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Featured Article—February, 2006

Managing a Manufacturer’s Representative

By Peter J Kusterer, President, NvestNtech Inc

 

As a small to medium size manufacturing company, employing a direct sales force can be a costly endeavor. Beyond the selection and hiring of sales personnel, training, management, and accountability (forecasts and quotas) can add an additional burden to an already stretched-thin management team.

 

In place of a direct sales force, many companies turn to a manufacturer’s representative to sell their line of products and service their customers. Traditionally, these individuals or agencies are independent contractors and are engaged by more than one company. The product lines they represent are normally from more than one manufacturer and often are complimentary to each other; most relationships carry some form of exclusivity so as not to represent competing lines of business or manufacturers.

 

When working with a manufacturer’s rep, keep in mind their independent status. The positive benefit to the bottom-line can quickly be offset by a lack of communication. Confusion or misinformation from the company to the manufacturer’s rep can lead to their calling on the wrong customers, over-committing on delivery or error in lead time, misrepresentation of the product’s capability, or poor application of the product for the intended use. Make sure they understand your company’s service policies as well.

 

Because they may represent more than one manufacturer, their marketing efforts may be less focused than you would like them to be. Unlike a direct salesperson, they often take a less tactical approach to the selling effort and sell through the breadth of lines they carry. Here’s where you should communicate your outlook of the market and develop a formal process to review your mutual results. Establish an agreed upon routine or regular interval to review each parties’ expectations.

 

Like any channel of sales (and distribution), sales training is an essential component for success. Develop and administer a formal program that includes: territory development, overcoming sales objections, competitive intelligence, and pricing policies. Since most companies that use manufacturer’s reps do not have their own sales force resources, turn to professional sales development and training organizations to help you develop a more thorough approach.

 

It’s nearly inevitable that at some time you may have to sever your relationship. Spend time in crafting an amiable separation agreement within the contract to do business. Ensure that a clear succession plan is in place before the final day of termination. Be sure to define how customer information will be shared between parties and who may have access or ownership of the records. Provision a means for the manufacturer’s rep to introduce their replacement to existing customers. Make an effort to have a cross training take place so as to not interrupt any built-up sales momentum with a customer or prospect diminish in any way. If the manufacturer’s rep maintains their own sales force automation or contact management systems, make sure that you can obtain a complete export of all data gathered on your behalf (of the sale). All these items should be covered in your "agency" agreement with the manufacturer’s rep.

 

A manufacturer’s rep can be an asset to your company and your customers. A well-crafted agreement and stellar communication can build a long and profitable relationship. Plus, the impact to your bottom-line can be a positive result in a highly competitive industry. But, like any sales organization, you will need to manage the relationship in order to succeed.

 

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