The Underappreciated Manufacturers’ Rep Print E-mail
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Written by Phil Zarrow   
Thursday, 31 July 2008 19:00

Be kind to the rep. They are vital to the chain.

Better Manufacturing While I usually discuss SMT processes, equipment and materials in this space, every now and then it is important to take note of the human aspect. One of the most overlooked and, in many cases, underappreciated personnel is the manufacturers’ representative. If you’ve ever been in a position where you were responsible for procuring equipment, tools or materials for a process line, you have no doubt dealt with one or several manufacturers’ representatives.

A manufacturer may elect one of several ways to sell their product in a particular region. Larger companies, for instance, may employ a direct sales force, in which their employee calls on buyers. More common in our niche, however, is the manufacturers’ rep. Within this approach, the principal may have national and regional (and sometimes, district) sales managers, but the actual “street feet” are part of a third-party sales organization, aka a “rep.” The rep is the person with whom you communicate through most of the sale.

In most arrangements in North America, the manufacturers’ rep does not take possession of the equipment being sold and is therefore, not a legal agent of the manufacturer. Also, in North America, service typically is provided directly by the factory’s organization, seldom through the rep. Outside North America, manufacturers’ reps typically take possession of the equipment and re-sell it to the end-user and also provide most of the service in their territories.

As mentioned, some equipment and materials manufacturers have their own direct sales forces. Their salesmen are employees of the respective company, responsible for selling only the products manufactured by their division. Other companies you may have worked with, including ACE, AIM, Autosplice, Cookson/Alpha Metals, DEK, ECD, Europlacer, Fuji, Heller, Indium, Juki, Kester, KIC, Mydata, Panasonic, RMD, Siemens, Speedline Technologies, Vitronics-Soltec and many others rely on third-party rep organizations to handle customers in the field. These rep firms are independent organizations that carry a number of lines. For each manufacturer represented, they report up to a regional sales manager of that supplier. The firms earn commissions from the sale of equipment and materials.

Manufacturers’ reps themselves may once have worked in sales or marketing at a manufacturer, perhaps in a management position. Others may have come from manufacturing or process engineering positions in our industry. Others may be starting their careers in sales, while some reps I know seem to have spent a lifetime in their roles.

Not only do most customers not understand the role of the manufacturers’ rep, it has been my observation that most of the principals (the equipment and materials manufacturers they represent) have no idea what “it’s all about.” In my consulting practice, my work includes helping firms maximize sales and marketing efforts, which includes relationships with sales organizations. As someone with experience both as a rep and, at various OEMs as a rep manager, allow me to attempt to set the record straight.

One big misconception is a rep’s “devotion” to each line. For example, a rep firm typically may have six to 15 product lines (from different manufacturers), some more, some less. However, if a rep has, let’s say, 10 lines, don’t think for a moment they devote 10% of their time and effort to each one. To the contrary, there are one or two – three at most – lines that get as much as 80% of their effort. Most of the other lines are along for the ride. And there is usually a line or two that just takes up ink on the line card.

What does it take for a principal (i.e., represented manufacturer) to become a Most Valued Principal (MVP) and gain a large portion of the rep’s attention? Having been there, done that, as well as owned that (slightly torn) t-shirt, I postulate it comes down to the following: support, reputation and money. I will elaborate.

Support. The manufacturer’s sales and marketing people have to put forth effort in the rep’s direction. Sitting back and waiting for the orders to pour in doesn’t quite cut it. A top-tier manufacturer will have good, descriptive and accurate literature – brochures, data sheets, and specification sheets in copious quantities – available to the rep. Supplying the rep with strong sales tools goes a long way as well. Videos (“sales demonstrations in a can”), presentations and professional cost-justification studies make a big difference. But sales and marketing support goes beyond paper and tape. Having a strong organization at the factory available to both rep and customer is extremely important. The third-party rep cannot be expected to be a technical whiz on every product line they carry (although some may pleasantly surprise you) and having accessible technical and applications support makes a big difference. Such support comes in both personal as well as remote (telephone) mode. Sales managers and product managers who travel in the field with the reps go a long way toward differentiating competitors from one another. What happens when a board is sent back to the factory for applications examination or related work? Is it turned around promptly or does it sit there for weeks (or months)? How about when the potential client comes in for a demo? Many sales have been made or broken not just on the technical aspects of a demonstration, but on how well the client was managed at the manufacturer’s facility. A good rep has a strong relationship with the clients in their territory and, rest assured, a low threshold for being embarrassed or let down.

Reputation. Somewhat related yet separate from support is the reputation that the principal has. Quite simply, is it a line that the rep is proud to have on his line card and to represent? Is the product reliable and does the company have a reputation for high quality, dependable service and support? Or is the line a major embarrassment? Do orders fall through the cracks; does every installation become a struggle, and the field service techs run the other way every time the phone rings? Those top-tier lines didn’t just happen to be that way. It takes a great deal of effort and commitment on the part of the manufacturer. Frankly, most still struggle with it. End-users know winners from the also-rans. The former enjoy an earned reputation and the rep will naturally gravitate toward such a line. This isn’t rocket science: It is much easier to sell a product, be it equipment or material, if the line has a good reputation. As a third-party, bear in mind there is not much a rep can do about the reputations of the lines they carry. While they are a conduit for communication between customer and manufacturer, it is up to the principal to respond, and appropriately.

Money. This may come as news, but like the rest of us, the rep is not in business for their health. Nor does the extreme pleasure derived from dealing with engineers and purchasing people provide adequate compensation (though you think it would). No, the rep is out there slaving for the legal tender, just like the rest of us. Accordingly, a manufacturer that pays a good commission and pays on time is the preferred one.
A typical commission rate for equipment (in North America) is around 10%. This may sound like a lot, particularly for an expensive piece of capital equipment, but keep in mind the rep is assuming a good part, if not all, of the cost of sale. Unlike for a direct salesman, principals do not reimburse reps’ expenses (fuel, auto and those lunches they bought you). The payment “gestation” period can be quite long as well. For example, you buy a pick-and-place system with a lead-time of 14 weeks. Your payment terms are net 30 days, so it is at least a month after delivery that you pay the manufacturer. The rep usually is paid commission a good month after that. So the rep doesn’t see a dime for their efforts (and financial outlay) for almost a half a year after completing the sale.

Be kind to the rep. They are a vital and necessary part of the supplier-user chain. Contrary to what some end-users (and sales managers) may think, reps are not parasites. Sure, there are some sleazoids out there; every field has them, and in our industry they are not confined to the sales side of the fence either. Most reps (as well as direct sales people) I have worked with are conscientious professionals who place their customers’ concerns high in their priorities. Remember, we’re all in this together.

Phil Zarrow is president and a principal consultant at ITM Consulting (itmconsulting.org); This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

 

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