Make Sure Your Agency Isn’t Part of Cost Cutting

SEMA Member News—November/December 2013

Make Sure Your Agency Isn’t Part of Cost Cutting

By Charles M. Cohon

 

The Manufacturers Representative Network will again host the Rep Technology Roundtable just prior to the SEMA Show. It’s a collection of business-critical discussions moderated by industry “thought leaders.”
The Manufacturers Representative Network will again host the Rep Technology Roundtable just prior to the SEMA Show. It’s a collection of business-critical discussions moderated by industry “thought leaders.” 

   

Reps sometimes find themselves in the crosshairs of principals looking for ways to cut costs, especially in a tough economy. In some cases, reps may face unilateral cuts in commission or unwarranted conversion of hard-earned customers into house accounts.

So how can a rep company protect itself from being blindsided by a cost-cutting principal? One rep’s solution was to preemptively promote his company’s value proposition.

“We have a decade-long relationship with one of our principals,” he said, “and I have always stayed in regular contact so they knew exactly what we were doing for them. About a year ago, their regular-as-clockwork commission check was late, but I didn’t call them until the check was 10 days overdue.

“They were very apologetic and rushed me a check, but the reason for the late check was a little jarring. ‘What happened was that we took a look at the value we get from our reps and decided that the only one we were getting value from was you,’ they said. ‘So we fired all of our reps. Our controller didn’t realize we still had one left, so he didn’t make a commission check run this month.’

“I was flattered, but I couldn’t help wondering about the other reps who had represented that line. I couldn’t have been the only rep worth keeping, but I was apparently the only one who had consistently communicated my long-term value proposition. And because I was the only rep they knew brought value, I was the only one they kept.”

Mass termination is an extreme example, but the same principles apply when a manufacturer is considering a commission cut or adding house accounts. Your best defense is to proactively communicate your company’s value proposition to your principals, so your rep firm will stay out of the crosshairs if they start to look for cost reductions.

Your communications do not need to be fancy newsletters or even regularly scheduled e-mails, but you do need to be sure that you don’t let any opportunities to communicate your value to principals slip through your fingers.

Communicating your value to principals is easiest for obvious kinds of growth, like adding head count or increasing sales, and an increase in gross sales dollars is also an opportunity for your agency to communicate its growth. But when your agency grows in more subtle ways, extra attention to communicating those enhancements is required.

Consider the owner of an agency who discovers that his or her customers now require more technical savvy than the agency’s existing sales force can provide. If you have replaced non-technical sales people with engineers, make a point of announcing that fact.

What has your agency done to grow its rep/principal relationships this year? Did you invest in test equipment, a demo van, a training room or new customer relationship management software? Be sure to communicate those investments to your principals so they can fully appreciate your commitment to the growth of your agency and to your rep/principal relationships.

Helping your principals understand the investments your rep company makes to bring value to your relationship is more than just good business; it’s also the best way to defend your hard-earned commission.

—Charles M. Cohon is the CEO and president of the Manufacturers’ Agents National Association (MANA)

MRN Rep Roundtable

Exclusively for reps and building on the success of the sold-out 2012 Rep Technology Roundtable, the Manufacturers Representative Network will again host a collection of business-critical discussions moderated by industry “thought leaders.” To be held just prior to the SEMA Show on Sunday, November 3, from 3:30 p.m.–6:00 p.m., these intimate roundtable discussions will provide attendees with the opportunity ask questions and receive practical solutions that address real-world issues.

Space is limited, so visit your SEMA Show Dashboard to register for the event. The price for SEMA members is $25; $35 for nonmembers. Topics include:

  • “How Reps Serve as the Data Conduit,” presented by Jon Wyly and Jim Graven of the SEMA Data Co-op
  • “Business Apps for Reps,” presented by Tyler Tanaka, Cie Studios
  • “Developing and Growing OE Relations,” presented by Erin Gilhuly, Toyota Motor Sales
  • “How Reps Can Work With the Benefits of SEMA Garage,” presented by Mike Spagnola, SEMA
  • “Biggest Challenges Facing Your Team Today,” presented by Brian Shirley
  • “Succession Planning and Valuing/Buying/Selling/Merging Rep Firms and Attracting and Retaining New Salespeople,”  presented by Charles Cohon, MANA
  • “Healthcare Reform Law for Reps,” speaker to be determined.
  • “Nexus Laws Affecting the Rep Industry,” speaker to be determined.
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