Independent manufacturers' reps operate as independent sales agencies based in local territories that usually represent about 10 to 15 different manufacturers' products. These product packages are often complementary products that work together in an electrical system or particular type of installation.
Many electrical manufacturers go to market with independent manufacturers' representatives to sell their products. In fact, the majority of manufacturers in this industry use independent reps instead of company-employed salespeople to cover at least some territories, and it's common for a manufacturer to use independent reps for all territories.
If you are a manufacturer new to the electrical market or an entrepreneur who wants to launch an independent manufacturers' rep agency, the best resource in the business is the National Electrical Manufacturers Representatives Association (NEMRA), Tarrytown, N.Y. About 250 manufacturer members sell electrical/electronic products either partially or wholly through more than 500 NEMRA members. NEMRA estimates 80 percent of the manufacturers that market through electrical wholesale distribution use NEMRA representative companies wholly or in part to market their products and that annually, NEMRA members sell more than half of the electrical products purchased by electrical distributors nationwide.
These products include but are not limited to all of the “nuts-and-bolts” of the basic electrical distribution system, such as distribution equipment, enclosures, boxes, circuit breakers, fuses, wire and cable, termination equipment, fasteners, splicing equipment, wiring devices, controls, tools and metering equipment and lighting products. Depending on a rep's market interests, they may also focus on controls/MRO supplies for industrial applications, pole-line hardware and other utility equipment, voice/data/video (VDV) equipment; electronic components for original equipment manufacturer (OEM) applications; and energy-saving electrical products of all sorts.
While NEMRA is by far the largest association for independent manufacturers' reps, it's not the only association or group of reps selling electrical products. For instance, many utility-oriented reps belong to the Electrical Equipment Representatives Association (EERA), www.eera.org; OEM electronics reps belong to the Electronics Representatives Association (ERA) www.era.org; and some electrical reps belong to the Manufacturers Agents National Association (MANA) www.manaonline.org, which has 3,300 rep firm members that specialize in a diverse array of markets. There are also many lighting reps who focus entirely on the commercial/industrial lighting market and see that slice of the market as different enough from the mainstream electrical industry that they don't believe (rightly or wrongly) that NEMRA serves their unique market interests. Additionally, it's not unusual to find reps that focus on the VDV and consumer electronics markets.
The common interests that link all of these reps is the need for professional salesmanship and the ability to run profitable agencies. NEMRA reps and agents from many of these other associations rely on the Manufacturers' Representatives Educational Research Foundation (MRERF) www.mrerf.org, for certification through the Certified Sales Professional (CSP) program and the Certified Professional Manufacturers Representative (CPMR) program, which for 20 years has provided executive-level training on rep agency operations.
Electrical distributors need independent manufacturers' reps to keep them posted on new products, train their sales force on the technical nuances of the products they represent, spot potential applications in the marketplace and to help build relationships with end users through missionary work. Independent reps offer some distinct advantages over company-employed sales forces, but they have some disadvantages as well. Here's a quick look at the pros and cons of using independent manufacturers' reps.
Going to market through independent reps usually costs less than fielding a factory sales force. Setting up a factory sales force requires leasing floor space and taking on other operational costs that an independent manufacturers' rep absorbs, such as payroll, unemployment benefits, workmen's compensation, profit sharing, bonus plans, pension plans, sick days and vacations. Some reps still warehouse products for manufacturers, although not as often as in the past.
For a manufacturer who wants to get to the end user quickly, using manufacturers' reps may work best. They know the market area, and they don't have to develop a customer base from scratch the way a factory sales force might.
While a factory salesperson may be on the way up or down the corporate ladder, manufacturers' reps tend to be well-established in their market areas.
Independent manufacturers' reps may have non-competing compatible lines that could pull a manufacturer's product into a sale.
Lack of control concerns some manufacturers. A company may want a rep to focus all of his or her salespeople's time on a particular product line or to operate in a certain way.
Because independent reps usually sell 10 to 15 different manufacturers' product lines, some manufacturers believe their lines won't get enough attention.
Companies concerned with corporate image may hire factory salespeople to use them as a direct visible link to the parent company.
The Rep's World
Reps live with 30-day contracts and volatile product portfolios, and they only get one-month's notice when they lose a line. They may spend their entire career building a product line in their market — only to have that line disappear because of a merger or acquisition. Consolidation, alternate channels and technology are forcing reps to evolve into new, more professional marketing organizations. These grim realities have always been part of a rep's life. More than 10 years ago, NEMRA commissioned a major research study from The PresentFutures Group, Denver, Colo., to paint a portrait of the rep of the future. That portrait, “Assessing the Rep Function,” nailed many of the key services now provided by today's most progressive rep firms. The study said reps would have to become professional marketing organizations with sales forces trained to answer increasingly technical application questions, focus on missionary sales work and create effective marketing campaigns. It said reps that focus solely on writing lots of orders, don't add any value to the package of services they offer customers and don't methodically seek out future sales opportunities will struggle to survive.
That has certainly turned out to be the case. Hank Bergson, the recently retired president of NEMRA, and now president and CEO of Henry Bergson Associates, www.hbergson.com, a consulting firm, has said many times during his tenure as the association's lead executive that reps need to focus their efforts on the consumer and the market ‘influencer’ — the people who consume the product. Until a product is screwed into a wall, pulled into a piece of pipe or built into a building, he says, there is no reason to build another one.
“This puts the burden squarely on the rep's shoulders to move from the role of peddler/order taker to a professional marketing organization. The focus is shifting from pushing products through the channel to pulling them through the channel,” he says. “Manufacturers have figured out that just because the product is on a distributor's shelves, it will not just fly off by itself. We have to develop a coordinated process of pulling stuff off of those shelves, making sure that the channel is responsive to the customer and ensuring that the customer understands how he can get his wants and needs satisfied.”
10 Musts for any Independent Manufacturers' Rep
You don't need to be a rocket scientist to succeed in the rep game. But as in any sales profession, the difference between winning or losing an order is often razor-thin and you need to do the little things exceedingly well. It's not always about the lowest price, and when it is, it's often an order reps should not want anyway. Heck, when reps even just focus on the following Sales 101 basics they can out-sell a good-sized handful of competitors:
- Following up on requests from distributors, manufacturers and end-users with accurate information as quickly as humanly and technologically possible.
- Always making that extra sales call.
- Being prepared for all sales calls.
- Treating everyone with the same professional respect and basic honesty you ask of them.
These sales basics go a long way, but for a rep to truly be best of breed they must do the following:
- Develop certifiably great selling skills. Many of the top rep firms regularly enroll new sales personnel in MRERF's Certified Sales Professional (CSP) program.
- Run a profitable rep firm. Over the past 20 years, dozens of top NEMRA reps have enjoyed executive-level operations training through MRERF's CPMR program.
- Eliminate waste. NEMRA's landmark study, “Eliminating Wasteful Activities in the Representative and Manufacturer Sales and Marketing Channel,” identified 31 strategies that reps and manufacturers can use to fine-tune their operations. Blue-chip reps provided many of these strategies to the publisher of the study, Farmington Consulting Group, Farmington, Conn. Check out “Eliminating Waste” at www.ewweb.com for an overview of this study, or contact NEMRA for a copy of the full report.
- Work in synch with distributors and reps on product launches. Reps are the central link in a successful product launch. To do it right takes a ton of upfront preparation. First off, the manufacturer has to make it worth the rep's time. The best manufacturers pay a higher commission percentage for new products. An often-overlooked step of the launch process is developing a timetable for getting product samples and literature out in the market — often in coordination with an advertising campaign in publications, key trade shows and counter days. The “Marketing Promotions and Product Launches” guidelines developed by the NEMRA Manufacturers Group (NMG) is a terrific resource for developing more effective product launches.
- Budget selling time for missionary lines — and be properly compensated for that effort. Many reps round out the package of lines they represent with a few smaller “missionary lines” that require extra effort to introduce in the marketplace. NEMRA's guidelines on the subject, “Developing New Markets with Independent Sales Representatives,” offer reps and manufacturers real-world tips on how to jointly market these lines.
- Go electronic. Like many small business owners, some reps have a love-hate relationship with technology. But the best of the bunch use EDI to their advantage.
- Keep the company's website updated. Reps run small businesses, and most can't afford a full-time Webmaster to build out and maintain a sophisticated website. But that doesn't mean that at the very least their websites shouldn't always have current contact information and links to their manufacturers' websites.
- Keep salespeople equipped with and trained on the proper technological tools. Most reps are road warriors and they need to be able to run their businesses and sell effectively from the road. Best of breed reps usually equip their salespeople with laptops, personal data assistants (PDAs), pagers or other communications devices.
- Network at NEMRA. Sure, some lone-wolf reps succeed. But there are many more reps who have built their businesses with the contacts and ideas they get through NEMRA.
- Learn, learn, always learn. There's no crime in being a perpetual student, and the MRERF courses and educational opportunities NEMRA offers are first class. The NEMRA Guidelines available for free to reps and manufacturer NEMRA members at www.nemra.org ($10 each to non-members) are a treasure trove of information. Some of the topics covered include compensation, contracts, rep councils, warehousing, publicity and marketing, strategic planning and developing new markets.