Astudy our firm conducted recently or the National Electrical Manufacturers Representatives Association (NEMRA), Portsmouth, N.H., was intended to help the electrical distribution industry understand the key factors electrical distributors and manufacturers value most from their independent manufacturers' representatives. Forty electrical distributors, 31 manufacturers and 54 independent manufacturers' representatives were surveyed. We asked electrical distributors and manufacturers one open-ended question: “What are the top three qualities that make up your best manufacturers' rep?” We also asked manufacturers' representatives: “What are the top three qualities that make up your best manufacturer?” Additionally, we asked these manufacturers' representatives to name their best manufacturer. This is a follow-up study to our recently published “Best Distributor and Best Manufacturer” research project where we explored the top qualities distributors and manufacturers are seeking from each other. An excerpt of this study was published in Electrical Wholesaling's February issue (page 46). This article is an excerpt of the new research.
Distributors Speak Out about Reps
Distributors said their best reps provide significant physical presence with planning and selling skills/product training (100%); keep them informed; are dependable and responsive (73%); possess the right values and beliefs (48%); and partner with them to locate market opportunities (35%). One distributor said the best reps in his market “integrate at all levels of the organization.” “Many reps call on only one group within the distributor organization, typically purchasing or sales,” said the respondent. “The best reps work with these groups plus marketing, management, and any other person who can impact their success.” Said another respondent, “Reps need to engage themselves into the distributor's culture and get to know the employees and their roles. The energy and excitement they have for their jobs and the products they represent should be contagious. They should have a positive attitude and be capable of motivating and encouraging others. However, they also need to possess the ability to be firm when there is a need to hold their distributor associates accountable to commitments. Basically, they not only need to be effective in their roles, but working with them should be enjoyable.”
Reps that excel at teaching distributors how to sell are few and far between, added another distributor. “It's a tremendous amount to work to infiltrate a distributor organization to a point that they effectively have a distributor's entire organization selling for them,” said the distributor. “Many reps have one dinner or event at their office and think they are set for a long time. They need to have a significant event of some kind completely focused on teaching a distributor selling skills in general, and then follow up across the organization with specific feature-and-benefit selling at the counter, inside and outside sales level.”
Another respondent said, “Manufacturer's reps should be well trained in the products they represent. They should understand the product and its application and be able to give good examples of potential customer types. They should have a good knowledge of the competitors' products and be able to compare features and benefits effectively. They need to understand the dynamics of the market the distributor is serving and be professionally trained in the sales process. The local rep is the person that is going to make it happen with distribution at the field level.”
Another distributor said it's important that reps don't allow their distributor customers to be the last to know about manufacturers' initiatives such as new products, promotions and training. This respondent said his company needs to know about any new product launches at least 90 days before the launch. “Don't let us find out from customers, competitors or trade publications,” said this respondent.
For at least one electrical wholesaler, the amount of time that an agent has spent representing a manufacturer is very important. “In past years, I gave little or no credence to the concept that tenure mattered. However, as consolidation moves lines from one manufacturer to another, the related changes cause electrical distributors to have less trust with manufacturer reps. All the work they may have put in on a particular line with a particular rep may now be at risk because the relationship suddenly has changed, and both sides immediately begin to attempt to protect business they jointly worked on.”
Another distributor said it's important for reps to take a stand on particular pieces of business. When he or she is confronted for supporting another distributor on a particular piece of business, they must “stand strong” and clearly outline that a competitor deserves better support because of past work they did on a particular project/order or opportunity. “I know when they do that for a competitor, I will get the same support from them in the future,” said this respondent. “A major problem in recent years is the high level of mistrust between distributors and manufacturer reps. Years ago, it seemed the battle lines were drawn more clearly on who supported who and to what level. Distributors are more reluctant than ever to travel with salespeople from a rep firm because of changing lines, salespeople moving from one rep to another and the attempt to control a particular customer. I believe this particular issue will only get worse for reps and the only way for them to control anything is they will also have to call on more end-users — something they struggle to get done effectively.”
For at least one other distributor, providing market intelligence was very important. “A lot of reps think calling on distribution is what they need to be doing. Most of the time we can get technical questions and customer service issues handled at the factory. We need willing-and-able business partners to help us grow our business.”
Manufacturers Speak Out about Reps
Manufacturers were looking for different qualities in independent reps. Respondents said the best reps have a technically competent sales force (97%); possess excellent distributor, specifying engineer and end-user relationships (71%) and have a strong strategic vision and business management skills (61%). Electrical manufacturers expected a lot from their reps. Along with hitting sales goals, marketing products to end users and maintaining strong distributor relationships, most respondents counted on their reps to be their eyes and ears in the marketplace. Said one manufacturer, “It's critical that the distributors and contractors trust the rep and perhaps even fear them a little bit. It's important the agent know as much or more about the opportunities available (and the potential pitfalls) of each local market. Any rep that runs a quote service will fail. The rep must know the market and be perceived as a provider of solutions to meet customers' needs.
Another respondent said his firm wants reps that develop annual comprehensive business plans for their major manufacturers that address the following:
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New vertical market opportunities.
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Increasing market share.
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Improvement of the manufacturer's overall gross profit margin through continued improvement of product mix.
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Successful new product launches.
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Focusing on business development and training programs for end users.
Another electrical manufacturer said a rep's succession plan says a lot about his or her firm. “If the rep has a well-thought-out succession plan, that tells you a lot about how a company thinks. They are proactive and are planners looking into the future and the bigger picture. This usually aligns with how they work with distribution and end users.”
Two respondents said reps need to be much more than just good salespeople. “Today, the rep's functions include a lot more skill sets than simply bringing home the order. It includes following through on every aspect of the customer's business relationship with his agency and the manufacturers his agency represents.”
“We love our agents that are not staying the status quo,” said another manufacturer. “These agents are participating in sales training, changing up how they service customers, doing things differently to stand out with their customers. These agents ask us to do things for them that we then in turn ask other agents to do because the ideas are excellent tools to change things up. Their innovation could be how they track jobs, process orders or how they set up trips with our regional managers.”
Reps Speak Out about Manufacturers
The survey also sought to help the electrical distribution industry understand the key factors independent manufacturers' representatives value most from their manufacturers. When 54 manufacturers' representatives were asked, “What are the top three qualities that make up your best manufacturer?,” they replied as follows: treats reps as valuable channel partners (82%); supplies high-quality products and new product development (74%); is easy to do business with and provides world-class customer service (57%); offers fair and equitable rep compensation plans (30%); supplies marketing and sales management support (28%) and possesses the right values and beliefs (26%).
“They care about our organization's challenges, people and financial health,” said one rep respondent. “It's a sharing relationship and not a dictatorship.” “Our best manufacturers treat us with respect,” said another rep. “They value the opinion of the field sales force, have rep councils, listen and act on our recommendations.”
Several rep respondents commented on the need for manufacturers to understand and respect the rep's business model. “The best manufacturers understand the benefits of a multi-line sales force. They share us with other manufacturers and welcome the diversity of sales opportunities that come from cross-selling the products of our various manufacturers to customers who value our expertise and relationships,” said one rep.
“They include us in the strategic planning,” said one rep. “We are their eyes and ears in the field and our input is valuable to the success of their plans. We are running very complex business, and it's imperative that we have the ability to plan for the programs and promotions to efficiently budget our time.”
Ease of doing business was also a common concern, and excessive sales reporting was a pet peeve. Said one rep, “We have some significant suppliers that do not even require any kind of monthly report, yet our sales increase significantly every year. We have other major manufacturers that require ridiculous amounts of data every month and it does nothing to improve sales, In fact, it takes away from selling time.”
Many of the rep respondents' concerns could be grouped under the heading of “Business Relationships 101.” For instance, one rep responded, “They share credit for success. They communicate when they are in contact with our customers and allow us to be involved in everything. They employ a good regional manager whose compensation is tied to your success.” Said another respondent, “The best manufacturers tell you the good the bad and the ugly and work with you on the bad and ugly. They share best practices and success from their other salespeople.”
Reps also seek out the manufacturers that do a good job with new product introductions. “They have done their homework,” said one rep respondent. “They provide comprehensive marketing tools and competitive information.”
Summary
Independent manufacturer representatives who provide high value will continue to function as a vital service bridge in the sales and marketing channel between the electrical manufacturer and the distributor. Industry consolidation among rep firms will continue. Those reps that do not provide high value will be replaced by those that do.
Thomas J. O'Connor owns Farmington Consulting Group, Farmington, Conn. He is a growth strategy consultant for electrical distributors, manufacturers and manufacturers' representatives and a contributing writer for EW. You can call him at (860) 676-7876 or contact him via e-mail at [email protected]. His company's website is www.fcgltd.com.
Call to Action: What Distributors Want from Reps
It almost goes without saying that reps need to possess and live the basics of any business relationship: trust, integrity, loyalty, passion and creativity. But to provide distributors with real value, take market share and grow profitable sales, reps must take the following actions:
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Be a familiar face around all distributor locations in their market areas and get to know all of the buying influences involved with counter sales, inside sales, outside sales, purchasing, marketing, accounting, human resources and the warehouse.
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Train distributor personnel on selling skills and products' features and benefits.
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Provide comparisons with competitor products.
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Provide targeted joint sales plans and calls.
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Keep distributors informed.
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Be dependable and responsive.
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Communicate effectively on new product launches, promotions and manufacturer policies.
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Expedite solutions to problems in a timely manner.
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Return all telephone calls and e-mails promptly.
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Ensure joint planning between distributor and manufacturer.
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Partner with electrical distributors to locate market opportunities.
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Make sales calls to specifying engineers, contractors and other end users.
Call to Action: What Manufacturers Want from Reps
To provide value, take market share and grow profitable sales, reps must take the following actions with their manufacturers:
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Have a technically competent sales force.
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Acquire competitive information and have an in-depth knowledge of competitive activities in the territory.
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Possess deep product and application knowledge to anticipate needs of contractors, end-users and distributors.
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Have a strong inside sales team with knowledeable product specialists.
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Sell features and benefits to build product value to minimize price.
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Possess excellent distributor, specifying engineer and end-user relationships.
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Make specifying engineer calls where specifications are written.
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Be willing to make proper investments and reinvestments in their agency.
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Have strong business management skills.
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Have a well thought-out and executable ownership and management succession plan in place.
Call to Action: What Reps Want from Their Manufacturers
To capture rep mind-share, take market share and grow profitable sales, manufacturers must take the following actions with their reps:
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Treat reps as valuable channel partners.
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Demonstrate sincere interest in understanding and supporting the rep organization's challenges, people and financial health.
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Include reps in the annual strategic planning process and work together to devise an agreed-upon annual strategy for the rep's market.
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Share best practices to help reps succeed.
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Employ good regional manager whose compensation is tied to the rep's success.
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Celebrate and reward mutual wins.
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Supply high-quality new products with differentiated features at competitive prices.
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Launch new products with sufficient product samples, literature and inventory.
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Continually invest in systems that make it easier to conduct business together.
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Respond to all requests in an accurate and timely manner.
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Provide best-practice order-fill rates, order-accuracy rates, and on-time delivery rates.
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Provide fair and equitable rep compensation plans.
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Understand the rep's operating cost structure.
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Set commission rate commensurate to time and effort required to sell the manufacturers product portfolio, and provide higher commissions to sell new products.
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Compensate reps for non-selling activities such as order entry.
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Provide accurate sales reporting.
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Pay commissions on time.
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Employ strong regional managers who are empowered to make field decisions, serve as reps' advocate to senior management, develop strategies and actions to create demand and help close opportunities, and provide rep selling skills and product training.