SEMA News—June 2013
By Mike Imlay
Manufacturing Reps 101
Why and How to Hire the Best
Let’s say you’ve launched a start-up company and are ready to sell your first line (or lines) of new product. Or perhaps you are a small to medium manufacturer looking to take sales to a whole new level. Or maybe you head the marketing department of a company in need of growing its sales force. In each case, you’re likely considering the ability of a manufacturer’s rep to help you reach your goals. If so, you won’t be the first who employed the services of an expert to gain entry to key markets and increase sales of established lines.
Why Get a Rep?
“We are, in simple terms, liaisons between manufacturers and their customers,” explained Rex Stephens, associate partner for Marketing Solutions Group, based in Kansas City, Missouri. “We are the arms, legs, ears, eyes, feet on the street to the local customer when a manufacturer may not have the manpower resources to truly put all the feet on the street to the customers they need.”
Stephens noted that even larger manufacturers with sizable sales forces regularly turn to manufacturer’s reps to gain an added edge in the marketplace.
“We are useful in those situations because of our local market intelligence or the relationships that we have,” he said. “We’ll work in concert with a national sales force in some instances to provide an understanding of what that customer is looking for.”
Jim Marino, principal at Wes-Coast Marketing in Upland, California, agreed.
“One of the key things we have is the soldiers in the field, all over the territory,” he said. “Say a manufacturer based out of Texas can’t get to the whole West Coast and travel it in a cost-effective manner. Because we have multiple lines and the relationships, we can get appointments where they might not be able to.”
Where to Look
Beginning your search for the ideal manufacturer’s rep is as simple as reaching for the annual SEMA Membership Directory, published by SEMA News each May. You’ll find more than 200 rep firms specializing in the specialty-equipment world. In addition, a number of agencies advertise in the back of each issue of SEMA News. Finally, don’t forget word-of-mouth referrals from other industry companies you network with.
In short, concluded Marino, there are three basic reasons both new and established manufacturing companies turn to rep agencies: “They need a jump start. They don’t have the relationships. They don’t have the manpower.”
According to Dave Price, owner of the Kent, Ohio-based Pro Source Sales and Marketing rep firm, a manufacturer should also try to see the equation from a client or buyer’s side.
“Some of the clients are too busy and understaffed to meet with every manufacturer that wants them to carry their product line and hear their ‘song and dance,’” explained Price. “The rep firms are able to see the client on an ongoing basis, making it easier to go over the programs with the buyer or arrange meeting times. Most clients would rather have one person to deal with than several hundred.”
A manufacturer’s representative can also be a key part of a new or small manufacturer’s growth strategy.
“Rep firms already have an established list of longtime clients with whom they’ve developed close relationships over the years, so outsourcing your sales force to a rep firm just makes sense,” said Price. “It allows the manufacturer to gain greater sales results with fewer dollars and enables them to concentrate on what they do best: manufacturing products.”
Jim Kerr, president of Jim Kerr & Associates LLC in Holland, Pennsylvania, agreed that a manufacturer’s rep is a major first step for a new or small company seeking a toehold in an increasingly competitive marketplace.
“A manufacturer’s rep is usually the fastest way to get the recognition and acceptance of your target customer base,” he said. “When you’ve been successful in getting your customers to a mutually acceptable sales level, you can consider the addition of a regional sales manager or managers, employed by your company directly, to assist the rep organizations to expand and assist their sales efforts.”
More Than Just Sales
In fact, at his company website, Kerr points out that a good manufacturer’s rep is more than just a sales agent. At his agency, every effort is made to develop sales initiatives that function as an extension of the companies that hire his services. Programs include catalog preparation and development, price sheet creation, dating programs, strategizing sales programs and attending jobber trade shows as well as awards banquets on behalf of the companies his firm represents.
“I have found there’s not one cookie-cutter mold to what we do,” Stephens added. Nor, he said, is there a “typical” workweek. “I personally work with a larger retailer, so we have a fairly detailed line review schedule. I know each month the lines that this retailer is looking to review and new opportunities that we can present.
“One week can be extremely busy, another week extremely slow and all of a sudden switch in the middle of the week. We are at the service of our manufacturers. If they need a project done, analyzed or looked at locally then, obviously, we get very busy very quickly. Most of a week is planned out for meetings and reviews, price shops, helping them understand items that are doing well and that are not and some of the indicators that go into helping those things improve.”
Traditionally, agencies represent more than one manufacturer, meaning that they often represent a number of related—but not competitive—lines. Because of this, the better agencies are highly selective about the products they take on, being careful to balance their portfolios to the benefit of all. Normally rep firms are paid by commission, which, depending on the product or industry, can vary widely. More often than not, they also specialize in certain states, territories, nations or international regions. However, changing times are bringing new challenges and innovative business approaches to many rep agencies.
At Wes-Coast, for example, Marino has a team of eight reps covering 11 western states, including Alaska and Hawaii, as well as western Canadian provinces. The firm represents about 20 different manufacturers, many of them well-known industry players. Unlike traditional agencies that pay their reps on commission, Wes-Coast employs only salaried reps and hires no sub-reps. Marino believes that this encourages teamwork and equal attention to all of the agency’s lines.
“Some of the things we’ve recently noticed are a lot of changes with e-commerce-type businesses,” Marino said. “We’ve had to adapt to that quite a bit and make a lot of changes to provide value in servicing that side of business as well. The industry is changing pretty fast and we’re adapting right along with it.
“We’ve brought in a real sharp Internet technology guy and we’re doing a lot of electronic web reports and reviewing a lot of data and images. Although we make more than a hundred jobber calls every month, we’re also servicing the e-commerce side of Internet companies, so whether they buy direct or not, we service them as a direct customer. It involves a whole separate set of needs—making sure primarily that data and images are correct and trying to monitor MAP violations. But the biggest thing that we’re looking for is good, proper exposure so that the consumer has the right product.”
Wes-Coast has also leveraged Internet technology to give manufacturers and clients real-time updates of sales meetings and other essential communications through a secure, cloud-based interchange.
Another interesting aspect of Wes-Coast’s setup is its garage, where the firm does project-vehicle builds featuring the product lines it represents. These vehicles make appearances at a host of industry events. In addition, Wes-Coast opens its garage to clients who may need product troubleshooting.
“This all started from being enthusiasts in the industry, with motorcycles, cars, boats and Jeeps,” explained Marino.
“We pride ourselves on doing a thorough job for our manufacturers. My primary areas of interest are musclecars and drag racers, so that’s how I got into the industry and that’s what I do. But from there it spread out. I ride a lot of motorcycles. The Jeep market is especially strong, and we’ve built a brand-new Jeep project vehicle and are participating in all the events and building some strong relationships. We also have a ZR-1 Corvette representing late-model technology and performance. We go to shows, events and races.”
Choosing an Agency
Given all the advantages a good manufacturer’s rep can bring to your business, how do you find the right one?
First, have an idea of what you’re looking for. Are you introducing a new product? Replacing an existing rep? Expanding your sales force? Entering new territories? Whatever the case, you should create a brief outline or profile of your ideal rep and the goals you hope to pursue.
According to Stephens, you’ll want to explore whether an individual agent or a small, midsize or large firm better serves you. A lot will depend on your own company and the number of product lines you wish to tout as well as the number of regions or markets you wish to sell into.
“Look for someone who knows their customers,” advised Stephens. “We find that most manufacturers are not looking to do business with a single account. They’re looking to do business with a territory, and that’s where an agency like ours comes in. We have multiple people strategically placed to call on key accounts in our territory.”
Next, keep in mind that potential reps will have questions for you as well. You’ll want to be ready with a company profile of your own. It should include the product(s) you wish to sell and their intended markets as well as a candid assessment of product selling points. You should also be ready to answer basic questions about your company’s overall health and plans for growth.
“We try to find out what direction a manufacturer is heading in,” Marino said. “If it’s something that fits what we’re doing and goes in the direction of the marketplace that we service, then we start talking further. There are a lot of variables in our discussion: how old they are, how they’re going to market, whether they’re ready for two-step or three-step distribution, whether they’re able to drop ship and take care of e-commerce customers.”
Jim Kerr & Associates LLC
Marketing Solutions Group
Pro Source Sales and Marketing Inc.
Wes-Coast Marketing Inc.
Once your agency and company profiles are ready, you’ll want to seek out agencies, ask around for referrals from other manufacturers and/or check the reputation of a potential rep agency with its existing clients (see “Where to Look” sidebar). And don’t be afraid to request referrals from other noncompetitive reps. There is a lot of networking in the manufacturer’s rep field.
“It generally starts with a phone call,” said Marino. “Most of the rep agencies advertise, and there’s also quite a lot of word of mouth. I think it’s also key for a new manufacturer when they’re soliciting a rep agency to find out how many lines the agency represents and get a copy of their line card. Their line card shows their strengths and the markets they service. You want to tie yourself to a manufacturer’s rep that is servicing the market of the product you manufacture.”
While some reps may be hesitant to share their line cards, many will happily do so. With their line card in hand, you can ask their existing clients for endorsements and further information.
Finally, while you and your prospective agent will initially “screen” each other through a phone call, the ultimate goal is a face-to-face meeting. This is a partnership, after all.
“We have relationships with our manufacturers and have done business with them for years,” Stephens said. “They’re looking for someone who’s going to do more than just pick them up at the airport. They want someone to be a true partner with them in making a sale.”
To that end, you’ll want to size up your potential rep’s operations, facilities, resources and staff. This is also the place to get down to the nitty-gritty and discuss a detailed contract that addresses incentives, rewards, performance, technical support and training, etc. According to Stephens, you’ll likely negotiate an annual agreement that remains at the ongoing discretion of both parties, meaning it can often be terminated on short notice—in as little as 30 to 90 days.
The Ultimate Goal
Good communications at your first meeting will hopefully lay the foundation for a long, profitable partnership.
“If you have chosen a good rep firm with good communication skills, you should not have to worry about maintaining or evaluating that relationship on an ongoing basis,” said Price.
“I would also hope the performance of increased sales would be a good gauge of an evaluation. The manufacturer will also have to keep in mind that sometimes there may be reasons or issues that are keeping the rep firm from having increased business. If there are issues of sales not increasing, I would think the rep firm would be in contact with the manufacturer to try to figure out the problem. It could be more competition, and the competition is taking some of the market share, or back-order situations or packaging.”
As in any business relationship, trust is fundamental. Following the steps listed above will set you on the right track to establishing that trust from the get-go. In the end, remember your ultimate goal:
Finding a rep who will meet and regularly communicate with both you and your clients as often as needed to keep everyone up to date and take care of any issues that arise as quickly as possible—all while increasing your sales.