SEMA News - August 2010

BEST PRACTICES

By Steve Cambell

Finding, Evaluating and Using Field Representatives

	In a marketplace crowded with competitors, expert experience can make a difference. Manufacturers’ reps pride themselves on selling for multiple companies across multiple product lines in large geographic areas.

Unlike other types of salespeople, manufacturers’ representatives work for multiple companies across multiple product lines in a large geographic area, either as individuals or as part of an agency. 

A rep is an independent businessperson, an extension of the manufacturers’ sales force, and he or she can also be a highly valuable jack of all trades who not only closes deals but also teaches in-house manufacturer, warehouse distributor or retailer/jobber salespeople how to best present the manufacturer’s marketing plan to create sales.

A recently completed DVD produced by SEMA’s Manufacturers’ Rep Council (MRC), titled “Understanding the Sales Rep,” points out that companies of all sizes and across all manufacturing genres have used rep firms for years to market and sell their products. The video points out that manufacturers’ reps (also called field reps) tend to be more effective and cost-efficient. Because they are paid on commission, their cost of sales is directly related to their sales success.

“With an independent rep, a company saves money by not having to pay for health insurance, a car, office or travel expenses, retirement or taxes,” said Chris Perry, president of Bill Perry and Associates. “And we provide additional services, such as reviewing customer inventory, updating pricing, revising part numbers and training the customers’ salespeople.”

The benefits of using a manufacturer’s rep, either in conjunction with other salespeople or as a stand-alone sales force, are directly attributable to their experience, contacts and the fact that they are independent contractors. An established rep firm is made up of highly experienced professionals who have developed relationships with distributors and retailers through years of personal contact.

“A manufacturer’s rep is accepted into the existing accounts that he or she calls on,” said Nathan Kunzman of Michael Kunzman and Associates. “The rep has long-standing relationships with his warehouse or retail customers, and those relationships are very important. The ultimate goal should be to increase distribution of the product.”

Reps are knowledgeable about the markets that make up their areas of expertise as well as the product lines they already represent, and their experience allows them to not only sell but to advise their manufacturing clients about the validity of new products.

“Reps provide their clients with a high degree of honesty, integrity and ethics,” said Perry. “They can help review and analyze a customer’s inventories, make sure defects and stock adjustments are correctly handled and help resolve warranty issues. They can act as the manufacturer’s eyes and ears, communicating problems or issues to the manufacturer and providing information on competitive lines in the marketplace. A rep should be open about conflicts with other lines they represent, but manufacturers must also understand that overlaps can occur as lines grow and be open to discussions to resolve these types of issues. Professional independent reps will always feed back information to their manufacturers.”

		Reps are knowledgeable about the markets that make up their areas of expertise as well as the product lines they already represent, and their experience allows them to not only sell but to advise their manufacturing clients about the validity of new products.

In order for the rep to perform effectively and efficiently, the manufacturer must provide all required materials, guidance, leadership and education at no cost, just as it would provide them to internal sales people, said Irv Cohen, managing partner of S&S Sales & Marketing. That includes literature, samples and the opportunity to follow up on all leads generated through magazines, the Internet or other channels.

“Manufacturers’ reps are happy to work with the manufacturers’ inside sales force, so long as they are set up as a team rather than adversaries,” he said. “Most reps don’t sit in an office all day, so a rep on the road may not be able to answer a call immediately, even with a cell phone. If there is an inside sales rep who is assigned to customer service for the same account as a manufacturer’s rep, for example, the inside person might be able to handle that kind of emergency situation.”

As with any business relationship, mutual respect is the key to mutual success. Reps expect manufacturers to value their time, said Perry, providing adequate notice of sales training and in-field sales work and an advance look at all marketing materials, special promotions and telemarketing efforts within their geographic territory. Reps also expect complete reporting of all customer purchases and timely compensation for services rendered.

The industry-standard starting point for rep services is 5% of the rep’s sales on established accounts, but that can vary according to the product line and the work involved in servicing the account. A pioneer line—one that will take extra effort to land because the line isn’t established, has no built-in business, is new to the market or comes from a manufacturer that is new to an established market—will probably call for a 10% commission, Cohen said. And there are other services that his or her agency will soon begin charging extra for.

	SEMA members may obtain copies of the Manufacturers’ Rep Council DVD entitled “Understanding the Sales Rep” by contacting Staci Bostock, SEMA council relations manager, via e-mail at stacib@sema.org or by telephone at 909/978-6693.

“There are many, many trade shows and events that need to be covered, and our expenses are out of hand,” he said. “If we work a trade show without the manufacturer’s presence or we need to provide additional people to handle a booth, we’re going to have to charge a fee.” Likewise, Perry said, the rep should not be expected to bear the cost of sales meetings that are not held in conjunction with trade shows or other industry events that the rep might be expected to attend or are outside of the rep’s normal territory.

Logical factors should be considered when a manufacturer begins to consider using the services of a rep agency. Does it have one or more agents who service the locations that the manufacturer is interested in targeting? How many agents are in the group, and what is the background of the individual or individuals who will be assigned to the manufacturer’s account? Does the agency’s existing portfolio of clients include any competing lines? Does it include any complementary lines that distribution or retail customers might carry in tandem?

Just as with any new hire, the manufacturer should spend some time checking the background and references of the agency and its employees before entering into a contract for services. Reputable agencies will happily furnish a list of current clients, and the manufacturer may wish to contact other agencies in a different geographic area, since most rep firms are aware of each other and can provide feedback based on their own expertise.

Once a manufacturer has signed with an agency, the proof is in the pudding. Sales are the number-one criteria.

“A rep should be able to open new accounts, increase sales within the territory and avoid complaints,” said Cohen. “But it’s all based on the bottom line. If you started with $100 worth of sales in a territory and it grows to $10,000, is that good, bad or indifferent? The way a rep shines is in what he or she actually does.”

However, even though production is the best evidence of value, the unexpected should also be factored into the equation. The recent recession provides a stark example.

“The rep’s service should also be evaluated by his hard work,” said Kunzman. “Sometimes it takes years for a product to sell, and there are many factors that go into its success. Often it takes repetition and continued follow-up on the rep’s part. The rep should communicate with the manufacturer, letting the client know about their efforts. The manufacturer will see the type of commitment a rep has.”

The SEMA MRC webpage and the SEMA Membership Directory offer listings of manufacturers’ rep agencies, and the Performance Warehouse Association also offers a rep section on its website. Neither organization will recommend an individual agency, but their listings include a wide range of established firms.