RepHunter - Discussions and tips for those looking for or in the Independent Sales Rep field

So confused! Independent Rep, 1009 Rep, Manufacturers Rep, Broker?

I get asked about many issues which come up when a company is considering adding Independent Sales Reps to their organization:

Where do I find them?
Are they a good fit for my business?
What should I look for in a rep?
How long before I am seeing sales?
Do I need a rep agreement?
How to I manage an Independent Rep?
Etc.

The list goes on and on, and all questions do need to be answered for your team to find success. To start, a brief overview of the industry.

Independent Reps are called many things; Independent Reps, 1099 Reps, Full Commission Reps, Consultants, Channel Distributor, Consultants, etc. Really doesn’t matter…..the basic premise of the Independent Rep is that they can make introductions and sales for your product/service, and they are compensated strictly on a % of the sale, they are independent covering their own expenses in most cases and income is reported on a 1099 form for IRS purposes.

Reps will carry multiple lines, so you will never have an exclusive with the reps…..and this is actually a good thing! Most of these reps are already connected in their industries, and can tell you pretty quickly if they can find success or get appointments on behalf of your product/service.

These Independent Reps can be individuals, small regional teams or larger, extremely well-run agencies. Each rep/agency usually has their specialty. They may call in Independent retail or Independent manufacturers, some do large big box, Tier 1 automotive, major OEM’s, large and small distributors, etc. Pretty much there is a rep or agency who specialize in every call point out there. It is important you find reps where your product or service is a compliment to their current business and will enhance their relationships with their accounts.

The US Dept. of Labor estimates there were over 2 Million Independent Reps in the United States in 2016 and that number is expected to rise 6% – 10% annually. This means there is definitely a rep or rep agency who is a potential fit for your product or service. There are many ways and methods to source these reps which I will cover in future postings.

The 1099 industry is a very active and growing segment of business in 2017. As Health Care Costs continue to skyrocket, and as companies are looking for reps who are already connected, this growth trend is only going to continue. Regardless if you are a principal looking to add Independent Reps or a Corporate W2 rep who is considering venturing off to begin their own rep agency, the growth and activity is there.

This was simply a quick overview of what’s happening out there and where the tea leaves are pointing. If you ever have any questions, just shoot me a note at: tom@rephunter.net.

Tom Metsa
Director of Platinum Plans
tom@rephunter.net
414.241.6984

5 things to know about “Repping” a line in 2017

Five key things to keeping in mind for your sales repping business are:

Some of the best new lines do not have a sales history: We hear it every day, “not interested in pioneering a new line.” Makes perfect sense and has been a common theme for years. Yet some of the potentially really profitable products and services in the country today, are also just being developed today. To ignore a great new product or service will prevent you from even having that “super” line or being on the front end of something significant.
Services offer a fun add on to a product book of business: One of my objectives is to find reps great “complimentary” lines. In some cases, that complimentary line could be a service with recurring revenue. If it fits into your area of knowledge, and your clients can benefit from it….why not take a look at adding a service?
Many foreign companies coming into the US: With the global economy what it is, we are seeing a significant number of foreign companies beginning to take a hard interest into doing business in the US. These can be great opportunities to get on top of some great new products and services, as well as earn a monthly guarantee as the company expands.
Upfront refundable commissions: Many reps and agencies are now requiring companies to offer an upfront commission plan. These are commissions paid to the rep or rep agency prior to any actual sales taking place. Be prepared….if you decide to go this route, these are refundable commissions. And companies are taking efforts to re-coup these dollars for rep/agencies who are not successful in getting sales.
Stay informed on the parent companies you are representing. When repping a line, we often become so focused on selling the product or service, we forget to stay on top of the company or parent company’s objectives and movements in the market. There is constant change happening at the high levels, it’s important to be informed.

Tom Metsa
Director of Platinum Plans
tom@rephunter.net
414.241.6984

Exclusive territories for independent reps

Use Exclusive Territories for your Independent Reps to Increase Sales

I talk with clients every day who struggle with how to lay out territories for their independent rep team. There are multiple ways to do it. We have seen three that seem to produce the most success on a consistent basis.

Exclusive territories can be used to improve your sales and attractive good independent sales reps to represent your products and services. Without offering exclusive territories, you can lose out on some of the best representation opportunities.

1. Geographical

Pretty self-explanatory–a rep will cover anything from a portion of the city, to a section of the state, to multiple states. Any business activity which happens within that territory is automatically assigned to that rep.

Many principals have an issue with giving business to a rep, simply because that person has an exclusive in that territory. The truth is–word of mouth is the most powerful sales tool in existence. So if the rep has been doing a good job, communicating and servicing his active accounts, just the word of mouth throughout the territory can bring in new sales. People who are in the same business congregate and have many discussions throughout the course of a year. This positive word of mouth can be a valuable sales tool.

2. By Business Vertical

In this situation, the principal provides a rep an exclusive to a very specific business vertical. It could be nearly any industry–medical, financial, aerospace, etc. Often a Business Vertical exclusive is combined with a Geographical one as well.

For example, one of our major touch screen manufacturers is working with a rep who has an exclusive to the medical accounts and prospects in the state of California. It has been a very successful relationship with lots of upside for both sides.

3. Named Accounts

This is where the rep calls their own shots. Essentially they are allowed to name in advance the accounts they will be targeting. The number varies depending on the industry and the number of calls it is reasonable for a rep to make. Could range from 20 accounts for high dollar purchases to 100-200 for small scale purchases.

The key is that the rep is actively working with or pursuing these accounts. If no activity is happening within a reasonable period of time, it can be easy to understand why. You can transition the inactive account to another rep, or register the account as “inactive” and replace it with a prospect who may be more receptive to the product line.

Need Help With Your Sales Territories?

I am always happy to discuss this or any independent rep/1099 rep issues which arise throughout the day. This is our exclusive business, and there are not too many situations we have not seen.

All the best! And remember, if you want active 1099 reps by the end of summer/beginning of fall…. the search has to begin today!

Tom Metsa
tom@rephunter.net
414.241.6984

Being “Rep-Ready”

Productive independent sales reps want quality products and services from quality companies. We hear from reps quite often about companies that have various levels of unpreparedness or even unprofessionalism when it comes to being ready to go to market via the rep channel.

If you are in the position of getting ready to work with reps, you need to be prepared and able to communicate to the rep on the details. Here is a list of items, or a checklist if you will, on items to have ready to communicate to the rep, as they may be relevant to your business.

A Rep-Ready Checklist

Current customer lists
Company history
Brand comparisons
Sales book – pricing and sell sheets
Liability Insurance
Terms for customer payments
Blank invoice for setting up accounts
Price lists
Volume incentives/Volume bonus programs
Holiday and Seasonal items
Product and New item information
Case Cube / Case Weight / Case Dimensions
Pallet Count / UPC / GTIN UPC / Item descriptions
Club Packs / Special Packs / Pallet programs / Shippers
Knock down (empty cartons/packaging)
Placement programs / slotting available
Private label, co-branding, branded
Delivered and FOB your plant
Remittance address
Minority-owned opportunities: WBENC.COM
Certifications or audits if necessary in your industry

Startups’ Steps to Being Rep-Ready

We very often have feedback from reps about unprofessional start-ups. It is understandable that when your company is new, you may have a great idea for a product or service that the market wants. But you may not have all your “ducks in a row” as far as getting to market. The market will not usually “beat a path to your door”. You will have to make that pathway yourself.

Creating that pathway involves a professional approach. Reps will get turned off when they are required to do too much “hand-holding”. When your startup is missing the elements listed above that apply to your business, then the rep feels you have the “cart before the horse” and are not ready to do business.

Being prepared in the appropriate areas allows the rep to avoid the hand holding, and makes communication to the rep and to your customers to have the greatest impact.

Undercapitalization – Underestimating Marketing Costs

Another common deficiency if your company is a start-up is undercapitalization. Here is what one of the RepHunter reps has to say about this:

The biggest problem facing reps and principals today is undercapitalization. Continuously, I get principals that require show attendance, interstate travel, advertising etc, and these are the same principals that insist on “house accounting” their territorial book of business … then they wonder why no rep organization will touch their line. Think about it: it costs the rep $1400/mo. to support one line correctly. Car, Insurance, hotels, cell, Laptop, air travel etc. This is expected to be carried by the rep 100% … according to most principals.

Summary – the bottom line is that most reps will assess a line on a “return on investment basis”, just as if they were going to purchase a stock or a company. If the relationship is non-reciprocial financially, in other words if the principal refuses to financially support any of their fair share of the operation, then the whole arrangement will fail right from the start.

It amazes me how many principals just think of the rep relationship as a free ride financially!

For more information on how to be “Rep-Ready,” check RepHunter’s indepth resource page: Requirements for Successful Use of Independent Reps

Manufacturers Reps Say “I Am Not Daniel Boone, I Can’t Do Pioneering”

By Charles Cohon

“Well, that’s what I used to say about pioneering lines,” says Ralph, a manufacturers’ rep. “I have a well-established line card and I just couldn’t justify taking time away from those lines to promote a product that wasn’t bringing in any income. But a manufacturer who really wanted me to rep his line came up with a very creative program that changed my mind.”

How did the manufacturer change the rep’s mind? With a joint territory development fee.

Joint Territory Development Fees

“My company is a powerhouse in the Eastern U.S.,” says Jim, the manufacturer, “but we have no existing business in California, which made recruiting a California rep for our product a huge challenge. And when I started my conversation with Ralph ‘no existing income’ was pretty much a deal breaker for him too. I did find reps who would take on my line with no existing income, but they didn’t operate at the same high level of professionalism as Ralph’s firm, so I really pushed for a program that could justify having Ralph add my company to his line card.”

Ralph agreed, adding “When I call on a customer they are usually pretty open to having me present three or four of my product lines. So when I do my mental calculus and choose to present products V, W, X, and Y to that customer but leave out product Z, it’s based on maximizing my income from that call. And if I have a line on my line card that produces zero income, it’s just not going to make the cut and get included in my sales calls.”

Until Jim learned about joint territory development fees, his conversation with Ralph would have ended abruptly when he revealed that the territory he was recruiting for had no existing business. But now, thanks to innovative thinking in the manufacturers’ rep industry, Ralph and Jim were able to strike a win-win agreement that made sense for both of their companies.

“It was pretty simple once we each watched MANA’s Developing New Markets With Professional Manufacturers’ Representatives video,” Jim said. “Bottom line, we put together a joint plan that estimated Ralph’s cost of having Ralph launch our line in his territory, agreed on reasonable reports so I’d know where my money was going, and we split the cost 50/50, with my company sending Ralph a monthly check for our half for one year.”

Sharing the launch costs 50/50 meant both Ralph and Jim had “skin in the game” and that the launch cost would not be 100% at Ralph’s expense, and by the second year Ralph had Jim’s line well established in his territory. For both companies, it was time and money very well spent.

Charles Cohon is CEO and President of the Manufacturers’ Agents National Association (MANA), a non-for-profit trade association that provides educational materials to agents and principals to help them find great partners and work together as professional partners in profits. He can be reached at ccohon@manaonline.org. MANA’s web site is www.manaonline.org.