As the largest North American manufacturers’ representative association we often get questions from manufacturers and representatives about best practices and how to maintain long-lasting, mutually-profitable relationships. In this post we share 11 recent questions and our replies.
- Should the manufacturers’ representative get copied on all the RFQs coming from the customer to the principal?
Many times the rep will actually work with the customer to help create the RFQ. If the RFQ went directly to the manufacturer it is a good idea but not always common practice to copy the rep on the RFQ. In some cases the representative will need to read the RFQ to understand the part that is being quoted. In other cases where the RFQ is for a manufacturer’s standard catalog number part, a copy of the RFQ is less important.
- Should the manufacturers’ representative be copied on all quotes going from a principal to a customer so that the representative can follow up with quote and report back to the principal?
The rep should always be copied on quotes so he or she can follow up. (It’s also a plus because when you follow up you can also have a conversation about other lines on your line card). Some principals ask for feedback on their quotes, and some don’t.
- Does the principal’s in house staff follow up on the quotes or is that the representative’s job?
It would be very unusual for the principal’s staff to do the follow up. This is almost always the representative’s job.
- If the sales representative doesn’t follow up with the quotes issued in response to the RFQs, what other value are they adding to the account?
The rep works with the people who write the specifications to try to get the product designed around the processes and equipment that best fits the customer’s needs and with which his or her principal works most effectively. And by developing personal rapport and trust the rep will sometimes get a “last look” if her price is not the best, or have a chance to sell/justify a higher price when a competitor’s quote is lower but the competitor’s quality or delivery is inferior.
- What performance standards are available to evaluate a sales representative?
In most cases, unfortunately, performance standards can be very subjective, which can work against the representative. We recommend that the representative and the manufacturer develop a mutual marketing plan and mutually agreed upon expectations against which both parties can be measured. After all, if the manufacturer can’t ship on time or with good quality you can’t be blamed when orders drop. And the plan should be written so you don’t have to rely on memory to know what was promised, or have to try to explain to a new sales manager what the old sales manager agreed to.
- I have represented a principal for years with no contract, is this a problem?
This kind of arrangement sometimes lasts for decades, but eventually somebody gets bad news and can’t substantiate whatever promises were made years or even decades ago. If you can’t convert this handshake agreement into a written agreement, at least resolve not to accept any new lines without a written agreement.
- Does the rep get paid for the life of the account?
Representatives who bring in a project should be paid for the life of the project. This should be in writing as a LOP/LOP (Life of Part / Life of Program) clause in the agreement. MANA’s specimen representative agreements in the member are of the web site include some examples of how LOP/LOP clauses you can discuss with your attorney.
- Why should a representative get paid for the life of the account?Especially if he or she is no longer active?
A representative can spend years working on a new account or project that can’t be closed and never see a dime from it, so it is only fair that when the rep brings in a whale that he or she gets paid for that whale for as long as the project lasts. The other reason for this clause is that when a rep brings in a big order there is a temptation for the principal to terminate the rep, pay him or her for 30 days, and keep all the commission the representative had earned. Without a LOP/LOP clause this would happen much more often.
- When does the representative’s relationship with the principal end? When the sales rep finishes a 5 year contract, or when the orders stop coming in, or when no new business is established?
Some rep companies represent the same company for 60 years across three generation of owners. The contract is usually renewed as long as the relationship is mutually profitable. Which can be a very very very long time!
- Do representatives only get paid on the orders they bring in? If they don’t seem to be staying in touch with the customer or the supplier, do they still continue to get paid on all new orders too – or just the ones that the supplier knows they were initially involved with? So, for instance, if a rep of Acme Company was engaged 30 years ago, and they brought in a few accounts, do they still continue to get paid on all new orders from those accounts, even though Acme isn’t sure they have anything to do with the new orders and Acme barely hears from them?
First answer: What does the rep agreement say?Second answer: If there is no written agreement it is common practice for the rep to get paid for any accounts they bring in even if they have not touched a particular order. If a principal barely hears from the rep, that is a trigger for the principal to call the rep and ask: “Why am I barely ever hearing from you?” Then the two parties need to discuss mutual expectations and come to terms with whether or not each can accommodate the needs of the other. But it would never be appropriate for a principal to just stop paying the rep without prior communication, adherence to any contracts, and compliance with any applicable state commission protection acts.
- I am wondering if all my following up with quotes on behalf of the principal is overkill. So many of the quotes don’t turn into purchase orders. Do the best sales representatives follow up on all the quotes that are issued by the supplier to the customer? Or is that just unnecessary?
Deciding whether or not all quotes require follow up is another case where the rep and principal need to have a heart-to-heart conversation and produce a written sales plan that documents those mutual expectations. The principal may not want follow up on every quote or may think this crucial. You will never know unless you ask. And you want to get it in writing so neither party can misremember what was discussed and hold it against the other.
One other reason to follow up on quotes is that it gives you a reason to be in repeated contact with your prospects and customers, which helps you build relationships and also gives you an opportunity for, “Oh, by the way, we have a new product that I know you could use, can I come by with a sample next Thursday?”
We love hearing from manufacturers and representatives who have questions about their roles and how to work together profitably. Drop us a note at mana@manaonline.org