Business Timelines Keep Focus on Reality

Exploring the Impact of Instant Gratification

What has spawned the desire for instant gratification? Is it the way fast-food restaurants have become such a part of our lives? Is it the Internet that seems to be able to provide any and all information/products/services seemingly at a touch of our fingers? Is it perhaps the fast-paced lives that we lead both personally and professionally that leave no room for patience? Or, is it a combination of all the above? Discussion of this subject might best be left for another time. Remember, patience is a virtue.

One thing for sure, however, is that there is no room for impatience or unrealistic expectations when it comes to the results a manufacturer expects from his reps in terms of developing new business. That’s the clear message that comes from interviews with several manufacturers’ representatives. What also comes from those conversations is the belief that it’s critical for communication on the subject to take place between manufacturer and rep before any contracts are signed. One of the purposes of such a conversation should be for the rep to educate the manufacturer as to how long it should take before business is developed in the territory. Once that’s accomplished, agreement should be reached by both parties that the length of time described meets the expectations of both parties. And finally, if there is no meeting of the minds between manufacturer and rep, it’s probably best not to proceed, since one side is going to have an entirely different view of a territory’s potential than the other.

Insights from Industry Professionals

Three New Jersey-based manufacturers’ representatives who are active in MANA’s Metro New Jersey-New York Chapter have spent considerable time exchanging ideas and refining their thinking on this subject.

Completing Due Diligence

Before he even gets to the point of having a signed contract with a principal, Mike Kozak, Lynx Associates, Inc., Oakland, New Jersey, performs his “due diligence” with the manufacturer. In the course of performing that due diligence, he asks close to 40 questions of the prospective principal. At the end of that process he will have zeroed in on the subject of the manufacturer’s expectations of the rep, the potential of the territory and how long it will take in order to develop business. Included in the questions are:

• How do you feel your product and program compare to your competitors’?
• What is the annual sales volume in the territory we are discussing?
• What are your company’s sales?
• What is your market share now?
• What kind of growth are you planning?
• As far as representing your company, what do you expect from us?
• What is important to you?
• What are your company’s plans over the next five years?

After questions are asked and answers offered, Kozak adds, “We’ll describe how we will perform over a given period of time. For instance, at 60 days through the first six months, we’ll conduct presentations and interviews with distributors. To successfully perform, we will need a formal introduction to current customers and periodic contact on an as-needed basis. At six months to two years, we will build the market. We will have developed our network of distributors and will be implementing the marketing plan. In year three, we start cranking out the sales. At the same time, you (the manufacturer) must do your part as we have discussed. That includes delivering products, performing customer-service return calls, advertising, etc.” These steps obviously lay the groundwork for jointly agreed-upon performance expectations.

Patience Is a Virtue

Bob Johnson, CPMR, The Growth Partnership Co., Green Village, New Jersey, uses the analogy of baking a cake to explain the timeline for sales processes. He emphasizes that while the process is generally the same, specific ingredients might cause some differences, but the overall approach remains consistent. This analogy helps him present a clear timeline to principals without needing to delve into excessive detail about every stage involved in acquiring a customer.

Well-Received Message

Johnson has explained his process to a number of manufacturers, and he’s been satisfied that his message has been received. “The functions of time are universal to everyone. What we explain to our principals are the ideal timelines for developing business and getting orders that we’re striving for. In general, they’ve all been very responsive to our approach.”

If there is no level of responsiveness to such a message, manufacturers’ representatives should not be afraid to walk away from a product line. That’s a message that’s delivered by another New Jersey rep, Greg Bruno, Midatlantic Enterprises, Inc., Pennsauken, New Jersey, who emphasizes the power of being able to say ‘no,’ which can be very empowering. When he refuses to represent a line, the manufacturer always has the option of contacting other reps or even hiring their own people — if they want to incur that expense.

Focus on Expectations

Here’s how a number of other reps view the subject of developing a timeline for new business and communicating their view of reality. A former rep turned consultant turned manufacturer has what might be considered an educated, if not enlightened, view on the subject of expectation timelines. “I spent more than 30 years as an independent electrical manufacturers’ representative,” explains Chuck Hopper, CEH Consulting, and Datacom Electronics, Norcross, Georgia. “Over that period of time I’ve learned that you must always address the subject of expectations early in the relationship between manufacturer and rep. And that’s something we do today in our position as a manufacturer and supplier of structural wiring systems.”

When Hopper speaks of bringing up the subject early in the relationship, he’s referring to as early as the interview process. “That’s such an important subject that it must appear up front. Why not ask it during your initial interview? Why even go in there for the interview unless you’re prepared to ask tough questions and get answers?” While admitting it’s important for the rep, Hopper also emphasizes that it’s equally important for the manufacturer. “From the start, the manufacturer has to get a fix on what the rep knows of the market, what he expects, and what the synergies are that he provides to customers in the territory. Obviously, the time before orders can appear in the pipeline will vary according to the product and the territory, but these are all subjects that had better be addressed early in the relationship.”

Admitting at the outset that “if someone has no business in the market, we’re generally not interested in ‘repping’ them,” Gene Biben, CPMR, Joseph E. Biben Sales Corp., Philadelphia, Pennsylvania, explains that if the occasion was to occur, “the first thing we’d put on the table is a marketing plan that would include the subject of expectations — including a timeline detailing when the manufacturer could expect business.” Biben notes that if the manufacturer has a different view of things, “and says he wants business to develop sooner, we won’t hesitate to refuse the line.” Before walking away because of differing expectations, Biben has been known to go the extra mile with the manufacturer, however. “For example, just recently we were in contact with a manufacturer who had a new product for which there was no existing business in the territory. When I communicated with the president of the company, I let him know that we didn’t have a desire to represent them. I let him know that the existing commission rate didn’t make sense for either one of us. After letting us know that he was very impressed with our marketing plan, he asked what it would take for us to rep them. I countered that I could offer two courses of action: an advance against the business, or a retainer that he would pay us for a period of nine or 10 months. If he agreed with the latter course, we’d be sure to send him monthly data verifying our level of activity on his behalf justifying what he paid us. He went with the retainer, and after 10 months I went back to him and asked if he would do the same thing over again. His answer was a resounding ‘Yes.’”

Biben continues, “I don’t walk away frequently, but when I do we’ve been sure that it was the right decision for us — and for the manufacturer.”

Don Swibes, Swico, Inc., Hammond, Indiana, turns the conversation to some of the experiences he’s had with overseas manufacturers when it comes to agreeing on a timeline for developing new business. “There are many foreign manufacturers that would like to see some immediate results — without having to incur a cost. They want quick amortization of their investment. Their belief is, ‘Here’s a great line, it’s all new, it’s great — pioneer it for us.’ Our response is, ‘Pioneering will take some time — you probably won’t see any results for a year or so, and it will be three years before you get back your investment. But, if everything is as great as you say it is, then you’ll be willing to participate in marketing and promoting the line.’” He explains that when he follows this approach with manufacturers, “Generally, they are taken aback. Their response is ‘That’s not what we thought,’ or