An Agency Opens The Door, And Then What?
Over the course of several recent interviews with MANA members, a number of challenges have been identified that nascent reps have to be aware of. In addition to increasing their awareness, however, it’s incumbent upon these reps to possess the wherewithal to overcome these challenges if they want to reach future goals.
Here’s a sampling of some of the factors that reps must consider as they adjust to their independent rep status.
Most independent manufacturers’ representatives can boast of fairly successful careers in sales. After all that’s where they gained the experience and the accompanying confidence they needed to go off on their own. But it won’t take long for the rep to realize there’s more to this game than just calling on customers.
An important ingredient to add to the mix is the need to become a complete businessperson. What does that mean? In part, the rep must know what it takes to run a small business. In addition, however, he had better be aware of the existence and implication of various federal and state regulations under which the agency will be operating. The rep must also possess the skills needed to manage a business — even if it is a single-person operation. In short, the rep should take it for granted that he’s going to need to be a “jackofalltrades” and master of many at the same time.
Business Sense Coupled with Financial Sense
Too often the beginning rep has an unrealistic — or more properly an untested — sense of what it takes to initiate an agency when it comes to the needed financial investment. A business plan can go a long way toward providing the rep with the guidance he needs to steer a prudent course as he experiences hopedfor growth.
Serving More than One Master
It won’t take long for the rep to gain an understanding that his principals and his customers carry equal weight. Add to the business mix the fact that the rep has got to keep himself professionally and financially satisfied at the same time he’s satisfying his manufacturer and customer constituents. For instance, consider the level of communications required with some manufacturers that only want to be contacted when there’s news of a big order. Contrast that with the manufacturer that wants regular communication concerning just about all of the rep’s activities. At the same time, reps today are finding customers are no longer as available to them as they were in the past. The pressure on customers has resulted in many of them relying on their voice and email for contact. Add to that the fact many of them simply aren’t as available for entertainment as they might have been in the past. As a result, it’s up to the rep to determine the best methods and the level of communications to keep in touch with his principals and customers.
For many, the opening of the agency’s doors represents the first time an individual is completely in charge of how he spends his time. How does the rep get everything done that has to be done while still maximizing his selling time in front of the customer? Who provides the legal, accounting and technology services that he’ll need to keep his business running? Unless the new rep can allocate his time properly, there’s the danger he’ll be distracted with tasks that keep him from achieving his major goals.
The majority of the reps we contacted for this article hit the ground running when they opened their agency doors. A good number of them came from marketing or sales departments with major manufacturers. For one reason or another, manufacturers decided to downsize or sharply cut their outside sales force. After talking with their former employers, many of these reps found themselves well armed with their first line. This worked well for them because they knew the product, the manufacturer and the culture of the manufacturer. As a result, they could represent the company well in the field. But then the question arises “How do I get additional lines that complement what I’m already doing?” Many have found the answer to that question to be a major concern. Regularly employed by reps are the tools of word of mouth, networking, asking customers if they know of available lines, using the MANA Online Directory in reverse and advertising in Agency Sales. Some approaches work well, some don’t, but the rep doesn’t rest easy until he’s reached a “comfortable” level of lines to represent. We emphasize the word comfortable here because if there are too few lines, compensation won’t be at a level to provide the income the rep is looking for. If there are too many lines, the rep will hardly provide the service the manufacturer will require if his line sits at the bottom of the rep’s line card.
Several reps have recently voiced the opinion that if reps were known at one time as “five percenters,” then those days are long gone. Changes in the business environment have caused the rep — especially the beginning rep — to become more creative and more demanding when it comes to compensation. The rep’s main concern is that he be paid for the work he performs. If that work takes the form of functions other than simply order taking, so be it, but from day one, this is something that should be negotiated with the principals. If it is not, then resentment grows as the rep finds himself required to perform more and varied tasks and he’s only paid when the order comes through. What we’re talking about here is agreed-upon payment for “pioneering” work, marketing and consulting services, etc. Keep in mind the axiom “the rep isn’t worth what he’s paid, he’s worth what he negotiated.”
How does the new rep get out word of his agency to principals and customers? The reps we spoke to for this article advertise in Agency Sales as well as belonging to and attending the meetings of a variety of business associations and organizations. In addition, they depend upon wordofmouth, and they network with and explore business opportunities through business acquaintances developed over the years. And cold calls remain a staple of their business activity.
All of these efforts, however, should be geared to creating the agency image or brand in the mind of both manufacturers and customers. Whenever either of these constituencies thinks of a product or service, it should be the goal of the rep to have established his or her agency name in the minds of potential principals/customers.