Step 10 - House Accounts, Split Commissions and Other Territory Management Issues

While it may be impossible to identify what follows as a trend, the fact remains there have been a number of MANA members who have recently contacted the association with their thoughts on what some term as “onerous” requirements that they provide regular updates to their principals on their principals’ CRM systems. At the very least, if it’s not a trend, it’s certainly an area of concern.

Perhaps serving as a preface to a discussion of this subject are comments that have appeared recently in Agency Sales. For instance:

• “Maintaining a manufacturer’s CRM (often salesforce.com), rep salespeople lose time generating the data and the rep’s data entry team has to be sized to keep up with those updates.” — April 2020

• “Today all principals want you to stay in touch with them — on their CRM systems — which are not ours. I’m the first one to understand and appreciate the fact that our principals need to have eyes on projects and opportunities in the funnel which helps them plan for their business. But every time the salesperson has to provide the factory with a report, it is a drain on the salesperson’s time to advance opportunities and uncover new ones. Time is the single and most important avenue for growth. The more face time we have with our customers, the greater the volume and quality in the funnel. Consider that our agency has seven sales guys out in the field. If each of them has three and a half hours of reports each week, our principals have to know they’re losing twenty-four and a half hours of selling time each week. While reporting is needed, we must mitigate the amount of time spent on it.” — June 2019

In partial response to those important points, one recently retired West Coast rep noted that his agency was faced with the task of submitting such reports, but thankfully the head of his agency took the load off his salespeople and did all the reporting himself—thus freeing his people to do what they do best, that is, sell, sell, sell.

Shedding some additional real-world light on this subject, one rep volunteered that in terms of relations with one of his principals, “We’re entering some uncharted territory here. I work with a manufacturer that is actively pursuing a CRM platform. What they’re proposing is that we capture every interaction with customers. On the one hand, I have an interest in assisting them when it comes to employing tools that will track some activities. On the other hand, however, I’m against including every interaction.”

He continued, “They’ve asked me to participate in a demonstration of the platform. Having done that, I’ve been fairly vocal when it comes to voicing my opinion when it comes to including all that they want.

“It’s interesting that when I give them my opinion, the sales manager who manages the outsourced sales team understands the terms of our contract, but the president and general manager of the company don’t really see this as some sort of separate function that I would be performing. I believe they think I’m afraid that I’m being watched.”

The rep concludes that what is needed here, is “for us to arrive at a happy medium — perhaps a quarterly report or some other interval where I can describe some milestones that will provide them the visibility of whom I am calling on.

The bottom line here is that manufacturers pay me to get orders; they don’t compensate me for describing how I get the order. That’s something I do at my own direction.”

And that’s hardly the only thought on the subject. Another rep offered, “Reporting is important but sometimes the add on for CRM and technology is a challenge for people who need to do what they do best — sell! We make our intentions clear to each principal, and most understand our approach. We don’t use their system, just ours, and we don’t spend countless hours writing call reports, or as a former boss called them, dissertations. If the sales rep stays on top of their funnel and data collection as they go, a report for the principal is just a click away, and the variations that can be offered via Salesforce are somewhat endless.

“But we are not above saying that they might need to hire someone to input data. If you can hire someone for a lesser rate, can you really afford to spend the sales force’s time (taking them from millions of dollars in calls) for excessive reports?”

Weighing in on this subject earlier this year was Marnee Palladino, CEO and president of MARN, Inc., Middlebury Connecticut. Writing a column for Agency Sales, she noted that a recently upgraded CRM platform “is going to make our day-to-day lives better. It allows us to easily input notes after a meeting, send post-meeting follow-up emails to prospects and customers, and share line specific information with the touch of a button — all from our smart phones.”

Adding to those thoughts, she recently commented, “I agree that the reporting is onerous. However, I do feel strongly that there is value in providing reports as well as a monthly discussion (20-30 minutes) to our principal lines because it reminds the principal of what we are doing for them — our value. I think the best way we can do that is to be sure our CRM can export an accurate report on accounts we are qualifying and the prospects and customers we are working on for them.”

Palladino is hardly alone in crediting CRM with making her business life a bit more palatable. Adding to the conversation is Bob Foster, who heads Foster Engineered Products, Phoenix, Arizona. Foster, who is also the owner of Bid Track Sell, which is an app on the Salesforce platform customized for the rep and manufacturing industry, explains, “Our agency struggles with the issue of trying to meet the demands of data input required by the manufacturers we represent.’’

Managing Data

“We have learned over the last couple years the manufacturers that require us to input data also are extracting very elementary information because they do not know how to manage their data. They are drinking from the data firehose and paying greatly to store the data. Data storage is a huge business so you will not hear any cloud-based company speak against data collection.

“That said, the CRM we use to track our projects and sales has been instrumental in our success and growth. We have worked out with many of the manufacturers we represent as to what data they want and provide them with a monthly report set up for them to import into their system. This method allows us to use our CRM and provide the manufacturers with the data they need.

“If you are going to actively participate with your CRM (100 percent adoption), they can be very good tools. If you do not have 100 percent adoption, then CRM will not provide the answers you are seeking. Customers that do not have 100 percent adoption of their CRM hate their CRM and view it as a waste of time and money. All of our repeat Bid Track Sell customers say they could not live without it. CRMs are sold as the answers to your issues, but the truth is they require a lot of input and a lot of maintenance.

“I don’t know if this is a good analogy, but a car is a great tool to get you from A to B, but it requires gas. A CRM will get you the information (A to B) you seek, but it requires gas (data).”

Rationalizing the Time

John Beaver, GSA Optimum, Oakdale, New York, emphasizes, “It’s a fact, CRMs are here to stay and reps need to become comfortable with it. The question is, how can reps rationalize the extra time required to do the keystrokes?

“As I like to say, ‘Technology giveth, and sometimes taketh it away.’ Time is what I’m referring too. Over time, technology has afforded reps the ability to work smarter and faster and CRMs, once considered a time bandit, are no exception.

When manufacturers use CRMs correctly (which most have and do), in actuality, their use becomes a time saver and revenue generator. For example, before CRMs, preparing for an upcoming Quarterly Business Review would take days to gather the data, prepare the infamous PowerPoint, etc.; now there is very little prep work needed as every detail about every account has already been entered into the CRM.”

Greg Matthews says, “I wish I had a silver bullet for you but alas, I do not.” Matthews, a partner in Keller Industrial Products, Inc., Clarence, New York, continues, “We do frequently push back and have an agreement with most manufacturers about the dollar level of opportunities that need to be loaded and followed. With some they wanted almost all opportunities over $5k loaded. That simply will not work for us. We have established a bottom threshold for our manufacturers’ CRMs to be between $25K-$50k. This does cut out quite a few but we are still doing the reporting. If they want more, that tells me they are babysitting a rep, which is never good.

Typical CRM Problem

And finally, Kurt Nelson, CPMR, a retired rep who served as the CRM specialist for NEMRA, offers, “If I understand the issue correctly, there is a complaint that most principals want communication on the factory-owned CRM systems; yet when they want an update on a project or want a report, the rep must do the work even though the information is in the system.

“This is a typical problem in any corporation that utilizes CRM. If the president does not learn the system and utilize it himself, then those below him do not bother to learn it. If the VPs just pay it lip service and do not know how to do things on the system, then the regionals quickly learn they do not have to learn it because their boss does not know it. Therefore, manufacturers as a rule continue to ask for reports or updates, etc., because they do not know how to capture the information from the system on their own. This is also the beginning of the end of a CRM system at a factory because no one is willing to state the truth that no one in the sales chain at corporate really embraced it or became a cheerleader for it, so the system itself gets blamed, and they switch to a more ‘user-friendly’ brand. This is a universal problem in all industries, and I experienced it with major manufacturers. Our firm was a couple of steps ahead of manufacturers in CRM execution and culture, so we gladly provided the requested reports because we knew that the direct territories could not perform upon request like we did, and we demonstrated our value over the direct model each time.”

Nelson continues, “I disagree strongly with the statement that it is a drain on the salesperson’s time to advance opportunities and uncover new ones. The gentleman who stated that is not utilizing CRM and the opportunity funnel as it is meant to be used. It sounds like his firm is using it as a product to create reports rather than a tool that enables salespeople to identify leads, determine if the customer has a reason or need to buy, to be auto reminded to perform certain tasks, etc. The salesperson who is utilizing CRM properly can track more opportunities, drop fewer balls, and close more business because he relies on the system to remind him what the next step is on the next call, and when to do it.’

It’s All About Time

“I agree, however, with the comment about time. The Good Lord gave each of us 24 hours a day, and what separates the mediocre from the excellent is the way we utilize our time. The whole argument about the guys being out of the field is way off base. CRM updating and report writing did not just pop up in the garden in the last couple of years. When I started off in this business, I did not know my customers, I did not know my products well, let alone the competition’s products and any advantages either had. I represented our main line back then, so I had to learn that line, plus understand additional lines to be able to talk with knowledge and recommend solutions. I also had to learn about each end-user I called on, what they made, who was who, and we did not have the Internet back then. And I had to do monthly reports as well. My point is this: I still had to make 5-7 sales calls a day and I did my reports, studied the catalogs and planned my calls with goals at night so I could be effective during the day. Any salesperson who wants to excel must realize that sales is not an 8-5 job, and there is stuff to do when customers are not available to be seen.’

“For those with families, the time might be after dinner and when the kids are in bed, or it might be very early in the morning before the family is up. It does not need to happen every night, and there is flexibility. There is also the lunch hour if the salesperson failed to obtain a lunch date with a customer. I apologize that I do not provide the wisdom the reps might be looking for on this point, but I believe what I have to share is a reminder of what the sales role requires and for the salespeople to ‘buck it up.’

Nelson adds that “I am an advocate of the rep firm having their own primary system despite having to upload to many manufacturer systems. Why? When a rep loses a line, all those contacts, opportunities, etc., are lost when the manufacturer shuts off their license. There is always the question of who owns the data, and when you have your own system, the rep will retain valuable account information that they inherited when they took on the line.

“When a rep has their own system, the field rep can utilize the CRM like it is meant to be used by a field salesperson. It sounds like many of the reps are turning in paper reports with the required field information in the specific manufacturer’s system, and a clerk in the office types it into the system. Generally, a manager will have to review what will be sent to catch something that should not be said. That is a lot of work indeed.

“By having your own system, it is easy to have a computer company map over fields from the rep’s system into the manufacturer’s system, so the rep can upload in batches weekly.”

In conclusion, he notes, “The bottom line is that I get a strong sense that these reps are using CRM because the manufacturers want information, rather than using a system of their own, that is a mighty tool, that assists them to identify, track and close more business than without using a CRM. They are chasing the tails of the manufacturers vs. proactively running their operation effectively with CRM.”

----------------

↑ Jump To Top

Other issues facing manufacturers’ representatives:

© Nikolai Sorokin | Dreamstime.com

The back and forth between principals and independent manufacturers’ representatives concerning the payment of commissions in cases where buying decisions have been made across several territories never seems to end. A recent conversation on the MANA LinkedIn discussion page points out that while some resolution has been made in some cases, it’s a matter that remains a constant for agents — and their principals.

When a manufacturer, who works with agents, introduced the subject, here’s how the discussion proceeded: “What is an appropriate way to address a rep that has a potential sale in another’s territory? Rep ‘A’ had a customer in a territory (Illinois) from a previous employer, now it is not his territory with his new principal. The current Illinois Rep ‘B’ has not done business with the actual customer in his territory. Are there any conditions to a situation such as that? Do you follow strict territory guidelines? Do you offer split commission, etc.”

If any proof was needed that this was a timely matter of discussion, independent agents were quick to offer their opinions.

“This has happened to me more than once. In each case I told the principal that it was unethical to cut out the territory rep from the commission. I contacted the territory rep and offered him 20 percent of the commission if he would sign a sub-rep agreement with me. The territory rep agreed in all but one case after which I felt it was not a breach of ethics to get the account for the principal. In a situation where the territory rep was calling on the customer but not making headway, I offered a 40 percent split of the commission.”

“Full commission on the first order, split commission after the customer is set up for a specified period of time. Then commissions revert to the territory rep as they assume responsibility for servicing after sale.”

“As a rep, I would expect that the current rep within the territory would receive ‘destination’ credit (20 percent, maybe 30 percent of the total commission) plus ‘order placement’ credit, if applicable (maybe 10 percent), and the other rep would receive the balance.”

Speaking directly to the manufacturer, another agent said, “You are touching a sensitive area for reps and I have seen this handled many different ways. Your specific case is clearly due to the relationship the new rep had with this customer. It does sound like you might be in the capital equipment side of the rep business and there might be more room for sharing a commission. If there is the need for follow-up, service and support of the equipment, there might be a way of utilizing your local rep and getting him as part of your company’s growth at that customer.

“There are many ways to split a commission, but your key as a principal is to keep your reps motivated to sell for you. Our motivation — as reps — comes from our successes and those commission checks. I used to push principals for a standard policy for splitting a commission; some have and some have not and choose to do split commissions based on each individual case. I am an OEM rep and commissions are not that of a capital equipment rep as we have repeat (we hope) sales compared to a single-sale transaction.”

“I have been on both sides of this issue — as vice president of sales for a contract manufacturer and now as an independent rep. You, the manufacturer, have to decide this issue. Hopefully, both of these reps work for you, and you have contracts in place with each of them with a clause in it covering split commissions. If so, follow the percentage guidelines for split commissions. From your description, it sounds like the sale may not have occurred for the new rep if the old rep had not had the relationship with the customer. That relationship is of value and the ‘specifying rep’ should get some compensation for his efforts. One thing is sure — the situation will reoccur and often in the opposite direction. Fostering good working relationships among your reps is critical to everyone’s success.”

And finally, an attorney noted, “It (split commission) is typically addressed by the manufacturer, not by the reps between themselves. Of course, there often is a split commission clause in the rep agreement between the sales rep and the manufacturer.”

Splits Happen with Frequency

Tom Leslie is no stranger to experiencing split commissions. Leslie, Thomas M. Leslie & Assoc., Arcadia, California, explains that “given the nature of the business that we’re in, instances of split commissions seem to happen more and more. It remains one of the more difficult situations I’ve faced as a rep. If we all lived in a perfect world and there was one person — a king — who made all the rules we’d live by, then that would be a great way to handle split commissions. But as any rep knows, that’s not the way things are.”

Leslie, who has more than 30 years of experience in technical sales and consultation in aerospace, defense and medical industries in California, Arizona, and Nevada, continues, “Here’s what I’ve encountered. You’ve got some principals who want to ignore the problem and treat the situation ‘old school.’ By that I mean if the order is shipped to your territory, then you get the commission. I find that approach to be completely unacceptable.

“I’ve made it a practice to discuss the possibility of split commissions with prospective principals. Personally, I’ve always felt that a fair way to deal with split commissions is that the originating rep — the rep involved in the start up and design of the project — should get the majority of the commission. When you consider the potential timeline in the process, that startup and design part can take up to three years or more. The rep has to be able to recoup all the work that was done at the beginning.”

Approaches Vary

When the possibility of split commissions presents itself to an agent, Leslie says reaction on the part of the rep can vary. “I don’t mean to be evasive here, but it really depends upon the rep. Consider, for instance, some reps who want commissions for the life of the project. Given that some aerospace projects can last upwards of 20 years, that can be unreasonable.”

He continues that in some instances, principals are the best ones to determine how a commission should be split, but “really it all comes down to a case-by-case basis. I used to say I’d like some sort of a formula to be developed that would work in these cases, but given all the variables involved, that’s not really possible.”

When all things related to split commissions are considered, Leslie says there are some constants that both principals and agents ought to keep in mind.

“Considering the principals first,” he says, “their focus has to be on keeping their reps motivated to continue the work. You always want the rep to continue generating new business and keeping the customer happy.”

What the rep must keep focused on, he continues, are a couple of things. “There’s always the potential for the principal to make an account a national account. When that happens the rep handling the R&D also handles the location the order is shipped to in your territory. Then he gets the commission. I’ve actually had that happen to me and I can’t say I necessarily liked it. In the end, I was successful in renegotiating things to my benefit.

“Then there’s the chance the principal will simply throw his hands up in the air and say ‘You (reps) work it out among yourselves.’ I’ve also had that happen and while it worked out in one case, in the other it did not. What can happen is that the principal runs the risk of upsetting both agencies involved.”

Leslie concludes by noting that split commissions remain a touchy issue. “If I had a preference, I guess it would be that the principal would work it out.”

Advice from the Past

As evidence that split commissions are a concern that never seems to go away, it’s probably worth citing information that appeared in Agency Sales close to a decade ago. At that time, the following areas were urged for consideration:

• Written agreement — Always be sure to get as much in writing as possible beforehand. Even if the subject is only touched upon during a conversation with a principal, it would be wise to follow up — in writing — confirming the details of that conversation. In addition, having a written provision included in the contract would go a long way toward addressing the concern.
• Negotiation — Negotiate prior to the order. It’s after the fact that things get much more difficult. Before signing a contract, it’s always wise to run your agreement with your principal by your attorney. And if split commissions are expected, it’s best to have them negotiated prior to agreeing to take on the line.
• Communication — If the agent knows beforehand that an order is coming down that may call for split commissions, it’s imperative to communicate with the principal as soon as possible. Inform him of the extent of the work you’ve done, even though the order is formally being placed from another location. If you wait, you may find that you wind up with a smaller part of the commission — or worse yet, nothing at all.
• Reaction — Remember that your principal isn’t going to change everything just for you. As a result, it’s important to react in a professional manner; let your principal know all the details of a given situation and urge him to work with you on it.

↑ Jump To Top

Compensating for Trade Show Duty

By Jack Foster

January 2020

© jumlongch | stock.adobe.com

First came an email from a MANA member asking for some advice about reimbursement for expenses they incurred while helping a principal man a trade show booth. In this case, there was no reimbursement.

Next was a conversation over breakfast with another association member who related his agency’s experiences over the years. “When a principal, especially one of our top lines, requests that we be in attendance at a trade show, we’re there. And there’s generally no reimbursement. It’s just expected that this is part of our job — and if we’re interested in maintaining a good relationship with the manufacturer — and we are — we know what we have to do.”

And finally, a retired rep noted, “As a rule, when I had my manufacturers’ representative business, my principals reimbursed me for expenses if I worked a booth with them.”

Since all of these experiences are fairly recent — and different, it seemed like a good idea to learn what others are doing when it comes to compensating reps for their time spent working with principals at trade shows.

Who Pays

First up, a bit of research found this question-and-answer response from several years ago in the pages of Agency Sales. In answer to the question: “Who pays the expenses when agents are required to complete booth duty at a trade show?” the following information was forthcoming:

“If a manufacturer requires an agent to do booth duty at a show held in his or her territory, the travel expenses are most often the responsibility of the agent. If you bring agents in from other territories to work your show, however, you (the manufacturer) usually pick up their expenses. After all, the show is not in their territory, and it will be of little direct benefit to them. Keep in mind if your agent has 10 principals, they are forgoing 90 percent of their ability to generate commissions while spending 100 percent of their time at your trade show booth, sales meeting or other requested endeavor on your behalf. Taking this thought into consideration, the effect on the agency’s overall income can be readily understood.”

Then, when the trade show participation question was asked at a MANA manufacturer seminar, the following response was offered: “This can be a thorny question. In general, a manufacturer should expect his or her agents to take part in trade shows held in their territories. However, the main problem with trade shows is that often manufacturers expect their agents to travel to other territories and to participate in the shows. Most manufacturers resolve this issue by picking up all the expenses for agents who must travel out of their territories to take part in a trade show. And they frequently soften it even more by limiting the time the agent must spend out of the territory. Remember, the agent is not selling only our line. He’s selling the lines of a number of other manufacturers.

“When the agent is out of the territory, he is not making calls on your behalf, and his efforts for his other principals come to a temporary halt. If the agent represents 10 lines and five of those principals expect the agent to spend a day or two at different shows, the agent’s time in the field is greatly reduced.”

Finally, the following points were made: “Agency people from the territory in which the show is being held are seldom paid anything more than their expenses. However, those asked to work the booth from other territories are usually compensated on the basis of some schedule related to their loss of income for taking part in the show.

“It’s not uncommon for some manufacturers to try to combine a trade show with a national sales meeting and to try to set all agencies to attend the meeting — and to do booth duty. Fortunately, this forced labor system is almost a thing of the past. Although when such an approach is combined with a system that compensates the agencies for time spent, it can be a good way to get everyone together productively.

“Not all trade shows are national, however, and more and more shows are being held regionally and locally. And the people being asked to run the shows are the agents in these territories. It seems that most manufacturers are picking up all the costs related to the show — the exhibit, the space rental, etc. — and they are paying the transportation and expenses of the agency in the territory to man the booth.”

Manufacturers’ Views

Bringing thoughts on this subject a bit more up to date, manufacturer members of MANA’s Wisdom Council were asked their views on this subject.

According to Nate Metz, Mark One Manufacturing, Minster, Ohio, “When it comes to asking reps to help out at trade shows, we look at the relationship between the rep and our company as a two-way partnership. And, we’re looking for every opportunity to maximize that relationship. Remember they (reps) only get paid if they provide work for us, and we are more than aware of the high cost when it comes to acquiring a customer. That’s why we try to do as much as we can for the rep on the front end.

“We operate with a philosophy that if our reps bring us an opportunity to display our products at a trade show, we’re more than happy to do so. On top of that, we’ll pay all the bills that are entailed with that participation. The company even goes so far that if a rep comes to us at the last opportunity to sign up for a show, we’ll still pay for it. On the other hand, it might be a bit different if they didn’t let us know about a show, went ahead and participated and only told us about it after the fact. Then it might be different story. We certainly want the opportunity to approve their participation beforehand.”

When asked if he’s ever requested that a rep leave his territory to take part in a trade show, Metz explained that he could only think of one occasion for that and when that occurred “We worked with a rep in one of our territories and brought him into another territory where we had no coverage — and, we paid his expenses.”

He added that his reps have always been enthusiastic and willing participants in trade shows. He jokingly adds that “I’d like to think it because they want to be around me, but realistically it’s because they want to build the business. Most of our reps are very anxious to work the shows.”

Todd Reuland, DragonGate I International Sales, Hong Kong, explained, “I can say that in my experience on the manufacturing side with Reuland Electric Co., when we exhibited at trade shows, the rep/reps whose territory the trade show was in were asked to work the show. In every instance the reps made contact with new potential customers — and that was the payoff.

“I know today that reps in the United States are doing things differently. They are asking for retainers when taking on a virgin territory with no existing customers. And I believe that’s a wise decision.

“I’d add that if a rep is taken away from his territory and losing time in front of the customer because of trade show attendance, I believe compensation should be negotiated prior to the show. Remember, employees of the manufacturer are earning a salary, the rep is not.”

Bob Limper, Zenith Pump Division, Circor International, Inc., Monroe, North Carolina, explained, “We only exhibit in three major trade shows a year and invite our reps to attend. Typically we staff the booth with our own people (regional managers, product manager, sales manager, and possibly some senior application engineers). Almost always the rep who is local to the show location will attend, but usually they have other principals exhibiting at the show and try to spend a little time at each of their principals’ booths. I cannot recall during my 37-year career ever asking a rep to assist in manning our booth. However, there have been many times when they have asked to help out.

“In many cases, it is the reverse; our rep is exhibiting in a smaller, local show and asks if we will help support him with demo equipment, and possibly the use of our regional manager. Sometimes we will co-op with them and a couple of their other principals and book three or four booths in a row, all under the local rep’s name, but with each booth having the identity of the manufacturer. This provides the local rep a larger presence while also giving each manufacturer a strong presence as well.”

To further explain his company’s philosophy, Bob Limper included a clip from the company’s representative contract with regard to advertising:

1. ADVERTISING

5.1 The Independent Sales Representative shall market within the Territory the authorized Products in their authorized Markets. All marketing, advertising and promotion of the Products made by the Independent Sales Representative shall contain a reference to the name of the Manufacturer.

5.2 All costs of marketing, advertising and/or promotion within the Markets in the Territory shall be incurred solely by the Independent Sales Representative. The Manufacturer may elect to share costs in its sole discretion and only upon advance written agreement.

5.3 The Independent Sales Representative shall provide the Manufacturer with timely advance notice of its intention to participate in any conferences, fairs or exhibitions promoting the Products in order to accommodate the Manufacturer’s ability to participate if it so elects to do so.

↑ Jump To Top

Manufacturer or Rep: Who’s Responsible for Generating Sales Leads and How?

By Graham Kilshaw

December 2019

Thanks 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:

1. 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).
2. 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.
3. 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.
4. 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!
5. 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.

↑ Jump To Top

Maximizing the Value of Field Visits

By Jack Foster

September 2018

© visivasnc | stock.adobe.com

“You hired us to increase sales, not to be your travel agents or ‘yes men.’” That’s how one rep described his reaction to a principal’s request that they make all the necessary arrangements for a visit to the territory, including getting plane tickets, making hotel reservations, not to mention setting up appointments with customers.

According to the rep, “When the principal’s new sales manager came on board for one of our lines one of the first things he asked was that we prepare for his visit in the field. Let me emphasize that there was no particular reason for the visit other than he was new to the position. There was no new product or program to introduce to customers, nor was there any training needed in the field.”

The rep held nothing back when he continued by saying, “I don’t need any manufacturer to make a field appearance in our territory just to make an appearance. Sure, if something important has to be covered, that’s great; but let’s limit these visits to one or two a year — at most. If you want to come in and spend time with us occasionally, we’ll consider it, but it’s not high on our list of things that we really want to do.”

Drawing the Line

He emphasized that the principal in question was his biggest line and “We get along very well. But when it comes to us having to make all the arrangements, renting cars for them, etc., I have to draw the line.”

In addition, “How about all the time this takes away from us being in front of the customer? They want to fly in around four in the afternoon. That means I, or someone else from the agency, has to leave the territory around two, pick them up and then drive back during rush hour traffic. This turns into a four- or five-hour deal, and there’s a dollar figure I can put on that because we’re not working out there in the field in front of our customers. Where’s the value in that?

“It’s easy to do the math on this. It’s not appropriate for us to drop two or three days for any manufacturer. We’ve only got five days a week, eight or nine hours a day in order to see customers. We want to use that time efficiently and effectively. We can’t spend time on non-productive activities. And, let me add that we’re not being paid anything extra for this. Now, on the other hand, if you want to pay us for that — that’s fine, we’ll willingly do it, but that’s not the case.”

As candid as this rep was with Agency Sales, he says that he doesn’t hesitate to let his principals know his thinking on this subject. “When I do so, they get put off. I don’t drop the matter, however, and I let them know that if they’ll pay for that extra service, then we’ll willingly provide it. Otherwise, we just can’t do it.”

This isn’t the first time a discussion on how to effectively make use of principals’ visits in the field has appeared on in these pages. To follow are some of the important points that have been emphasized in the past.

Reps look forward to and appreciate well-planned and executed calls on customers with their principals.

When he’s contacted by a principal for the purpose of participating in a joint customer call, the first thing one rep who is located in the southeast asks is, “What is it for? What are we trying to accomplish here?”

He continues, “For the call to be truly beneficial, there has to be a clear purpose and agenda. Otherwise, all we’re going to be doing together is traveling over the countryside accomplishing very little. To ensure that there is a purpose, I’d maintain that we’ve got to devote time before the call for planning and discussions we’re going to have with the customer.”

Strategic Planning

He continues that he’s been fairly lucky with his principals in this regard. “The joint calls I make with my principals work because such calls have always been a part of our strategic planning, and they’ve always been clear on why they want to visit. Generally they’re here in pursuit of a specific job. I’d have to say that any rep would be eager for them to visit the territory for that purpose.”

They view such calls as opportunities to enhance their relationships with both customers and principals.

One New York State rep commented, “I’m lucky in that I don’t really remember any joint calls on customers that weren’t productive. For instance, just recently the vice president of sales for one of my major principals accompanied me to one of my major accounts. The visit developed when there were some changes at the account. My previous long-term contact left and my principal accompanied me to firm up the new contact. While that was a special one-day, one-time call, there are others that occur when the principal wanted to spend two or three days in the field. To ensure that his time, my time and all of my customers’ time is well spent, I’ll work out a detailed itinerary well in advance.”

Reps would rather avoid any visit that’s put together at the last moment with no clear purpose in mind.

One rep who is hardly into spontaneous field visits emphasizes the need to plan ahead. “Here’s what I’m referring to when I mention advance planning. I’m on a business trip that will take me through the rest of the week and I get an e-mail from a regional manager letting me know that he wants to work with one of my customers next week. There’s not an awful lot I can do with that type of short notice. I’m asking myself ‘Where did this need come from — out of left field?’ If he truly wants a quality day, he’s got to build in some time to make it worthwhile.”

This rep explains that when he’s provided enough time, here’s the type of checklist or itinerary he’ll come up with. “Prior to a visit we’ll communicate with the principal regarding the following:

• The time he arrives at the airport.
• Whether he needs to be picked up.
• His preference for the hotel he stays at.
• Does he have to meet with inside/outside sales staff?
• What customer(s) does he want to meet with?
• A complete list of his objectives during the visit.

Valuing Time

“When I do this and if the regional manager doesn’t go over the form and sign off on it, then he really can’t expect us to even meet him at the airport. It’s not unheard of that he’s failed to get back to us until the last minute and by then we’ve already gone ahead and planned any number of activities. We do this because our regional managers are very important to us, their time is important to us and we don’t want to waste it.”

They don’t necessarily want such joint calls to serve as in-the-field training for new principals’ personnel.

According to one rep, “Since we’re the manufacturer’s local presence in the territory, what we’re looking for when it comes to a field visit is someone who is supportive of our efforts with customers — someone who reinforces our legitimacy in front of them. Hopefully the factory person brings some technical and commercial expertise that adds value to the sales calls.”

Something this rep doesn’t especially enjoy doing on such calls, however, is training the ever-changing personnel from the manufacturer. “We get frustrated with the constant turnover of regional managers. Before we know it there’s another fresh face sent out into the field for us to train. Sometimes it looks like they just send people to keep them out of the factory and out of trouble. We wind up babysitting for them.”

In conclusion, it’s worthwhile to review some of MANA’s and Agency Sales’ reminders on the value of field visits. For instance, keep uppermost in mind that visits to the field can serve as an excellent way for reps to promote their firm and to demonstrate to principals’ personnel that they are the true experts in the territory. However, it’s just as important that there be a true reason or purpose for the visit. In general, principals should schedule visits for some or all of the following reasons:

• To introduce a new line or new marketing program.
• Conduct orientation/training on new products.
• Solve problems in the field.
• Negotiate a new contract.
• Evaluate the representative.
• Conduct annual or quarterly reviews.
• Conduct technical seminars.

Additional resources on the subject of visits in the field may be found in step 7, “Set Up Territory Visits for Maximum Benefit” of MANA’s “Steps to Becoming a Quality Principal” program in the member area of the website, www.MANAonline.org.

016: 1949 Rep Article Rings True Today

The year was 1947. Harry S Truman was president, the World Series was televised for the first time (the New York Yankees beat the Brooklyn Dodgers in seven games), Chuck Yeager broke the sound barrier, and on October 17, 1947, the Manufacturers’ Agents National Association joined the community of not-for-profit trade associations.

Fast forward to July 1949, and MANA members discovered the first, 24-page issue of The Agent and Representative magazine (eventually renamed Agency Sales) in their mailboxes.

Digging through the first few issues of The Agent and Representative reveals how much MANA has changed, and also how much it has remained the same.

In those first few issues we find sentences like: “I know it’s customary for men to call themselves and believe themselves to be ‘practical men’ to pooh-pooh anything savoring of academic classification in salesmanship.” No thought of women as salespeople or as customers in those earliest editions. But in today’s MANA, woman-owned firms are common and the first woman to join MANA’s Board of Directors does so in May 2017.

Another glaring change since 1949 is that, although manufacturers were invited to advertise in our magazine, the articles in that 1949 issue focus solely on the needs of manufacturers’ representatives. Today Agency Sales strives to be relevant to both manufacturers and manufacturers’ representatives and includes articles for both audiences. And, also for the first time, a manufacturer will join MANA’s Board of Directors in May 2017.

Those are things that have changed, and changed for the better. Yet, some articles from those early issues could be reprinted today and most readers would have no hint that they were written in 1949. In the very first issue of The Agent and Representative is the story of Bill Herendon, a manufacturers’ representative whose customers pressured his principals to fire Bill and cut the price by the amount of Bill’s commissions. And how Bill, lacking a written agreement, had no recourse when the principal’s new sales manager agreed to that customer’s request.

Harry S Truman

↑ Jump To Top

Back to Course Main Menu
Forward To Next Step 11 - Work Effectively With International Principals