Monday, July 10, 2017

Rep Disconnect: Are you not working with your Local Rep?

It happens with distributors everywhere. For some reason you don’t have a great relationship with one of the manufacturer’s reps assigned to your company. The reasons for this are many. Let’s dig into the big three:

The rep is responsible for lines which are competitive to your company’s key suppliers. Many distributors fear working with reps who are tied to competitive products lines. The reasoning is simple, introduce them to our best customer and the next day, they will return to the customer with a demo of a different brand product. Further, if they know more about “your” customer, proposed solutions become more focused and effective. When the product they sell are an important part of your value proposition, it’s easy for them to offer something similar but better or cheaper or both.

The rep is closely aligned with a competitive distributor. When the rep has close ties to a competitive distributor, it raises a number of trust issues. Will important information be leaked to the guy down the road? Are prices really fair or does the other distributor get some kind of competitive advantage? We recently talked to a distributor who was very certain a rep had shared the dates of their big open house with another distributor, who magically announced their big shindig would happen the week before. While no real evidence supported it, the whole thing wasn’t just a coincidence, they made the decision to not invite the rep to other similar events.

The rep has baggage which precludes you from trusting with your accounts. When Will Rogers said, “I never met a man I didn’t like” he obviously hadn’t met this rep. Unethical behavior can be found anywhere and it sometimes rears its ugly head in our industry. Associating with these kinds of people causes their reputation to rub off on your organization. Misleading statements and lies impact customer service and ultimately create situations where business is damaged.

Reps play an important role in our industry
After surveying distributors across a number of industries, I have discovered a number of breakdowns caused by rep disconnect. The table below things we have discovered:

Implications to selling
No joint calls
Distributors rank joint calls as the single most important selling tool available from a manufacturer.  These are used to answer detailed technical questions, respond to customer commercial issues and to launch new products.
New literature not available
No literature means proactive sales calls are more difficult and experience tells us that in spite of all the electronic hoopla, customers still want you to place a glossy brochure in their hands when talking about a product. 
New programs poorly discussed
How many times have you learned of a 90 day program a month late?  This means lost opportunity for coordinated market attacks and often translates into lost business.
Special pricing agreements (SPAs) missing
SPAs have become a cornerstone of our business.  As both an offensive and defensive weapon, they can lock in business or lock you out of business.  In candid conversations, manufacturers tell us they judge a distributor’s sales effort by the number of SPA requests submitted. 
No sales leads shared
“Even blind pigs occasionally find an acorn.”  Reps are trained salespeople.  They find business opportunities.  Most likely, they are not sharing with you.  Manufacturers spend millions mining for solid sales leads.  Most intend for them to trickle down to the distributor and you won’t get any.  This costs money.

This whole issue is serious. When the rep is disconnected from your organization for any reason, it costs you money. I believe it’s important to have a company-wide plan.

Rep exclusion needs to be a business decision…
First, I believe the decision to disconnect from a rep is not something to take lightly. With all the negative consequences, it shouldn’t be an emotional decision. Most importantly, it has to be a management decision. Unfortunately, many distributors allow salespeople to make the rep disconnect decision. What’s more, some of these decisions are based purely on personality and emotion. Here are some real world examples.

One salesperson reported, “I wouldn’t work with Joe because he sells the same type of products as my good friend. I trust him and we’ve worked together for something like 20 years. Because of that, I have decided not to include Joe’s company in any of my customers.” Sadly, the company Joe represented was strategic to the sales guy’s company.

Another seller related a story of issues presented by the rep being discussed. Listening to the tale, it would seem this person was not the right kind of business ally. But, I happened to know the company in question and things weren’t adding up. After a few questions, things got interesting. The issues were nearly 15 years old and several of them could potentially be cleared up with a discussion. Still, the distributor salesperson persisted. What’s worse, his particular point of view had spread to others in the organization, who had never had an issue. An important product line flat-lined because the rep had been excluded.

Addressing the issues…
First, allow me to restate, the issues we described in our two examples are common. We are not discounting the need to occasionally make the decision to disconnect. It’s a business decision and as with every business decision their needs to be a plan. Here’s a sample plan:

1. Gather facts. Specifics on the situation are important. Issues with past performance should be tied to dates, customers and how the rep behavior could impact future business.

2. Speak to the owner/principle of the rep agency. Even if the owner/principle is part of the problem, arrange a meeting to share your grievances and outline why you feel that working directly with them creates issues for your business.

3. Explore potential work-arounds. Is there a way the rep could work with your organization which would not impact business? If the issue is with a single salesperson, would it be possible to assign someone new? If the rep agency carries a highly competitive line, could there be at least a few accounts which could be worked? If not, move to the next step.

4. Talk to the manufacturers involved. First, this is a business discussion with the manufacturer’s regional manager or VP of Sales. Avoid personality issues and character assassination because you have no real way of understanding the depth of relationship between the manufacturer and the rep. Ideally, your plan would be to find a way to “work around” the issues of not having a rep. This would involve identifying the right people to call for getting negotiated pricing, sales backup, customer support and a source for sample, demos, literature or other selling tools. An alternative training plan might be needed as well.

5. Build a working plan with the manufacturer. Make certain the manufacturer knows that you still want to build your business with them. Further, make sure they understand the potential financial impact of operating with rep disconnect. Set up a plan for providing the necessary services for your growth and pre-schedule monthly check-ins to keep the plan real.

6. Periodic reviews with manufacturer. Without a rep, you are outside of the normal lines of communications. You miss news on programs, specials and sometimes new products. These are important for distributor and manufacturer alike. Even though some might argue this is backwards (with the distributor being the customer… and all that jazz,) I recommend the distributor take a leadership role to ensure the reviews actually take place.

Is this perfect?
In most instances, operating without a rep is more difficult than with a local rep. When the relationship is strong, the work is properly assigned to the right person (whether they be on the manufacturer or distributor side) and everything is running well, the rep/distributor combination is a thing of beauty. When things are dysfunctional, profitability and business growth for both manufacturer and distributor are stressed. The worst case scenario is to ignore the situation and hope things change.

Distributors and their supply partners regularly have this kind of conversation at association meetings, marketing group conferences and conventions; I know because I have been involved in many of them. I’ve seen some discussions become very productive and others take a turn for the worst. Most turned from business to emotions. First and foremost, this is a business discussion; specific details and data are important. Comments like “Joe is a slimy snake” make you look petty and unprofessional.

Just in case the conversation turns in this direction, be prepared with a list of reps you believe do a good job in your territory and be prepared to explain why.

I am further researching and revisiting some of the distributor-rep relationship issues. I would love to hear your thoughts either via comment here, email or by phone. Once again, those sending us emails get the River Heights Grand Prize… A lovely hand addressed postcard from Iowa.

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