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How to Profit From Rep Groups

By Michael Nolan is Managing Director of Braver Business Strategies LLC

"It all starts with the sale." We’ve all heard it and we may even believe it. Utilizing manufacturers’ representatives to expand your marketing outreach may be one solution.  If you are considering an outside sales representative organization, it may be valuable to review what these relationships have looked like historically. Sales representative group relations can be characterized in stages:

The Honeymoon
During the initial phase after hiring a rep group, everything is just great. There is a flurry of activity. The manufacturer is swamped with quotes and inquiries.  The rep group is excited about calling on all the customers and prospects in their database to tell the new story and sees only opportunity in this new relationship.  The manufacturer is generally willing to spend the money to provide sales and marketing materials to this new organization.

The Awakening
Sometime during the first year or two, sales may not be what either the manufacturer or the Rep firm expected.  The manufacturers may begin to feel that all they are is a quoting organization because quotes are not converting to sales at the rate expected.  Conversely, the rep group may feel that they are dealing with an overpriced manufacturer that has added margin rather than value. 

Sales continue to fall off from the sales reps and the manufacturer is losing interest in quoting. One begins to hear phrases like "all I do is quote and they can’t sell anything." "I’m in no hurry to get this quote out…my rep won’t be able to sell it anyway."  The manufacturer’s reps show this manufacturer less and less. "Why should I show it? They have it priced too high anyway? They don’t listen."

These steps are so prevalent in business today that many manufacturers refuse to even discuss the possibility of using manufacturer’s representatives.  They are married to lower levels of sales that they "can control."  This often leads to missed opportunities and an inability to expand the business to meet economic expectations. This doesn’t have to happen. The following are some basic rules for the successful utilization of manufacturer representatives.

Treat Reps As Your Sales Organization
All too often manufacturer reps are hired and forgotten.  Before you hire a rep group you must clearly define your expectations.  Not only should you discuss your expected sales results but also what you expect for reporting.  If you hired your own salesperson, would you just give him a goal and forget him?  Don’t neglect your rep firm either. Your sales organization, whether in-house or outsourced, is your eyes and ears in the marketplace.  LISTEN TO THEM! Reporting up and down the sales chain keeps lines of communication open and establishes the fact that you expect results. Good sales organizations monitor activity not sales.  Sales are the result of activity! 

Keep Detailed Accounting of Activity
Maintain an accurate log of all quotes submitted, all accepted bids, and the average dollar value.  The ratio between the number of quotes presented and won is a key ratio.  This will determine how many bids the company needs to quote in order to maintain the sales goals for the year, quarter, or month.  These logs should be kept on file by period from year to year.  Your ratio of successful quoting will be the basis of successfully forecasting demand. Comparing the same period from the previous year will allow you to see if activity is increasing or decreasing.  Is our closing ratio the same, not as good, or better? What is the reason for our current quoting success ratio? If it is better, is it because we are getting better or because our pricing is too low? Information and analysis is critical to your success. The winners understand what complex of activities are important, collect data on those activities, analyze the data to develop good information, and then act on the information developed.

Make Doing Business With You Easy
Rejection is one of the certainties in the professional life of salespeople.  Your customers and prospects say no many times before they get to yes, when and if they do. Your salespeople must respond to requests, listen to the deal, and see if you can accommodate. Try to reach a compromise. Look for opportunities to say yes! Don’t make this relationship adversarial. Your salesforce represents your customers.  Make the administrative burden on this salesforce minimal.  People will do business with people they like and with companies who make it easy to do business.

Keep Their Interest
Constantly look for new ways to insure that your products are prominent in the minds and in the sales presentations of your reps. They typically have a limited amount of time with buyers. You want that time spent selling your goods. You can remain top of mind by developing a great relationship with them. Thank them for every order. A restaurant gift certificate or tickets to a sporting event helps, and so do sales contests. Creating interest in your products is critical and it is your most important job.  Accompanying the top sales people in the organization on sales calls from time to time is an excellent method of taking stock of exactly how prominent your line is, and it informs both sales rep and customer that you know what is important. 

Manufacturer’s representatives bring a great deal to the table. They have developed relationships with buyers that would require you to devote enormous resources. You need to invest those resources in cultivating a great relationship with your sales organization, and rewarding their successful efforts.  They are your salesforce, your eyes and ears in the marketplace. They often can tell you early on in the sales process what changes need to be made on your product and service. Ask for their feedback.  Listen to what they say.

Michael Nolan is Managing Director of Braver Business Strategies LLC, Newton, MA, a service line of Braver PC, the eighth-largest accounting firm in Massachusetts and the former Chief Operating Officer of Micron Products in Fitchburg, MA. He can be reached at [email protected].

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