For the past three weeks we have been discussing the rep-principal relationship and how it needs to be improved, for the future. We listed what the reps want from this relationship and what the principals want from the relationship and just by comparing those two lists we can see that there are some wide gaps between. Which leads me back to my original statement that this relationship is no longer working.
I had a talk with a friend of mine the other day who pointed out that the large, big name OEMs, like component manufacturers, are no longer using reps, which led him to the premise that the rep is on his way out as a viable method of selling.
After some discussion we both came to the conclusion that because of a number of factors including social media, search engine optimization and Google ads, these companies are so well-known and so in tune with their customers that my friend’s premise that reps are passe with these OEMs might very well be true. But the real reason was because these companies have their own products, that is they design and produce their own patented products.
But in our industry – PCB manufacturing and assembly – we do not have our own product. We are building other peoples’ products. We are a Business to Business industry helping companies like these well-known OEMs produce their products. Ours is a consultative sale requiring a person to person interface and thus still requiring sales people whether they be direct or independent sales representatives… and as we still reps, which means we need to improve the rep-principal partnerships.
With that in mind here is what has to happen for the rep-principal partnership to work better in the future.
- Partnership: Both sides of this table have to make an intentional effort to make the partnership work. This has to go far beyond a “We’ll just get along better” promise. No, there has to be a mutually developed and implemented plan for a productive partnership. The reps and the principal need an open and honest discussion on how they are going to work together to create this fruitful partnership. Both parties have to participate fully in this effort.
- Respect: During the course of developing their project the parties must agree to respect one another and as in a true partnership, look out for one another.
- Balance: Let’s get rid of the old Golden Rule, “he who has the gold makes the rules” which is one of the dumbest things ever assumed in any relationship. That kind of thinking has led us to where we are today, with the rep-principal relationship in shambles. Both parties have to come to the table as equal partners. This is especially true for the way the principal views the rep.
- Open communications: This has to be understood from the beginning. Both parties have to be open and honest with one another at all times. The principal must include the rep in all discussions and decisions about their mutual customers.
- A contract based on success not failure: Contracts today are written with an assumption of failure not success. If a contract for the rep has a 30 day termination clause, why have a contract in the first place? This means that the principal does not believe in the partnership enough to extend the termination clause to something that makes more sense like six months to a year. Look if you don’t trust or know the rep you are signing enough to commit to this then you don’t know the rep well-enough period and you don’t sign them until you do.
- Take the assignment seriously: Too many reps are eager to sign contracts, but not so eager to do the work. I have seen many examples where reps sign a contract and then never do a thing (or so it seems) A contract is a commitment that has to be taken seriously. If you sign up to represent a company, then do it! Represent them! Prospect, cold call, follow up, negotiate, get the quote, get the order, and develop an ongoing relationship with this customer. Once you have a new customer, go after another one. Being in sales means doing all of these things, this is what you signed up for, so just do it!
- Retainer/stipend: Whatever you want to call it, it is time for a rep contract to include a retainer. No longer can reps work for almost three quarters of a year before seeing one cent. I don’t take this recommendation lightly at all. It has taken years for me to come to this conclusion, but I think the time has come. BUT! Everything I have listed above has to be in place, especially number 6. Reps need to realize that when they get a retainer, they are committing to doing their job, to doing everything listed in item 6 and more. You cannot just get a retainer and assume it’s business as usual. That retainer binds the rep to be all in for that principal, this means being seriously accountable to that principal. These means participating in a good and solid rep partnership program including, reporting, sales meetings, forecasting, (yes, forecasting!) and prospecting. Yes, prospecting and cold calling on new target customers is part of your responsibilities.
If the rep and the principal not only agree but are ready to fully commit to the 7 guidelines and use them as the foundation of their relationship, then it will turn into a successful and productive partnership. It’s only common sense.