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

Spend time as a manufacturers’ representative, you eventually learn you can lose an important line for doing too good of a job. What? They fire you for being too good? Yes, it does happen. While most manufacturers understand and appreciate the value their manufacturers’ representative partners provide, a few see it differently.

They look at the commission check they send the manufacturers’ representative and conclude they save money if they employed a direct salesperson. From a pure accounting point, that makes sense. They assume the direct salesperson brings in the same order value as the manufacturers’ representative. How valid is that assumption? The main reason the manufacturers’ representatives books orders is that the customer knows and trusts the manufacturers’ representatives and buys from them. Over years, the manufacturers’ representatives develop reputations as trusted problem solvers. They help their customers not only with that line that’s about to terminate the agreement, but the other complementary and synergistic lines they represent. During one visit, the manufacturers’ representative provides the customer with multiple solutions.

What happens when the principal terminates the manufacturers’ representative agreement and hires a salesperson? During the period the new direct salesperson tries to develop the customer relationship, the competitors swoop in and take away the business. The customer bought from the first manufacturers’ representative because they were the favorites. The customer has others calling on them and there’s a number two on the favorite list who handles the competition. The customer switches the business to them. Do not make the assumption that the only reason customers purchase from your company was the quality and performance of the product. Excellent sales skills also play an important role.

Then we have a few who terminate the agreement because of resentment. They believe the manufacturers’ representative makes more than they do. Do they really? The average MANA manufacturers’ representative member employs, on average, between five and six outside salespeople. Does that principal understand how much it costs that business to support payroll and other expenses? These few principals assume the check they send is like a paycheck to the owner. They deposit it in their personal bank accounts and spend it where they wish.

While we call it “backselling,” the goal is to educate the principal. High-quality principals understand the value they receive from their manufacturers’ representatives. They know they receive orders because of the professionalism their manufacturers’ representatives exhibit. These principals never terminate agreements for the reasons we described above. To prevent the smaller number of others from making unfounded decisions, the manufacturers’ representatives need to educate them. They need to educate them on the value they provide and how they invest the commissions they receive in their businesses.

Implement a backselling program and you minimize the chances of losing the line for outstanding performance.

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.