By Joe Miller and Jerry Leth
As the manufacturer views the marketplace, he’s always got two goals firmly in his sights — achieving increased sales and profits. To reach those goals he relies upon the services of a professional sales force. That’s where the choices begin. He can go either of two ways when it comes to interfacing with prospects and customers:
- Hire direct employees.
- Outsource the sales function by contracting with independent manufacturers’ rep businesses.
Regardless of which path is followed, the manufacturer must be mindful of the fact that management of an outsourced sales force is significantly different from managing employees. How the manufacturer interacts with each type of sales force — and how he achieves desired results — can be vastly different. If done properly, however, the results of working with reps can be significantly more rewarding than a direct sales force.
Plain and simple, employees are staff. As a result, they are subject to all the rules and protocols of the employer organization. Predictably, they are motivated by job security, resist change and have no stake in improving profitability. Conversely, independent reps are motivated by a sense of accomplishment in building their and the manufacturers’ businesses, and strive to improve the bottom line. When the manufacturer’s bottom line grows, so does theirs and they don’t usually get paid until they create a favorable outcome for their principal.
The professional manufacturers’ representative is a businessperson in sales as opposed to being a salesperson in business. He is an entrepreneur who exhibits a willingness to be in business — just as the manufacturer does. The rep depends upon his or her business skills in order to enjoy success and longevity in the territory. He recognizes that long-term success of the principal’s business is critical to the success of their business. At the same time they expect to share in the rewards of a successful relationship with the manufacturer. In order to enhance that relationship, most manufacturers have found that reps care more about getting a good price for the product than does the average direct salesperson employee.
The goal of the manufacturer is to sign up the most professional manufacturers’ agent willing to work with them. On the other side of the relationship, the goal of the manufacturers’ agent is to sign up with the highest quality principals willing to work with them.
Working Together
For the manufacturer-rep relationship to work, however, there must be an appreciation that both are traveling a two-way street. And, as any such relationship, it must work to the benefit of each of them. To achieve that admirable goal, the manufacturer needs to know how to work with the manufacturers’ rep and, conversely, the manufacturers’ rep needs to know how to interface with the principal. The quicker each side learns how to work as members of a team to solve the customer’s problems, the faster they profit. It’s not just about going out and trying to book orders; rather it’s a partnership — a partnership in profits; a three-legged stool, if you will, comprising the manufacturer’s firm, the rep’s agency and their mutual customers.
For relationships like these to succeed, certain elements need to be present. First, consider the obvious elements:
- Does the manufacturers’ rep have solid relationships with the customers for the manufacturers’ products or services?
- Are both parties competent?
- Is the manufacturer going to enhance the manufacturers’ rep’s reputation as a problem solver or create problems for him? Is the manufacturer going to enhance the manufacturers’ reps’ reputation as problem solvers or turn them into problem creators?
- Is the manufacturers’ rep business good at closing sales?
- And, most important, does the manufacturer or service provider understand the importance of investing in new products and services?
That’s not all.
- What about trust? Is there a high level of trust between the two parties? This one is absolutely essential. Without trust, communication is limited and is not open and transparent. It’s expensive to do business with those we don’t trust. If you don’t believe this, just read The Speed of Trust by Stephen Covey. Without trust, the relationship is not profitable for either.
- Are both parties ethical? Without adhering to a code of ethics, it’s difficult to develop trust. MANA’s Code of Ethics is a good guideline for both parties!
- Do the partners share a common purpose? Is that purpose to help customers solve problems? Anyone who has ever taken a consultative selling course knows that the money will take care of itself if you can help make a customer’s business better.
On the manufacturer’s side, is the entire organization committed and supportive of outsourcing the sales function? A divided organization creates stress and the manufacturers’ reps that represent that company will tend to spend more time and effort with their other principals if they sense disunity.
On the manufacturers’ rep side, is it a professionally run business or just a salesperson that is paying his own expenses? Manufacturers and customers both prefer the former.
How do all the pieces of this puzzle get put together in order to create long-term and mutually profitable relationships?
It all begins with the selection process. Surveys completed by consultants conducting audits of rep-principal partnerships have shown that only 40 percent of the relationships they studied were an ideal match. The other 60 percent were marginal or dysfunctional. Is it any wonder some people believe that outsourcing the sales function doesn’t work?
During the due diligence process, what should each party be looking for? As a source of guidance, we’d recommend MANA’s special report, Selecting the Right Representative or Principal Partner. This publication is a complete guide to the selection process and includes a checklist of what the manufacturer should learn about the manufacturers’ rep. You will also learn the qualities the rep looks for in a manufacturer. Both sides have the responsibility to conduct their due diligence. If the process is not done thoroughly, chances are very high it will need to be done again in six months. Not only is this costly, it leaves a bad taste in the participants’ mouths and sullies the reputation of the outsourced sales business and manufacturers as a group.
Keep in mind that conducting due diligence is important in order to properly lay the foundation for lasting relationships; but relationships change over time. What appears as an ideal match at the outset may not be so long-term. Consider for example that the rep may need to shift markets as a result of outside factors or the principal may develop a new product requiring different selling skills than the rep has. What should be done is that both sides need to keep re-evaluating the relationship and take the appropriate action — to adjust for change — when and as needed.
Win-Win Agreement
Once due diligence is completed and the selection process has successfully run its course, the next step is for both sides to negotiate a fair and balanced agreement. And by “fair and balanced” agreement, we mean it must be a win-win for both rep and principal.
When the terms of an agreement have been put down on paper, what’s the appropriate action that the rep should take? Is it to simply look for the place to sign, sign and date it and mail it back? Hardly — the professional rep very carefully scrutinizes and negotiates an agreement submitted to him by the principal. The principal should look for this as a sign of the competence of the rep firm. The rep who signs without comment is quite often not the rep you want.
The importance of the agreement being a “win-win” can’t be overstated. Short-term, it may seem like good business to write a one-sided agreement, but in the long run, it will probably work against you. Manufacturers are cautioned that their corporate counsel, who may have little or no experience with manufacturers’ reps, may be prone to creating agreements which do a great job of protecting them. Since these agreements are not balanced, however, experience shows that they ultimately fail. We refer you to the MANA Manual for the Creation of a Rep-Principal Agreement which includes the background and rationale for all the clauses found in a typical agreement. The Manual has sample agreements as well.
Once the agreement has been negotiated, the terms need to be put into a formal legal document. MANA strongly recommends using an attorney familiar with rep law and the rep business to finalize the language. A list of law firms that meet this criterion is available from MANA headquarters. Please note that we purposely use the word “agreement” rather than “contract.” Agreement suggests a partnership type of relationship; “contract” implies more of a protective or adversarial relationship.
We’re obviously making progress here, and the relationship is now formally in place. Time to go to work with each other.
The next step that MANA recommends is to create a mutual action plan. Take a good hard look at the current reality in the territory. Who are the customers? Which ones have the potential for the highest sales volume? Who are the competitors? What are their strengths and weaknesses? Set up a mutually-agreed goal and figure out who needs to do what by when to make it happen. Write it all down and commit to a plan — and implement the plan. Revisit it often and make changes where appropriate. This is the way real business partners work as opposed to the principal setting up a “quota” which has no relationship to the real world. This plan should be unique to each of your territories.
MANA Educational Resources
All that has gone before in this article has covered the concrete steps that principals and reps should take to establish and maintain firm business relationships. There’s more that must be considered. The most important thing principals and reps can do to get the relationship headed toward an excellent result is to act in an ethical and trustworthy manner. When we first meet someone, the trust level is neutral. As we get to know each other, the trust level moves in a positive or negative direction. MANA’s Steps to Becoming a Quality Principlal program and seminars can help you learn how to accentuate the positive. With a high trust level, good things happen because the open and free exchange of information enhances both parties’ ability to help their customers.
There are many other elements which work together to enhance the rep-principal relationship, such as the willingness of both parties to invest in the appropriate means to build a profitable territory over time. This business practice — and many others — can be learned by accessing all the resources that are available through the MANA education bundle. In fact, your willingness to invest in a MANA manufacturer membership and in continuing education about the rep-principal relationship could be the deciding factor when the most professional rep firms consider whether or not to represent your company!
Working Together as Trusted Partners in Profits
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RELEVANT AGENCY SALES MAGAZINE ARTICLES
Tips for Manufacturers to Get and Keep Their Reps’ Attention
By Charles Ingram
March 2020
© bestpixels | stock.adobe.com
A common topic of discussion among manufacturers’ sales managers, besides the exploits of their favorite sports team, is how to get their reps’ attention for their company — and keep it.
While there are certainly special or unique methods many manufacturers use (no, I’m not sharing our unique ones here), several tips are worth reviewing to assure your company has best practices in place to garner your reps’ attention.
Treat your rep as a partner in the business of sales
Remember, both the rep and manufacturer have value for each other. The “Us and Them” attitude simply will not foster a positive relationship. When reps are made to feel that they are truly partners with their principals in serving mutual customers, this team approach will benefit each and contribute to growth and camaraderie.
Be responsive!
Answer the phone. Respond to emails promptly. Collaborate on communication with customers. Manufacturers who respond promptly and clearly to reps’ inquiries and needs will gain respect and selling time from their rep sales force.
Set expectations
No agreed-upon expectations? Don’t be surprised when there’s a disconnect in performance measurements. Clearly communicating expectations of both parties keeps reps focused and comfortable with their role in your partnership.
Sales leads
Perhaps highest on the list for earning and keeping your reps’ attention is generating sales leads for them. Sure, magazine “bingo cards” are a thing of the past and today’s customer inquiries come through many different portals; however, the best way to motivate reps remains getting quality sales leads into their hands.
Offer regular training
Not sales training. Application, product and company training. Give your reps the tools to educate customers on how to best use your products. Your training programs should also include time devoted to helping your reps understand and absorb your company’s culture, strategies and history. After all, your reps are out in the field representing your company brand, not just your products.
Regular communication
Be sure to provide your rep team with regular updates and insights into your company’s activities, marketing plans and strategies. This can be accomplished through newsletters, meeting minutes, general announcements and, as with our company, a rep-specific portal on your website.
Rep Council
An important and valuable contributor to communication exchange is a well-organized and structured Rep Council. Our company implemented an active Rep Council with helpful tips from MANA over 25 years ago. Our Rep Council practices transparency, unfiltered communication and healthy dialogue that has served us very well over the years. Be sure to promote and publicize actions attributable to Rep Council meetings so all your reps know they have a voice on the team. MANA can help you establish a valuable Rep Council, too.
Continuous improvement
Reps love new and improved products and services. A manufacturer who strives for continuous improvement in these and other areas of their company is a manufacturer with which reps are eager to be associated.
Management accessibility
Make sure your reps know they are free to contact all levels of management. Just understanding that they aren’t limited to their principal’s sales manager will help solidify reps’ feeling part of the team.
Pay commissions due on time!
This one seems pretty obvious, doesn’t it? Well, over my years in sales management I’ve been continually surprised at the stories I hear from reps about manufacturers who delay paying their reps commissions due or reducing commission after an order ships based on profitability. This is probably the best (and fastest) way to lose your reps’ attention.
Years ago, when commission checks were “snail mailed,” my company’s commission checks were completed a day later than usual. We sent out our reps’ checks by overnight delivery so they’d arrive on the same day as they would have if mailed. We still get positive comments from our reps about this effort to keep our commitment.
Side note: Our company learned about the trend toward wire transfers of commission payments from an article in Agency Sales years ago and have processed payments this way ever since. If your company is still mailing paper checks to your reps, change to the faster, safer wire transfer method. Your reps will thank you.
By now, you’ve very likely thought of some other tips of your own to get and keep your reps’ attention. That’s good. Make it a regular review subject with your management team — and your rep partners.
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Manufacturer or Rep: Who’s Responsible for Generating Sales Leads and How?
By Graham KilshawThanks to the Electronics Representatives Association (ERA) for giving MANA permission to reprint this article from their magazine The Representor.
© 300_librarians | stock.adobe.com
Working in the electronics industry, you’ve likely heard one of these statements:
- Rep: “We are a sales company. We don’t do marketing. That’s up to the manufacturer.”
- Manufacturer: “I hire sales reps to go out and find new customers. We are just a manufacturer.”
Here lies the great paradox of our industry: new sales are the lifeblood of a company, yet the responsibility for marketing and prospecting is tossed around like a game of hot potato. Why do companies often shrug off sales accountability and actively stunt their own growth through muddied sales goals and processes? And how can a simple approach resolve the misalignment between reps and manufacturers and immediately begin creating new opportunities for both parties?
Read on!
Why is there disagreement between manufacturers and reps?
First the obvious answer: manufacturers and reps are two different organizations, each with their own processes and priorities. To complicate it even more — each manufacturer works with several reps and vice-versa, all unique from one another.
But this answer misses the fundamental cause: the hot-potato effect results from discomfort in not knowing how to generate real and well-qualified sales opportunities. By addressing this education gap, both manufacturers and reps can immediately begin generating measurable business growth.
Why does the electronics industry have trouble creating real sales opportunities?
A trip back through the history of marketing electronic components, devices, and related services provides the answer. Just like many markets, the B2B electronics industry has traditionally been very new-product-oriented as companies maintain pace with rapidly evolving technologies. Thus, the tendency is to promote whatever is new. After all, new is interesting; companies survive on society wanting the latest car, phone or television.
If you’re reading this, I’m confident your product is not an impulse buy. Few are waking up with the urge to buy an EMI filter just because it appeared in a commercial during the Super Bowl or it’s now 25 percent off. Instead, your audience is reacting to need, and unless your new product announcement happens to coincide with the specific project that a potential client is working on (and in most cases, it won’t), your press release or announcement is being read, mentally cataloged, and likely forgotten.
Instead, your potential customers — such as design engineers — are seeking education to help them design better products: content in the form of research, whitepapers, instructional videos, how-to’s, and case studies. If you’re not helping educate, you’re not building the trust and awareness needed to convince an individual that your product is the solution.
Yet even though this education is a critical component in the decision-making process of a potential customer, many manufacturers perceive “content” as product data sheets and design files: great information to have when someone already understands what type of product is needed to address a challenge, but doesn’t capture the engineer who recognizes there is a challenge, but doesn’t yet know the type of solution. And therein lies the rub!
What’s the solution to aligning manufacturers and reps?
You guessed it: educational content. Rather than companies saying “Take a look at this new liquid cooling product we just developed,” they should be saying “Here are the common challenges and solutions in data center thermal management. One such solution is liquid cooling, which is beneficial for these reasons. As shown in this case study, our liquid cooling solution has produced these amazing effects for Customer X.”
Who should be producing this content? The manufacturer (with some help from the rep on getting the word out)!
NPIs, catalogs, brochures, and data sheets are important, but not the final answer. Rather manufacturers need articles, whitepapers, interviews, videos, lists and blogs, and they need to ensure their future customers can easily find them.
“But Graham, this sounds like a lot of work.”
Nope! In fact, it can be quite simple, and the little time invested now will save significant time in the future.
The following is for manufacturers to follow. If you’re a rep reading this, forward this on to your principals to see how they can assist your sales efforts, and then continue reading to learn how you can play a part.
In summary, you will be sending e‑mails to your contact list to offer them free content in return for submitting a registration form. In addition to the basics — name, company, e‑mail — the registration form will ask what the person intends to buy and when. Sometimes it’s as simple as asking!
Here’s the process:
- If you do not already have an e‑mail or marketing automation platform, set up a simple account such as MailChimp (www.mailchimp.com), Constant Contact (www.constantcontact.com), or ActiveCampaign (www.activecampaign.com).
- Compile your educational content: search your website, ask your engineering colleagues if they have content on their laptops, or search the office for printed content that can be digitized. If they’re not already — upload the content to your website.
- If you lack a web developer or designer, sign up for a landing page builder such as InstaPage (www.instapage.com), Unbounce (www.unbounce.com), or similar. If you happen to have a marketing automation platform, like Marketo (www.marketo.com) or HubSpot (www.hubspot.com), you may already have landing page functionality. If so, you won’t need another landing page builder. The landing page is where you will use a registration form to capture data from your contacts, and most landing page platforms are designed to be easy to use, even for those not familiar with digital marketing or graphic design.
- Build the landing page with a form embedded on it; when the form is submitted, it should redirect the user to your piece of content (or be automatically delivered over e‑mail if you’re comfortable with e‑mail automation). When you’re setting up the form, ask your prospects if they intend to buy your company’s type of product and when. The question can be simple: “Will you need to purchase a [Insert Product Type Here]? A — Yes, in 0 to 6 months, B — Yes, in 7 to 12 months, C — Yes, in 13 to 24 months, D — No, not at this time.” Just ask them!
- Prepare and send out an e‑mail announcing your free piece of content. Link the e‑mail’s call to action — such as “Start Reading” or “Watch Now” — to your landing page. This will direct the recipients to the landing page so that you can capture the lead once the form is submitted.
This is where the manufacturer and rep can work together.
When the above process is complete, the manufacturer should create a LinkedIn post promoting the content and that directs viewers to the landing page. From here, every salesperson and support staff (such as technical support and application engineers) in the organization can share that post and landing page with one simple click of the “share” button on LinkedIn. Then, the reps can follow the same process — creating even more leads by sharing the content to their LinkedIn connections and territories, and even promoting the same content by e‑mail to their own contacts.
Between the combined e‑mail databases and LinkedIn networks of the manufacturers and reps, it’s easy to see how this content can quickly and inexpensively gain quite the readership. And if someone takes the time to download the content, there’s a high chance he’s a potential customer.
If you follow this process, I’d love to hear about your experience; please e‑mail me at graham@lectrixgroup.com and let me know how it goes. We’ve found this process to be highly successful for ourselves and our clients as well.
Good luck!
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Understanding the Rep’s and Manufacturer’s Role
By Jack FosterManufacturers and their networks of outsourced sales professionals (i.e., independent manufacturers’ representatives) don’t agree on everything. One area where they’ve found common ground, however, is the potential for friction between manufacturers’ inside support staff and the reps working in the field.
© Robert Kneschke | stock.adobe.com
Manufacturers and reps interviewed by Agency Sales for this article point to several causes for the potential existence of friction including these:
- Lack of understanding of each other’s role.
- Lack of appreciation for the role each performs.
- Failures in communication.
- Existence of pre-conceived notions.
- Perception that each side should be doing more.
- Lack of a personal connection.
The marketing manager and sales rep manager for a West Coast manufacturer reaches way back for a biblical verse to stress how much he and his company value the contributions of their reps: “Where there are no oxen, the manger is empty, but from the strength of an ox come abundant harvests.”
While acknowledging that without the continued contributions of their rep oxen his company wouldn’t be as successful as it is, he admits that he’d “be shocked if manufacturers or reps said friction didn’t exist in the relations between the two.”
At the same time, however, he explains that his company has a staff of 12 inside people supporting a network of 60 reps from 25 independent rep firms. “If friction ever develops within that framework, it basically revolves around a question of who is serving whom.”
He goes on to say that “We’ve been in business around 15 years. At the beginning when we were fighting to gain a foothold in the market we only had a few reps. We worked hard to show them we could meet their needs. The reps were ‘rock stars’ to us. We were here to do what they needed to be successful. If they said ‘Jump,’ we responded ‘How high?’”
As time passed, he continued, “We’ve grown a lot. We’ve probably begun to exert our will on reps more than in the past. This has caused the rep to adapt to a changing environment. On top of that, everyone is busier today than they’ve ever been. The questions might be asked:
- ‘Are our inside people always at the reps’ disposal?’
- ‘Are we always there to call them right back with a smile on our face?
- ‘Are we expected to drop everything we’re doing because someone else doesn’t plan well?’”
Looking for a solution, he wonders “Are there some best practices to follow to ensure we’re all rowing in the same direction?”
MANA Best Practices
He continued, “MANA has done a great job providing best practices, and the association’s President and CEO Charles Cohon constantly stresses how important it is to provide quality products, to remain competitive, to pay reps accurately and on time. These steps will all work to lower the potential for friction, and if you’re not following them a strained relationship will only get worse.”
He adds that he and his staff have worked diligently to generate a level of high trust with its reps. “We’re always having sales meetings at our factory or industry conventions, and we also make use of a rep council. We’re constantly showing our reps we’re trying and working to partner with them to serve the market together.”
Adding his perspective to this subject, Todd Reuland, director, DragonGate I Consulting Ltd., Hong Kong, admits that “Yes, I have encountered friction both as a sales manager for a manufacturer and as a rep.”
As to why the situation exists, he maintains we can point to several issues that contribute to the problem: “On the manufacturer support staff side:
- House accounts being handed over to a rep.
- Inside support staff has ‘preconceived opinions.’
- Inside support feels the rep should be doing more.”
House Accounts Being Handed Over to a Rep
He continues, “When you have an inside support staff (inside sales) who have been handling one or more house accounts for a long period of time, it is hard for them to let go. When house accounts are contributing to high monthly or annual sales, the inside staff take pride in that, and they take credit for that.
“Because many inside support people have never been on the outside, or even visited the house accounts, they cannot and do not, understand why these accounts need a rep calling on them on a regular basis. They don’t understand the dynamics of what a rep brings to the table. They don’t see the ‘value’ the rep brings. They, in all sincerity, believe they can handle the account from their office with a computer and a phone even if the customer is on the other side of the country. Thus they are baffled when the account is lost to competition.”
Preconceived Opinions
He continues, “Many times when the inside support staff receives a purchase order from the rep’s office, it is their job to list that rep as being the one to receive commission on the sale. The inside staff many times are very involved in placing the commission rate along with the PO into the manufacturer’s ‘system.’ Thus they know how much money reps are making.
“Because the inside support staff have no idea what a rep does, they cannot understand the amount of commission the reps make. They don’t feel it is justified. They feel that they do as much or more than the rep does. After all, they write up all the paperwork, draft quotes, etc. So they ask ‘What is the rep getting paid for doing?’”
He adds that this also falls under “The rep should be doing more!’”
What the Rep Thinks
Reuland then addresses the rep perspective:
- Reps don’t feel they are receiving quotations on time.
- Reps don’t feel they are receiving technical support on projects.
- Reps feel that some, or all of the inside support staff, are under qualified for the job they are doing.
- The rep also has “preconceived opinions.”
Reps Don’t Feel They Are Receiving Quotations on Time
According to Reuland, “I see more manufacturers taking the quote write up process in-house. Some principals want the reps to go through the company catalogs, draft up the quotes in their offices, and send them into the principal’s inside support staff.
“Recently I have seen manufacturers/principals moving away from this practice so that the rep can spend more time in front of the customer. When manufacturers have sales managers with good skill sets, the sales manager will in most cases recommend that much of the ‘paperwork’ be done by the inside support staff.
“If management agrees, they make the necessary changes so that the reps hand off the ‘paperwork’ to the inside staff. What follows is a slowdown in quote turnaround time. Oddly enough, this is viewed by the rep as ‘incompetence’ on the side of the inside staff. However, in a lot of cases the inside support staff feels this to be unfair and they ‘fight back’ by taking longer to provide the rep what he needs. Now you have a two-way resentment, and both sides feel it.”
Reps Don’t Feel They Are Receiving Technical Support on Projects
On the subject of providing reps with the information they need, “Many reps have a world view that differs a lot from the inside support staff’s world view in regards to ‘getting the sale.’ As a result, many times the rep and the inside support staff have two different lists of priorities:
- The rep wants to close the sale.
- The support staff want to do what they believe is their priority.
“At times, the rep forgets that the manufacturer has, say, 30 other rep offices that he’s working with. And they don’t think about the manufacturer’s overall objectives. Those objectives might have the manufacturer putting their inside support staff on projects they deem important. If those projects take time away from some reps, in the eyes of those reps they are not getting the support they need. It is easy as a rep to forget that the principal has other territories to deal with besides your own.”
This subject leads to the next issue of reps feeling that some — or all — of the inside support staff are under qualified for the job they are doing.
Reuland maintains that “When the rep is not getting the ‘service and support’ he thinks he needs, he will many times have the belief that the inside support staff are underqualified.”
The Rep’s Preconceived Notions
He continues, “Reps feel that some inside support people are power hungry, and they have pet accounts they want to control which interferes with the rep’s activities.
“The fact is reps have favorites. They perceive that only one or two inside support people are worth their salt. If the rep seems to get the best service from a specific inside support person, he will write off the others without seeking to find out the ‘why of it all.’
“And on both sides, there is gossip. The reps talk among themselves, and the inside support staff talk among themselves. On both sides they bad mouth each other.”
While acknowledging the real-world problems that exist, Reuland does offer a possible solution.
“I believe that the inside support staff should attend a rep council meeting to get an understanding of what takes place on the ‘outside.’ In addition, each inside staff member should make sales calls in the field with the reps. Just visiting a customer with the rep — even if they remain silent — can really open their eyes. Just experiencing the dynamics of what takes place is an eye-opener. They begin to see that the rep knows a lot more that they thought he did — and that the rep knows the product more than they thought he did.
“Additionally, the rep needs to spend a week working in the manufacturer’s inside support department. He will begin to get an understanding of what the inside people know; he will see that they handle more than he thinks they do. The rep will learn about the company culture and see how it affects everyone in the company. And how it drives them. It will remove what was planted in the rep’s ear via gossip as well.
“These two groups — reps and inside staff — are mutually dependent on each other. Many times — a lot of the time — they don’t see that. They must work as a team. But to be a team, they must believe their counterpart has value. I believe that the manufacturer — through the sales manager — must initiate the process of building a team. And a good sales manager cannot be one-sided.”
The Problem Exists
Given the acknowledgment that the potential for friction can and does exist between manufacturers’ inside staff and their reps, it’s really not that surprising that reps by and large tend to agree with manufacturers on the existence and severity of this problem.
As an example, a recently retired West Coast electrical rep wholeheartedly agreed with many of the points made by Reuland. “Friction can result any time you have people working together and there’s a failure in communication.”
Speaking specifically to a couple of the points Reuland made, the rep noted, “If there’s some difficulty when a house account is shifted to a rep, the inside person shouldn’t take it out on the rep. Rather, he should consider who actually made the decision (e.g., the manufacturer) and not let tension develop. On the matter of the inside person believing the rep doesn’t do enough to justify his large commission check, I’d say that’s just a matter of that person not seeing the big picture. I don’t know how many times I’ve heard from inside people that ‘Every time I want to speak with the rep, he’s at lunch.’ The rep does a heck of a lot more than just go to lunch and it’s important for the inside person to consider all the tasks the rep performs.”
As to whether the rep should perform some sort of educational function in order to provide the inside person with that “big picture,” the rep noted “That’s not the job of the rep in the field. If there’s some sort of education that should be performed, I’d say that’s up to the agency’s management to communicate with manufacturer management.”
He concludes by endorsing Reuland’s idea that allowing the rep and inside sales personnel to meet each other can go a long way toward avoiding problems. “One thing that really helps is if the manufacturer allows their inside people to travel to the field or have the rep meet face to face with their inside contacts when they visit the factory. Let’s face it, you’re both trying to accomplish the same goal — you’re both trying to get the order. If you build a personal relationship with the person you’re dealing with, you’ll have a hard time thinking that they’re an idiot.”
Understanding Each Other’s Role
The partners of an agency that serves the safety equipment industry were quick to offer their views on this subject. According to one partner, communication is a key to avoiding problems. “Too many times there’s some confusion as to who owns the account. Who’s responsible for selling and serving the customer? When friction raises its head, too often it’s because the manufacturer feels he’s being pushed out of the picture. Next is that matter of communication. Manufacturer management doesn’t always communicate to its staff who and what we are. We’re members of the team, but all too often we’re really something else in their minds.”
Actions speak louder than words was the admonition offered by another partner. “Manufacturer management can say all the right things but when they send a memo or have a meeting that excludes their outside sales staff, that really sends a message that we’re something other than what we ought to be. If there’s a positive trickle down of information throughout the entire organization then the inside guys truly know who we are and what we do. Then there shouldn’t be any problems between the two of us. It’s all about the message that leadership sends down the chain.”
The third agency partner offered that “Sometimes we get a bit lazy when it comes to communicating our role in the sales and marketing process. We enjoy great relationships with great manufacturers. Having said that, we do make an effort to take the time to fully explain our role.”
Education and Communication
It’s appropriate that Hank Bergson offers a final word on this subject. For several years, Bergson, Hank Bergson & Associates, has been conducting the MANA manufacturer seminar (the next one of which is scheduled for October 10-11 in Chicago. Visit the MANA website — www.MANAonline.org for detailed information.). He is also the past president of NEMRA (National Electrical Manufacturers Representatives Association) and naturally has spent a good deal of his professional life working with both manufacturers and independent reps.
When asked if this question of friction arises during the manufacturer seminar, Bergson is quick to note, “This is one of the first subjects we address in the seminar. We do that because quite frequently friction can be caused because manufacturer management hasn’t done the job of explaining to its inside staff who the rep is. The message has to be that the rep is an integral part of the company. He’s the guy who brings in the business and pays their salaries. The result is that too many inside people don’t really know who the rep is. Is he a customer, a distributor, or just some guy looking for information? The truth of it is he’s much more than that. There should be an appreciation for that special relationship that has been created between the manufacturer and the outside sales force. Reps should be treated as if they’re employees of the company.”
Next, Bergson endorses the notion advanced earlier in this article that reps and manufacturer inside people should have opportunities to meet face to face with the goal of creating a personal relationship. “We highly recommend that manufacturers provide the opportunity for their inside people to meet with reps when reps visit the factory or during the course of sales meetings and industry gatherings. Steps should be taken to ensure they’re able to meet in business and social settings all with the goal of building a long-lasting personal relationship. That’s how they can really understand that they are both part of a team.”
Finally, Bergson stresses how this is all about communication and education. While he maintains the manufacturer has the responsibility to educate its own people as to the role and importance of reps, he also says that “There are a lot of reps that don’t adequately explain to their own people who the manufacturer’s inside people are. Those inside people are the reps’ lifeline.”
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The Secret to Success With Reps: It’s Not Business, It’s Personal
By Charles Cohon
© Sergey Nivens | stock.adobe.com
For years after I started my manufacturers’ representative company, I had what I thought was my own closely‑guarded secret. Sometimes I would spend as much as 20 percent of my time on a line that was only 10 percent of my representative company’s income. And sometimes I would spend just five percent of my time on a line that was 10 percent of my company’s income.
Turns out that I had only rediscovered a fact well-known to reps but little-known to manufacturers. The amount of commission a manufacturer pays a representative is only one of the factors representatives use to decide how much time to spend selling a particular manufacturer’s product. And it is often not even the largest factor in the mental calculus representatives exercise every day to pick what products get most of their attention on sales calls.
In my 30 years as a manufacturers’ representative, it never occurred to me how powerful this knowledge would be for manufacturers. But once I became CEO and president of the Manufacturers’ Agents National Association (MANA) I had more visibility to the manufacturers’ side of the fence. It became obvious how much both manufacturers and manufacturers’ representatives would benefit if manufacturers better understood this little-known fact affecting the way manufacturers’ representatives choose to allocate their time.
Manufacturers benefit from knowing the non-financial triggers that get them much more of their representatives’ sales time because it is a powerful lever to increase sales without increasing sales expense.
Manufacturers’ representatives benefit from having manufacturers know the non-financial triggers that get more of their manufacturers’ representatives’ sales time because those triggers all make it easier for manufacturers’ representatives to do their jobs better and lift their sales commissions through increased sales. Spreading this information widely is a win-win for manufacturers and representatives.
This article relies heavily on a MANA LinkedIn survey that asked representatives for the non-financial reasons they spend more time (or less time) on each of their manufacturers. And I must also note the work of two insightful executives who presented and wrote on this topic. My thanks to the late Jack Berman and to author and entrepreneur Bob Reiss (www.bootstrapping101.com) for their insights on this topic.
MANA’s LinkedIn survey revealed 19 characteristics of manufacturers who get more of their time than that manufacturer’s commission income strictly justified. See pie chart for complete details.
Interestingly, though, a manufacturer who embraces just the five most-important characteristics covers more than 50 percent of what reps in that survey said they wanted. And a manufacturer who covers just those five points will probably be the manufacturer who gets much more of the representative’s time, perhaps even regardless of representatives’ commission income from that manufacturer. It’s the manufacturer that representatives privately refer to as their “Emotional Favorite.”
The overriding theme of representatives’ responses was: “It’s Not Business, It’s Personal.” Let’s take a look at the top five practices that manufacturers who get much more of their representatives’ time than their commission income strictly justifies embrace.
1. Appreciate the rep, make the rep feel like part of the family.
Because many manufacturers’ employees often treat representatives as an outsider, a vendor, or less than a full-fledged member of the team, the manufacturer whose employees treat representatives as “part of the family” overwhelmingly get more support from those representatives.
2. Respond quickly when representative transmits customer inquiries generated by the field sales calls.
Representatives live and die by their reputations with their customers. A manufacturer whose quick responses let the representative reply swiftly to customer inquiries makes the representative “look good” to his or her customers.
Knowing that a manufacturer will make the representative “look good” to his or her customers is a very strong incentive to spend more time promoting that manufacturer’s products.
3. Collaborate instead of dictate.
Show representatives your new brochures before they go to press and your new product prototypes before the designs are finalized. With rep feedback your new brochure will emphasize the features reps know are most important to customers, and your new product will include features you could have missed without feedback from the field.
A brochure that stresses features and benefits that are unimportant or a product that only comes in blue when the market only buys red, for example, are errors that could have been avoided if the draft brochure or product prototype had been shared with field sales.
Manufacturers who formalize their collaborative style by forming a representative council are especially valued by their representatives.
4. Pay commissions on time.
Paying commissions on time reinforces the first practice on this list: “Make the rep feel like part of the family.” A manufacturer’s employees would be shocked if their wages were not paid on time. Should the representative’s expectation for timely pay be any less simply because his or her compensation is tied to sales performance rather than a fixed wage?
5. Allow a fair profit.
Allowing its representatives a fair profit also reinforces the first practice on this list: “Make the rep feel like part of the family.” If the representative’s services are sufficiently valued that the manufacturer desires a long-term relationship with the representative, the representative needs to earn enough to keep his or her business financially healthy. None of the representatives asked for exorbitant commissions, they simply wanted fair, industry-standard commission rates that would allow them a fair return on the time they invest on their manufacturers’ products.
Of the top five practices representatives valued in their manufacturer partners, how many actually cost the manufacturers any money? None! Representatives didn’t ask for higher commissions, or spiffs, or bonuses, or sales contests. The practices they asked for were the basic fundamental things that ought to be table stakes to get in the game, but in reality, often are neglected by manufacturers.
“Some people try to find things in this game that don’t exist; but football is only two things: blocking and tackling.” — Vince Lombardi
Blocking and Tackling
Blocking and tackling are the fundamentals of football. Execution of the fundamentals by the manufacturers they represent are the single most-compelling reason that drives representatives to spend more time on a manufacturer’s products, and failure to execute the fundamentals are the single most-common reason manufacturers’ products get less attention from their representatives.
Two comments that accompanied representatives’ responses to MANA’s survey give us added perspective on what representatives value in the manufacturers they represent:
“We give the most time to principals that make us the most money and the ones that we enjoy working with. The companies who are a small part of our business who get an unfair advantage are the ones that:
- Are fun to work with.
- Appreciate the work that we do for them.
- Take care of issues (quality, quotes, lead time, etc.) quickly!
- Do a nice job in front of customers.”
“Most people in the world just want LEIA, to be Loved, Encouraged, Inspired and Appreciated. If you invest your time, treasure and talent into building “real relationships” with your reps, they will kick down walls and set records for you!
“Nobody cares how much you know, until they know how much you care …Figure out what you need to do to inspire your reps to close with passion. It’s not just about the money (commissions). Reps and salespeople want far more — they want to know you care and they want to feel like they are your prized race horses!
“I truly believe you can get 100 percent of your manufacturers’ rep’s time, even if your company represents five percent (or less) of their total income. If you do the little things that nobody else does (inspiring phone calls, encouraging hand-written notes, personalized e-mails, sincere small gifts of appreciation, etc.), I am positive you can turn any rep or salesperson into a hungry lion closer.” (edited for length).
You’ll notice that neither of these representatives who took time to add narrative to their survey responses asked for more money. They want to be treated as valued professional partners, and to work with professional manufacturers. They want to work with manufacturers who are doing their blocking and tackling, and for those manufacturers to recognize when the representative is doing his or her own blocking and tackling as well.
Is there more you can do? Of course! Often representatives have concerns about their manufacturers that they are reluctant to express. If you can preemptively address these unspoken concerns, representatives will have even more reasons to focus extra sales time on your products.
Representatives’ most frequent unspoken concerns are that the manufacturer will:
- Take my territory direct.
- Reduce my territory size.
- Take new house accounts or fail to turn over current house accounts.
- Cut my commission rate.
- Fail to give me a written annual goal so I never know if I am meeting expectations.
- Send me regional managers who don’t understand the rep business.
- Miss promised shipping dates, and to add insult to injury, fail to give prior notice when a shipping promise will be broken.
- Miss some commissionable sales on their commission reports so the commissions are calculated too low.
- Fail to tell the truth.
- Expect the representative to be both the good guy to get sales and the bad guy to collect past due bills from customers.
- Conceal problems.
Why are these concerns unspoken? Because representatives’ experience suggests that “the nail that sticks out gets hammered down.”
How do you address these unspoken concerns? Speak about them!
Write the contract to address concerns about taking house accounts or territories direct, and maintaining consistent long-term commission rates and territory boundaries. Collaboratively discuss and document annual goals. If the truth was not told, or if problems were concealed, discuss why it happened and why it will never happen again. Representatives will spend more time on your products if you bring up the elephant in the room.
Ready to take your game with representatives to the next level? Here are some final practices that will put the frosting on the cake and get even more of your representatives’ selling time:
- Provide great training so representatives feel confident presenting your products.
- Always make representatives look good to the customer.
- Let representatives communicate with you in the way that is most comfortable for them: by text, phone or e-mail.
- Have a great website to help introduce customers to your products, and provide representatives with excellent selling tools and samples so they can continue the education that started online.
- Spend the time to develop personal as well as professional relationships with your representatives.
- Keep reporting requirements to a minimum, and if reports are required be sure to close the loop with representatives to let them know that you are acting on their reports.
- Insure that customer service understands that the representative is the manufacturer’s partner, not a customer and not a vendor.
- Capture and act on metrics for the manufacturers’ customer service department: train customer service to provide quality responses, measure time on hold, and count hang-ups due to long hold times.
- Celebrate successes publicly, address failures privately, and broadcast appropriate details of sales into new markets or customer categories to all your representatives.
Your Three Key Takeaways From This Article
- The #1 driver of manufacturers’ rep performance is the manufacturer’s attention to “blocking and tackling.”
- Low-cost and no-cost activities can get you more of a rep’s attention than an expensive incentive program.
- The key to success? Put yourself in the rep’s shoes and treat the rep as you would choose to be treated.
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What Do Manufacturers Look for in a Rep?
By Charles Ingram
© Julien Eichinger | stock.adobe.com
The best manufacturer-rep relationships are those where both parties respect each other, understand their mutual expectations and have shared business values. While manufacturers may have some variations on the attributes of rep organizations they wish to represent them, there are some constants we all look for.
At Eriez Magnetics, where we’ve been working with independent manufacturers’ representatives for over 70 years, our best representative agencies possess the following:
- A formal company overview
This sounds like a simple requirement all professional reps should have, but it’s surprising just how many agencies solicit representing our line without a basic presentation of their company. The best reps provide an overview of their history, markets served, territory covered, a synergistic product portfolio, services provided and current manufacturers represented.
- Marketing skills
It’s true, manufacturers expect more from their representatives these days. Years ago, reps really served as field sales personnel. Sales leads were sent out to reps who then were the technical resource for their customers. Now, largely due to the Internet, product and technical information is more generally accessible. Customers are usually well along in their project research by the time a sales rep is contacted. The best reps have a formalized marketing program which actively promotes their company’s expertise, strengths, products and services.
Additionally, all professional rep agencies should have a quality website with links to the manufacturers they represent. We’re proud of our reps and want them to present a professional, concise picture of their agency to our mutual customers. After all, if a rep agency can’t promote their own company well, how can we expect them to do a good job promoting our company?
These programs, of course, should be integrated with their principals’. Reps serve as a manufacturer’s eyes and ears in the field, so their feedback and input regarding market trends, the competitive environment, and even rep council involvement is critical. When manufacturers’ and reps’ marketing strategies are aligned, their successes will multiply.
- Customer relationships
Okay, this attribute has always been a constant in the manufacturer-rep relationship. The leading reason manufacturers go to market with independent reps is to leverage the customer relationships and local knowledge reps bring to the partnership. Our best reps know our customers’ key personnel, manufacturing processes, and hot buttons. They are familiar and are willing to assist with conflict resolution, too. Without solid customer relationships, a rep firm will not attract or maintain quality lines.
- Business plan
This does not need to be a chapter book. Some of the best rep business plans I’ve ever read were only one page. They contained a brief summary of the agency’s focus, expertise and strategic direction. This illustrates to a manufacturer that the rep is operating a professional business, not just selling products.
- MANA membership
You bet! Membership in the premier association for professional rep agencies signals to manufacturers that a rep is professional, serious about their business, and willing to invest in continuous education and development.
- Succession plan
Well, you knew this one was coming. This is the one that causes manufacturer sales managers to lose sleep. What’s the future for my company’s representation in your territory? The manufacturer is looking for growth, sustainability and continuity in the organizations that represent them.
At our company, we’re fortunate to have an average tenure of over 20 years’ representation with our U.S. and Canadian reps, with six agencies on our team for over 50 continuous years. These representatives have the attributes referenced here that will continue to serve our long-standing relationships. Do you?
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TELEFORUMS AND PODCASTS
Teleforums are hour-long conversations with people who know the topic. Podcasts are shorter interviews with knowledgeable people.
- Working as Partners in Profits (MANAcast)
- Understanding the Rep-Principal Relationship (Teleforum)
- Sales Reps and Manufacturers — Adversarial or Cooperative? (Teleforum)
000: Outsourcing Selling Preview
Savvy manufacturers’ know that there is only one thing more expensive than fielding a highly-qualified sales force. It’s not fielding a highly-qualified sales force, especially if your competition does.
But those same savvy manufacturers also know that hiring direct employees to field that highly-qualified sales force is very, very expensive. And they will have to pay those direct employees’ salaries, benefits, and expenses before they actually close any sales. If they actually close any sales at all.
How do those savvy manufacturers avoid paying salaries when there are no sales? They don’t hire sales employees, they hire highly professional, independent contractor, manufacturers’ representative firms that get paid for sales performance, not just for showing up.
“Outsourcing Selling” is your podcast resource for tips, best practices, and solutions on sales force outsourcing, both for manufacturers and for professional manufacturers’ representative firms. For more information, contact the not-for-profit Manufacturers’ Agents National Association at www.manaonline.org or mana@manaonline.org.
You can find this episode on iTunes, Stitcher, and Google Play.
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