The following has been adapted with permission from MRERF’s Outsourcing Field Sales article.
What is a Manufacturers’ Representative?
Manufacturers’ Representatives are professional sales companies. They are independent in terms of legal entities, but are truly interdependent with the Manufacturers they represent. Success for the Rep firm cannot be separated from success for the Manufacturer.
A Rep firm exists to provide professional field sales, market share growth, and marketing services to multiple Manufacturers within an industry. Typically, they sell within a defined geographic territory with an annual, renewable contract and are paid by commissions earned on sales. Because Rep firms are paid on commission, the Manufacturer incurs no cost to employ the sales force until there is a sale.
Rep firms come in all shapes and sizes. Large or small, these firms are always mindful that their income is directly tied to personal productivity. Rep firms are motivated to sell because commission income changes proportionately when sales change.
Representing Both the Manufacturer and Customer
Rep firms are advocates for their Manufacturers and Customers alike. Living in their territory, they are committed to Customer satisfaction as they re-present the Manufacturer’s message.
The unique perspective of the Rep firm means they understand the Customer’s needs as well as the capabilities of each factory they represent. Their knowledge and objectivity become more important when a Customer’s needs diverge from the factory’s standard procedure. Whether it is a product modification or an expedited delivery, the Rep firm can and will fight for their Customer. As independent companies, Rep firms have more freedom to carry their influence all the way to the top, if needed. When the Customer’s request cannot be met by the Manufacturer, the Rep firm will relay that information as well and look for other solutions.
The Synergy Advantage
The additional value that Rep firms provide emerges in great measure from the synergy created through multiple lines. The products on their line card are complementary in nature and the presence of each line benefits the other lines represented. Synergistic selling opens doors for product lines while adding value for the Customer with ‘one-stop shopping’. This partnering relationship exists at different levels within a Customer.
Because of the synergy of the Rep firm’s product portfolio, they can afford to call on smaller customers that do not warrant a visit from a direct sales rep. Leveraging existing business to introduce new products or Manufacturers creates greater market share and faster market penetration for all lines represented.
More than a Source
In addition to synergy, the ability of Representative firms to perform well rests in the caliber of their sales personnel. Therefore, these firms attract and retain the top entrepreneurial, competitive, and goal-oriented talent in their industry.
Because Reps live in the territory they serve, they have long-term relationships with their Customers and Distributors. Customers appreciate the timesaving aspect of working with Rep firms that sell the depth and breadth of their line card, addressing multiple solutions during a single meeting. Distributors appreciate the product training and other support Rep firms provide.
Independent Manufacturers’ Representatives are a resource. Professional Representative firms provide timely, valuable and relevant feedback to both their Manufacturers and their Customers. Rep firms make multiple points of contact, including engineers, designers, and purchasing agents. They support each buyer throughout the process. They supply in-depth multi-level interdepartmental coverage, helping to bridge the communications gap that can exist between engineering and purchasing. The Rep’s advice is germane because of the familiarity achieved over the years with the total corporate culture of the Customer. This long-term understanding and greater market exposure gives the Rep firm access to a broader range of information, which can be analyzed with objectivity given their outside perspective.
The tenure of a Rep firm within their territory is typically counted in terms of decades, not months. Successful factory direct salespeople are often promoted, leaving the territory and negatively affecting sales. Recent figures indicate the average stay of a company salesperson is 19 months, down from 24 months (Dave Stein, Eyes on Sales accessed 8/2009 goto.MRERF.org/SalesFacts).
Both Customers and Distributors value the Reps they work with. Reps and Distributors are partners in providing excellent service to their mutual Customers. Customers can tailor their delivery schedule to match production needs through either the Rep or the Distributor. Services from Rep firms are limited only by their imagination and the solutions requested by their Manufacturers and Customers. Manufacturers that find value in these extended services will be inspired to look beyond standard commission formulas towards new methods of activity-based compensation.