Overall, the sales rep-principal relationship is not working the way it used to. In fact, it is archaic to the point of being unworkable. Let’s look at this issue from both sides and examine why it just doesn’t work.
From the Reps point of view here the challenges of being a rep in 2021:
- Reps are wary of principals especially in the PCB industry where they have been treated badly over the years.
- PCB shops tend to be unreliable. They don’t always make their deliveries on time and their quality can be uneven.
- There is no respect for reps, to the point that if a rep scores a large account, the shop owner will think he is making too much money and reduce his commission, or worse yet, terminate him.
- There used to be 1500 shops, there are not less than 200, and as those 1300 shops went out of business their reps did not get paid their due. In fact, even with healthy PCB shops the rep is often the last to be paid.
- Speaking of getting paid… after a rep signs with a company, it can be the better part of a year before she even sees a penny. Think about that…90 days to get some quotes in; another 60 days to win some business; another 35 days for the boards to be delivered and then with 60 day terms before the principal gets paid (which is after which reps get paid) add 20 days from the time the principal receives the money, and he sends out the rep’s payment. Add that up and the equals a grand total of 265 days before a rep sees a red cent.
- Meanwhile the reps are out traveling, visiting customers, entertaining them, all on his own dime for almost 9 months…footing all the bills. In today’s vernacular…that sucks.!
- Never mind the fact that often the principals have no idea what business they are in, who their ideal customers are or even what kind of business they want the rep to bring in. Then in the end the reps are just not treated right. They are not treated like true partners, which does not make for a good relationship.
- Oh, and by the way Covid did not help the rep situation.
- Principals are unreliable, untrustworthy, and incredibly, you can’t believe anything they say, or promise.
Now from the principal’s point of view:
- Reps no longer like to prospect they are all relationship managers not hunters. Most principals already have people to take care of their customers, they don’t need the reps doing that. They need the reps out talking to new potential customers.
- Reps don’t even know what the company does well. They won’t take the time to learn what the company’s ideal customers are. All they do is call on their own customers, the ones they have had for twenty years and try to cram that business into their principals’ shops, regardless of what the principals’ sweet spots are.
- Reps want money up front. Every company has a horror story of paying a retainer of $1000 to $3000 per month and getting nothing for their money.
- Reps will not be held accountable, they will not write reports, they will not do forecasting or any amount of planning. That’s why they became reps right? So, they would not have to answer to anyone.
- Reps complain about everything. All they do is complain about quality and delivery. Some owners have been known to say, “If we did everything perfectly, we would not need sales reps.”
- Reps will not prospect. They get lucky and bring in one or two big accounts and then just sit back and do nothing but collect their commissions checks. In some cases, they got the account years ago and do nothing to sustain that account’s business. Now all the work is handled by the principals’ team
- Reps are unreliable, untrustworthy, and incredibly, you can’t believe anything they say, or promise.
So here we have it, and it’s getting worse all the time. More and more it is becoming apparent to me that the rep/principal partnership needs a serious paradigm shift. We have to come up with new and innovative ways to make this relationship work.
I for one am not ready to throw in the towel, in fact this little exercise was just a teaser, an evaluation to show you what challenges we face today when it comes to making the rep/principal partnership work.
There is a solution, and we are going to present it here during the next few weeks. When all is said and done by the time this series of columns is written we will have presented an entirely new and innovative way to make this challenging partnership work, better than it ever has before.
Are you ready to take this journey with me? Are you ready to make a dent in the world of reps and principals and change it for the better and forever? Fasten your seatbelt, it’s going to be a heck of a ride! It’s only common sense.