Employing the services of a Manufacturer's Representative is not the same as employing a territorial salesman to sell your products. A Manufacturer's Representative is a professional services firm (whether several hundred employees or a one person firm) operating as a business. Outsourced field sales professionals can be the most economical way to take your products or services to market; however, they must function as a business and operate from a business perspective. Failure to truly grasp this reality can virtually guarantee a failed and frustrating relationship that will cost both the manufacturer and representative time, money and energy.
Here are few questions you should ask in the initial phase of your representative search.
Q. For what geographical territory or market area are you seeking representation ?
A. Reps tend to be a “product” of their territory or market and usually have a long tenure in the territory: it is the first key strength that a principal seeking representation should look for.
Q. Is your product line compatible, but not competitive with the product lines the Rep currently represents?
A. Synergy of product lines is a key leverage the Rep uses for market and customer knowledge as well as customer relationships. Although represented separately, each product line in one respect or another should reinforce the other lines.
Q. What sales and marketing services will your product line require?
A. One of the main advantages of utilizing Reps is their ability to spread cost over several manufacturers. If your product line will require special services that the current lines do not, it may be difficult to do unless compensated for separately from normal commissions.
Q. Do your marketing philosophies and policies match those of the Rep and his current principals?
A. The success of the Rep / Principal relationship hinges on the blending of the two cultures.
Q. Does the Rep have the people and infrastructure in place to support your objectives?
A. If the Rep does not, then you should be prepared to share in the cost of additional personnel or investments.
Q. Do you have good systems in place for communication of leads, quotes, orders, invoices, and product information to support a Rep sales force?
A. Reps require the same support that you would provide a direct employee: the faster the communication, the better. Keeping Reps in the dark until it is convenient to send information is kin to sending them into battle with one hand tied behind their back. They can only be as effective as you make them. There is no such thing as too much information supplied too fast.
Q. Is the management of your company fully committed to utilizing an outsourced field sales force and are the other employees informed and comfortable with the idea?
A. Warning!!! Reps are not a “fast” way to go to market, new orders will not start to flow immediately. There will be a honeymoon stage and a growing of self confidence in each other. Reps cannot abandon their time and efforts of the Principals that are keeping them in business to pursue a new line, and not every product line can be sold on every sales call. Reps will provide you a continuity of representation through good times and bad. Their object is to “build brand” and not just sell product.
Q. Do you have “realistic” expectations of your Rep and have the metrics in place to measure progress?
A. One of the most significant problems Reps encounter are unrealistic expectations that are not shared “up front.”
Q. What time, resources and compensations are you prepared to invest in a successful relationship?
A. Today's Reps are not just a sales force paid on commission for the orders they produce. Today’s Reps are a business in business to make a profit. They do not just look at “market potential” or what might be, they look at the monthly income stream less the cost of doing business and work from there. They are also a cash business, not accrual, they cannot pay bills or borrow money on “commissions due.” The key to any Rep motivation is higher commissions paid faster.
If your company does not have an existing commission flow from the territory, you may have to consider a retainer, draw on future commissions or longer termination provisions. These quickly becoming the “norm” for pioneering new lines.
Q. Are Rep contracts or agreements important?
A. Yes, if you want to avoid problems with the IRS and avoid litigation. MANA has an excellent specimen contract that has detailed rationales for you to use as a guide. It is fair to both parties and has been reviewed with several attorneys specializing in Rep Law, and these attorneys are available to assist you in formulating a mutually profitable relationship.
Q. Are Rep certifications, like CPMR and CSP, important?
A. CPMR, Certified Professional Manufacturer Representative, is a 3 year program, one week per year and an exam each year. It is a program that specializes in how to run a professional Rep firm and is a significant investment in time and money for the Rep to achieve.
CSP, Certified Sales Professional, is one week program and exam that specializes in professional selling.
Q. Is the Rep’s investment in his profession important to you?
A. Narrowing your search as much as possible will save much time and frustration. MRERF will list 40 vertical industry specific associations as well as all of the CPMR's. NIRA is one of these vertical associations and is composed Reps in the MRO Industrial Products and Safety fields. If you have not found an industry that is specific to your products then try MANA, an association composed of almost 5,000 rep firms that cuts across all industries.