Vol. XVIII

Dear Manager,

There is a very unique position in American business today: the relationship between manufacturers and their use of manufacturer’s agents. The development and maturity of this relationship is worth our review.

Where else in American business can you find a relationship of total independence and ultimate dependence? Only with the relationship between manufacturers and independent sales agencies. Originally, this relationship was developed to assist smaller and independent manufacturers with the sales and marketing aspects of their products. It provided a fixed cost of sales, and direct compensation in the form of commissions based solely on the performance of the individual. How very pure.

As manufacturers grew, so did many of the sales agencies. There was a time a few years ago in my industry when a number of manufacturers tested the waters of a direct sales force. For some this was a good decision. For many others, their sales staff and field management costs forced them to return to a fixed cost system they could once again control.

The single greatest value of a commissioned system is its ability to fully compensate its sales staff based on pure performance. From a management perspective it is survival of the fittest. Over time, the below average performer cannot survive, the above average performer will prosper, and the elite will set the standards of performance for the whole. At each level they will be compensated in a manner consistent with their own ability to perform.

IMPACT FOR MANAGEMENT

When properly selected, management using independent commissioned sales representation has the distinct advantage of working with a much higher caliber of field sales personnel. Only the confident, capable and experienced sales professional will accept a position with compensation based solely on their own abilities and performance. Your ability to rely on the strengths and management ability of your independent sales agency can reduce the need for expensive field-level sales management.

In recent years, Regional Managers have become more commonly used in tandem with manufacturer’s agents. Its obvious intent is to raise visibility and generate support in the field. This decision should be reviewed on a case-by-case basis. Often, the quality of the individual involved cannot realistically compete with those they are expected to manage. In essence, they may not have a clue as to how to motivate, challenge and compliment the independent nature of the sales agency. The very best Regional Managers are those with field sales experience. They have been in the trenches, seen the obstacles and fought the daily battles. With out this, their value does not exist.

While manufacturers are certainly entitled to hold a high standard for their sales agencies, rarely is this fully taken advantage of. If you have hired a sales team to represent you, and you believe they are incapable of serving your best interests, find a sales agency with the management team that can! Do not continue to layer on levels of field sales management. This is in direct conflict with the very premise and value of using independent sales agencies. There can be great benefit in having a field sales management team. This decision should be dependent on your ability to hire and afford capable, energetic and street-wise professionals. When the time is right, your ability to properly financially support this commitment will become obvious.

Until then, consider investing in a much more cost effective form of sales support, located within your current sales service departments. Provide a qualified and dedicated individual to assist in the needs, and develop a more personal relationship, with a limited number of your organizations. This Super Assistant should become familiar with three to seven of your sales agencies and the varied dynamics and personalities of each. Once trained, they need and deserve the latitude to assist, negotiate and, at times, even bail out associates in the difficult times often found out in the field. Yes, this quality is well beyond a minimum wage individual, yet its effective cost is substantially less than the actual costs of support towards a field sales manager. What most salesmen are looking for is someone who cares, someone who is readily available, and someone who can step up to a decision. Most manufacturers would be amazed by how seldom this is available.

IMPACT FOR SALES AGENCIES

The greatest advantage for sales agencies is one of flexibility, diversity, and the ability to react to the needs of your region and marketplace. With no single manufacturer “owning” your time there is generally an understanding of the value in each individual. Once again respect is always an earned privilege. Those who find it will enjoy a “work with” rather than “work for” attitude.

Sales agencies have ultimate control over whom they choose to work with. If a manufacturer cannot meet the needs of your sales agency, you have every right to lend your professional support to one that does. Just as manufacturers have the responsibility to meet the needs of their company’s objectives, so too do sales agencies. I often hear of an agency’s complaint regarding policies established by their manufacturers. No one has forced this relationship upon the agency. Either make the very best of the situation, improve it, or make preparations to move on. These are the options available.

THE NEED FOR CHANGE

Early in my agency’s growth (it was an agency of one!), I developed a primary relationship with a manufacturer at the very beginning of their entry into the marketplace. They soon enjoyed simply explosive growth that became almost legendary in my industry. Along with this growth came perhaps the most difficult, demanding, and self serving sales manager I had ever, until then, “worked with”. In fact, this individual may still be at the top of my list.

This individual thought nothing of calling at any hour of the evening or early morning to motivate the troops. With the company’s phenomenal growth, forecasting became very difficult. Despite the successful efforts made, it was never enough. Aggressive forecasts were developed and modified three and four times a year, regardless of performance. Have you ever heard of a moving target? As you may have guessed, this person was making me miserable. I obviously needed to move on. There was only one catch: I needed the income to support my family.

Out of pure frustration I certainly wanted to, shall we say, share my very specific opinion of their organization. Yet it was this very relationship that taught me to never come to decisions from a position of weakness. Always come to decisions from a position of strength. I dedicated myself to replacing this income.

Within a year, and while continuing to meet their expectations, I had developed relationships with other manufacturers I wished to work more closely with, and had been able to replace the income. It was indeed a pleasure to notify this manufacturer that I would no longer be representing their product. The response was one of disbelief. No one had ever dropped their line. They misjudged their own position of strength.

I am often surprised by the attitudes of some manufacturers relating to their self- perceived position with their independent sales organizations. While their intent may be honorable, they have bought into the old school and assumed an attitude of intimidation with their sales agencies. What they fail to realize is that in working with independent agents they are competing for attention with all the other manufacturers in the agent’s “bag”. When the representative’s car trunk lid goes up, whose samples are they going to grab? It is only human nature to be enthusiastic and supportive of those manufacturers by whom the agent feels supported.

Agencies show acceptance of a style of management by their continued relationship with a manufacturer. Agencies that have no need for this type of relationship will invariably move on to more productive ground, and will be replaced with-hand picked agencies that thrive in this arena. And you know for a few, it’s hard to find a good sales agency any more!

Personal Regards,

Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2008. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL/INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM