First of all, let me say there are no bad guys here. Only good guys trying to work with each other.
I am sure you have all noticed how difficult it is to find good reps today when it comes to selling PCBs and PCBA’s. That is not to say there are no good reps out there but rather there are not many reps who are dying to represent our companies.
Being in the rep finding and managing business for many years, I have had a front row view of this dilemma.
Reps are in high demand right now. If I signed up every company that approached me about helping them to find and sign reps, I would have a hundred clients and that would be globally not nationally. It seems that every company I talk to wants me to help them get some reps. There is no shortage of companies looking for reps.
And by the same token there are reps, good reps who would like to work with these companies. There are reps who like the PCB and PCBA industries.
But…they are not doing it for a number of reasons. Most reps, especially the very good ones, are more than just reticent to work with our industry.
Why is this? If they would love to work with companies in our industry, and if the companies in our industry want to sign them…then what’s the problem? Why isn’t it happening?
It all boils down to the rep-principal deal, the contract. The standard contract that most companies in our industry use is a terrible one for the reps. Here are some of the reasons why:
They have to wait too long. They have to work too hard and spend too much of their own money before they see a return on their investment. It can take up to three quarters of a year before they see any money. With all the prospecting, lead generation, surveys, site visits and everything else it takes to win significant customers, it can take a good six months before they book their first order. And then the principal has to build and ship the product and then wait up to sixty days to get paid and then the rep waits another minimum to get paid after that! In the end it is not uncommon for the rep to wait ten months (all the time working on the account) to get paid. Sorry for the vernacular here but that just plain sucks.
They are not treated as equal partners. No matter how long a rep has worked with a principal, she is never treated as an equal partner. In fact, there is usually some resentment from the inside sales and customer service people who feel that they are doing all the work and the rep is reaping the rewards. Once a rep delivers a new customer to the principal, the principal’s team takes over in accommodating that customer. If they are doing their job correctly a strong tie develops between the customer service team and their customer often leaving the rep in the dust. At this point it becomes the principal’s customer and the rep is left out of the loop. This is not a bad thing in and of itself. But then everyone tends to forget who brought in the customer, and it is just a hop, skip and jump from “what have you done for me lately?” to “why are we paying this rep all this money when we are doing all the work.” All the while forgetting who actually brought the customer to the company.
Most of our contracts have thirty day termination clauses. And take it from me because I’ve been in the middle of these negotiations. The rep has to negotiate (fight like crazy) to get a termination clause extended to ninety days. All the time the more successful she has been the more vulnerable she will be. Every good rep I talk to has a horror story of becoming too successful, to the point of being paid “too much money” and being dumped, leaving thousands of dollars behind. The option is suing the principal which again takes thousands of dollars which as an independent contractor, the rep has neither the funds nor the stomach to do. Check it out, call any rep you know and ask him or her about the time a principal dumped them for being too successful and making too much money.
These are the three reasons why reps are not very excited to work with PCB and PCBA companies. And I get it. The world has changed, and the standard rep-principal contract has not. But it is time now more than ever for a new way to work with our reps and now more than ever a time to completely revamp their contracts. Stay tuned because next week in part two we are going to present our ideas for what that new contract should and hopefully will look like, putting the Win-Win back in the principal / rep relationship.
It’s only common sense.