps can be fun!

E-very-thing

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How up-to-date on technology are you? Have you ever heard anyone say, “I’m utilizing my technology tools — 100%?” I think most of us understand and utilize our tools at a rate less than 50%. There are a few of you that know and use all of the features of your phone and PDA, and are smarter than the help desk for Microsoft Office.

The important thing, however, is that you know and use the technology that makes you do your job better.

We live in a world of rapid technology change, and it’s important to embrace the appropriate tools that make you more efficient at meeting the needs of your customers. You need to upgrade your tools as well as upgrade your knowledge, through education and training on new software, tools and systems.

As reps, you need to become communication experts. You may think you ‘sell products,’ but your real job is to move information between the customer and the factory. The best reps move information rapidly and reliably.

E-this and E-that — E-verything is available on the internet. The internet of yesterday was a place for us to go and find information and/or solve a problem. Today it’s all about participation and collaboration. It’s about social networks and getting information and advice from thousands of user-experts, rather than from just one source.

The important technology and communication tools for reps are fairly simply these:

  • Cell phone
  • Personal Digital Assistant (PDA)
  • Computer
  • Your website

Make sure you know them inside and out, and use them to the max. And remember, the internet will never replace face-to-face selling — sales is still a contact sport.

So stop “cerfing” and go sell something!

The Biggest Challenge

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Happy New Year and welcome to another exciting year of Agency Sales, the voice of the manufacturers’ representative industry. Over the past year, I have asked thousands of you the same question: “What is the biggest challenge facing your rep firm today?”

I’ve had the opportunity to speak with many of you on the telephone and face-to-face, at 21 presentations to Sister Rep Associations, other associations’ rep groups (distributor and manufacturer associations) and manufactures’ sales meetings, as well as at 19 (MANA) All-Rep events in cities throughout the U.S. and Canada. In 2007 I asked more than 2,000 reps this thought-provoking question, and as a result, have had very engaging discussions. Here are some of the more common (and consistent!) answers:

  • Increased cost of rep firm operations (healthcare, insurance, even just gas!)
  • Keeping up with the increased demands of manufacturers.
  • Decreased commission rates (reduced rep firm income) — just combine these three and create a huge challenge — more cost, more work, less income.
  • Finding, attracting and hiring good salespeople (some great ideas in this issue).
  • Keeping good salespeople and having motivational compensation plans.
  • Succession planning within the rep firm.
  • Buying and/or selling a rep firm.
  • Split commissions and tracking commissions (customers going off shore).
  • Rep firm contracts with manufacturers.
  • Mergers and acquisitions of both our manufacturers and our customers.
  • Getting to the customer; face-to-face selling time with key busy people.
  • Relationships with manufacturers.
  • Technical issues and rep software, as well as the various software applications used by manufacturers.
  • The Internet.

So, what are we going to do?

MANA’s biggest challenge is finding the best and easiest way to get you to network, communicate and learn. We will be creating an ongoing dialogue about the “biggest challenges” and will continue to use teleforums, webinars, special reports, surveys, local and regional meetings, blogs and other communication methods and tools.

The bottom line — you need to participate. And MANA is committed to helping you face the challenges and create better long-term success.

Best wishes for a prosperous 2008.