“Understanding” is Key to the Future for Manufacturers & Reps

Last September NEMRA released its “Manufacturer of the Future Report” as a follow-up to its 2020 report on “The Rep of the Future.”  As always, they are extremely well done and include a significant amount of time interviewing many key industry leaders. I urge everyone to please acquire copies for a true look into our changing industry and those plans necessary to achieve success. As I recently re-read them, I thought, “a basic needs to be mutual understanding of each party.”

The issue I have with both is the direction we all seem to be heading without recognizing that working together would enable us to get where we all want each other to be.

Yes, this is a bold statement and may go against the grain of “progress” but as an industry elder, I remember the times when manufacturers, reps, and yes, even distributors, worked together to develop solutions that supported all as well as were concerned about the financial welfare of each. We recognized that we were all “in it together” and that success was assured when there were strong relationships.

And yes, Channel Marketing Group researched and wrote both reports, so David may fire me.

Let’s break down some of the findings in the reports to see how these might be attained together.

5 Pillars of the Rep of the Future Report

The 2020 report for reps identified 5 key dynamics (5 Pillars) that would drive relationships between a manufacturer and their representatives.

In interviewing representatives, I have found some manufacturers truly treat their reps as “part of the family.” The majority of reps, however, do not feel this way, as they had years ago.

1. PRODUCT EXPERTISE

Given the consolidation of distribution, manufacturers stated demand for products would need to be made on a local level that would include both specification and distributor training.

Why? Most reps stated their manufacturers do little training unless it is virtual with little follow up. While many understand the additional cost, they state as we grow larger in number to enable us to meet the standards of our manufacturers, why can’t they send specification people for national, regional, or local meetings with our people present. A few reps stated that those manufacturers who do training charge us for transportation, rooms, and meals while their own people attend the same meetings, and it is a business expense for the manufacturer. “Aren’t we saving them money in our territory by doing the specifications?”  Some manufacturers even charge reps for samples to show and share in the field!

2. DEMAND GENERATION

The vast majority of representatives where I have worked, competed against, or spoken to, understand this well and have been doing this as a normal part of their operations. For many it has gotten so extensive and significant that there is now more time spent with end-users than distributors. Many contractors I have spoken to now see more representatives than distributor salespeople. The contractors, utilities, industrials, and certainly engineers and architects look mostly to reps for bringing new products and methods to their attention.

The more you know, the easier it is to have a significant audience. Again, who does the training?

I had a meeting with a larger engineering company in Philadelphia a few years ago. It was a luncheon meeting with 23 of their electrical people. You can imagine the cost for that lunch that we, the rep, were responsible for, but at the end I asked for questions. One of the engineers got up and she asked if I had catalogs for everyone including a set for their library. The manufacturer I was presenting did not have catalogs, so I stated that but also suggested, as I was told by the manufacturer to do, all the information was on our web site. The manager of the group got up and not so politely asked if I was the one that was trying to get them to do the specification of my product, I should pay more attention to their needs. He was absolutely accurate. If DEMAND GENERATION is important, do your representatives have the tools they need to satisfy the particular group you are looking to satisfy?

3. PLANNING

There was a time when manufacturers and distributors got together in each other’s offices at least annually for at least a day or two. I had lunch with an industry distributor icon who is well recognized by many and well quoted as well. He told me ten years ago there were a few of his key manufacturers where he did not have a personal and working relationship with management. Now, he stated there are perhaps one or two that he even would know and that few come to visit his location. He did say he gets regional managers who visit but they always come in with a sales agenda to pitch product and wanting to visit customers. Few express interest in his business or even understand the distribution business. He said it had been years of meeting with manufacturers since one asked him what his company’s goals might be, although he certainly heard a great deal about theirs. This is true of the manufacturer and rep relationship as well. We meet in 45-minute increments at NAED and/or NEMRA and, as one manufacturer told me, by the time you get the niceties over, you might have a half hour.

4. MARKETING

Never before has more information been generated on presenting your products in a method that entices them to consider products than today. Manufacturers I have spoken to as a VP of Channel Marketing Group consistently state they need reps to position themselves within every function a manufacturer might need, including marketing. I asked how often their marketing department or advertising, or IT departments are in meetings or supply information available to their representatives?

The answer I got in nearly every conversation was “never, but they should be.”  Again, are the tools available to their reps? If a manufacturer has 25 representative organizations, do they want 25 different messages in marketing to be developed? I asked contractors how often they respond to marketing information from manufacturers. Their response was “only from the ones we know.”  I asked if they receive the same information from distributors or manufacturer representatives and most admitted they do look at them and often will call to get more information or wait for their representative to come in to ask.

The bottom-line of marketing? Manufacturers would generate a higher ROI on their marketing spend if it was aligned with their reps and their reps marketing efforts.

5. TECHNOLOGY

Quality data is essential. Being on the same systems to transfer data BOTH WAYS to and from manufacturer and representative is therefore even more so.

Does any manufacturer recognize the cost to a representative on technology? I often hear of a manufacturer changing systems and its expense both costs, learning and implementing. How about the cost to your representative? Manufacturers have entire departments of TECH people. Reps say they have very seldom have ever been in contact with these people. Why? Would the cost for a manufacturer’s representatives be significantly reduced if these TECH people were available to help train their reps and help them implement?

I had a factory person come to our office a few years ago as they had changed systems, and our people and customers were complaining about the poor performance. The factory candidly blamed it on our inside associates and sent a manager to see first-hand what the issues might be. At the end of the day, I took her to dinner and back to her hotel. She literally began crying.  As her husband had been very ill, I thought that was the issue and apologized for our company’s needs at this important time in her life.  She explained to me that her sadness was not about her husband, but listening to the complaining customers in our office. As she was showing our people the intricacies of the system, she discovered that all of their representatives had a fire wall created so that we could not see the information necessary to properly answer the questions and activate actions.

How many TECH people have been to visit rep’s offices? Could this be helpful to a rep to be able to properly represent / service the manufacturer?

If it sounds like I am complaining, I am not. I merely want to express how together, many of the manufacturer / rep issues can be more easily solved. How we have mutual interests in each other’s success. In a previous article we found the average time spent in a position for a manufacturer today is 2-3 years before they are moved either physically, go to another position or leave the company. If we want the manufacturer & rep relationship to last longer than 2-3 years, perhaps we need to spend more time together, asking what each other wants or needs to make the relationship a lasting one.

And on the financial issues, remember, the rep earns a single digit commission. Distributors and manufacturers have double digit margins. A rep is an outsourced salesperson. If a manufacturer had a direct salesforce, they would incur training, “sales enablement,” and technology costs. Why the difference?

As manufacturers and representatives enter the planning season, perhaps plans can be made to understand each other’s key issues and work towards resolving them.