Manufacturer’s Rep: Endangered Species? (Part 2)

So last month, I tackled the general purpose for having a sales team, and introduced some of the pros and cons of working with reps versus a direct sales team. Let’s continue the discussion, based on the presentation I made last year to the HDMA Marketing and Sales Forum.

Let’s begin by noting some of the prevailing attitudes about Reps, starting with the OEM.

If asked point blank, there’s a good chance the OE buyer or engineer is going to express concern about the use of reps. Why? I suppose it’s the safe answer, and there are valid concerns, including the potential for reduced contact with the factory and reduced support after “the sale”. That said, OEM’s do value reps that have an established record of effective service.

What about Suppliers? Their view is kind of schizophrenic, isn’t it? Reps are valued most when the supplier /products are new and revenues are low, an outlook that reverses when the supplier is established and the commission checks get larger. Indeed, reps can become somewhat of a plug-and-play option used to bolster an organization during expansion(s).

So far we’ve managed to paint a complex picture where we’ve described a critical and complex sales function, and some big picture advantages and disadvantages regarding reps. Perhaps now we’re ready to tackle the Big Question – Are Reps an Endangered Species?

First, can I say that expectations of a rep today must be significantly advanced beyond what the rep might have done twenty, ten, or even five years ago? US Workplace productivity has tripled in the past 40 years, and it only makes sense that reps would adapt along with everyone else. One need only observe the complexity of any of the OEM’s … PACCAR, DTNA, Volvo/Mack or Navistar … their global operations … the intensity reflected in their daily activities … and you quickly understand that the sales team has a big challenge on their hands. Here’s a short list of skills vital to a rep’s success:

• Model of integrity and hard work
• Excellent communicator
• Technically proficient
• Commercially astute
• Extensively networked, horizontally and vertically, at both OEM and Supplier
• Focused on a targeted segment of the market

Match a rep having those classifications with the right opportunity, and you have a recipe for success. So what circumstances favor the use of a rep?

• Recruiting challenges, specifically, trying to place an employee in a unique geographic location
• Desire to reduce or minimize fixed costs
• Need for ccelerated access to key influencers / decision makers
• Optimization of scarce sales and marketing resources
• Periods of accelerating growth

You will of course come to your own conclusion, but as a group, we agreed that Reps are NOT an Endangered Species (good news for NW Heavy Duty!). Our summary points were

• Certain business models favor the hiring of Reps, other favor the direct sales team
• OEM’s do not oppose the use of reps – they oppose the misuse of their time and money!
• Suppliers optimize their sales force by balancing revenue growth with profitability, new product opportunities, branding, and development of strategic relationships
• Suppliers should explore the customization of the Rep Model to suit their enterprise and the business cycle
• As with any business decision, deciding to use Reps, or hiring a specific Rep, requires a great deal of strategic thought

The screenwriters for Indiana Jones and The Last Crusade put it thus: “Choose wisely!”. May it be so with you. Cheers!

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