Backsell the CFO

Save the Life of Your Manufacturer-Rep Relationship

By Jerry Leth, Vice-President and General Manager, MANA

In June I attended the MANA Attorney Forum and AMRA (Alliance of Manufacturers’ Representative Associations) meetings. At both events, I heard a recurring theme: when high-quality manufacturers create relationships with professional manufacturers’ representatives, the results way exceed expectations. Unfortunately, I also heard about the other types of relationships, the ones where a management change results in disappointment for both parties. Two totally diverse groups; rep-savvy attorneys in one, association executives in the other, both with the same message.

What motivates someone to take something that works and change it so it doesn’t? What happened to “If it ain’t broke, why fix it?” The answer lies with the failure to know and understand the unintended consequences of the actions they take.

For example, Ken Hooper, President and CEO of the National Electrical Manufacturers’ Representatives Association (NEMRA) brought up a situation where new owners take over a business with a proven and successful track record of working with manufacturers’ representatives. The new CFO notes the commission expense on the financial reports. “We can significantly cut expenses and improve profits by switching to sales employees.” The CFO’s lack of understanding of the value manufacturers’ representatives provide hides the unintended consequences that result. With many venture capitalists taking over manufacturers these days, the occurrence rate of this problem accelerates.

The desired solution is to educate the CFOs so they understand why the commission line item on the financial report is high. The customers know the manufacturers’ representatives, trust them and buy from them resulting in significant sales volume for the manufacturer. That significant sales volume translates to significant commissions. Take that manufacturers’ representative out of the relationship and the customer then buys from another manufacturers’ representative he or she trusts, not from the salesperson the manufacturer hires, whom they don’t know. Sometimes that manufacturers’ representative is the same one they bought from previously who now represents a competitor.

In the past, MANA recommended manufacturers’ representative members “backsell” their value to principals. What’s new now is, you need to add the CFO to the list of those who need to appreciate the value you provide. Help them learn so they don’t try and fix something that’s not broken. MANA provides many resources to help you do that.

Jerry Leth, MANA’s vice-president and general manager, started as membership manager in August 2000. Previously, Jerry owned and operated Letco Tech Sales, Inc., a MANA member, multi-line professional outsourced sales agency he founded in 1989. Before starting his own agency, he managed a network of manufacturers’ reps as vice-president of sales and marketing for torque and tension equipment. Jerry graduated from Stanford with a mechanical engineering degree. He started his career at Hills Brothers Coffee in San Francisco in engineering and production before embarking on a sales career.