Conferences

MANA (Manufacturers’ Agents National Association) was invited by STEP (Saskatchewan Trade Expansion and Partnership) to give a conference on "The Value of Working with Manufacturer's Representatives". MANA asked me to deliver this conference. Following are my notes:

Main Advantages and Disadvantages of Working with "Reps" and commissioned sales people.

Predictable sales costs

• Pay a pre-established percentage based on results, i.e. after the sales.

Lower sales costs

• In the USA, a DSF (direct sales force) person costs, on average $136,000.00/yr. If this salesperson generates $2,000,000/yr. in sales, his cost to his company is 6.5% of sales. A rep on a 5% commission will cost his principal (company) $100,000 and chances are the rep will increase sales and market penetration.

Increased sales with complimentary products

• This is an important point. Today with the "rationalization" of jobs, everybody is super busy and it is difficult to secure appointments (ask me, that's what I do for a living). However, reps use one product to sell, compliment another, offer a wider array of solutions and "unity of responsibility"; reps are system sellers and get the attention of the customers better than single line DSF.

Highly experienced sales personnel

• Today's reps are sophisticated sales professionals. They know their industry, their customers within their territories like no one else.

Quicker access to markets

• Because of their experience and deep territory knowledge, they know right away who will be interested in your products, where to focus.

Low cost or free consultant

• Your agent is the best person in the territory to advise you. For instance, he knows in which exhibitions to participate, those to avoid or where to spend your advertising dollars. Reps can often provide other marketing services such as mailings, warehousing, store lay-outs, etc. and at a very low cost.

Low training costs

• Consider that the average DSF (direct sales force) person lasts an average of two years in a given territory; with a DSF, training then becomes a continuous recurring expense, but a rep knows sales and the territory; the only training he needs is in what differentiates your product from the competition's.
• Another point is that you cannot promote a rep! His territory is his livelihood, he has no intention of going anywhere else. A substantial saving in training costs.

Good sales forecasts

• Reps know they will be haunted by their principals if they are overoptimistic or if they are too conservative.
• You might also be in for pleasant surprises. I have seen reps meeting, even surpassing the sales forecasts.

Marketing synergy

• It used to be the companies that were making all marketing decisions and carried them through. Now reps have their own newsletters, web sites, direct mailing programs, database, etc.
• For instance, many of my clients rely on my database for the recruitment of new agents and many are familiar with my postcard program (to receive my postcards, please send me your name, company, address and phone number).

Every call is a call for you?

• Absolutely!!! Sales is a relationship business. And as your rep calls on your potential customer, he builds up his relationships with him; even if he might not talk about your specific product or company, he is laying out the ground work for you.

Reps disadvantages???

Reps are harder to manage?

• Reps have to be lead. Old fashion coercive management or "control freak" managers should not be involved with reps or with leading edge marketing.
• An important point here is that the rep route is not for amateurs. In order to work with reps, one must know marketing, how reps work and how to support them.

Reps won't think long term?

• Reps have demonstrated, time and time again, that they are very successful at capital equipment sales which require long term planning and selling.

Reps complain too much?

• They get frustrated and can overreact, but it is also my experience that many principals prefer not to listen to their reps because they do not wish to change their methods, products or adapt to changing market conditions.

Reps are order takers?

• That is what they are meant for, however, they also know their customers' needs, they work with them and it is to everyone's advantage that they promote or suggest your product at the most opportune time. Pushing a product or trying to get orders for more than the customer wants is not professional.

While I was preparing for this conference on the evening of September 7, 1999, I heard the following - almost word for word - on the CNN Newscast:

When Sumner Redstone took over CBS he told the sales staff:

"You are no longer on salaries, you are on commission. You deliver or you don't eat.
And you know what? They delivered".