8 Reasons to use a Manufacturer's Rep
1. You find its too expensive to have enough direct people to give the intensive coverage you need.
If your sales volume is under $75 million, you probably don’t have the resources to support a sales force big enough to do the job. Your objective, remember, is a sales organization that develops closeness to customers. Because that means spending a lot of time with them, you need an adequate number of people.
Reps are, by their very nature, specialists in certain markets and with certain major customers. When you have a diverse market profile, you can develop a network of parallel reps geared to specific market needs. This approach can be powerfully effective. The right rep will have industry/market-dedicated sales people with the experience and knowledge to help you grow and find new opportunities.
2. Your profit centers or markets are diverse and require different sales skills.
3. Your product line is limited.
Sales representatives have scale with their customers by representing multiple and compatible product lines. Regardless if your product has large volume with each customer, the best reps will have a true partnership with the buyer and will provide focus on your products.
In addition to variable expense and a more favorable cash flow, there is a third financial advantage to using reps. It is balance sheet management, a particularly important advantage for manufacturers who are in markets requiring local services, inventory and value-added support. Fixed investments by reps improve your balance sheet.
Customers frequently show a preference for local representatives. Unless you can afford the investment of direct sales people in every key trading area in the country, reps may be the way to go. Having a local agency rep that your client can meet with on a regular basis gives you a competitive advantage and your customer a trusted advisor. Your profit centers or markets are diverse and require different sales skills.
4. You have modest financial means.
5. Your customers want local representation
6. Your direct team is struggling with a channel that’s not their primary focus
Typically, corporate sales forces are shared by internal factory divisions, but they have a primary market thrust that almost totally consumes the time and effort of the sales personnel. If a certain division does not fit this primary thrust, that division faces a tremendous obstacle to growth. It would be much better off withdrawing from the corporate sales force and establishing its own sales channel with independent reps. Sales agencies often have channel teams with customer specific expertise that can provide deeper coverage
Many manufacturers stumble when trying to use their existing sales force to penetrate a new market. Not having contacts or familiarity with the market becomes a major roadblock and frequently sales people return to historical patterns as soon as corporate pressure to call on the new market abates. It is typically easier and more productive to recruit a parallel network of reps who are specialists in that market. A hybrid model of both direct and independent reps can help you enter new markets quickly, effectively, and without disruption to existing business.
7. You need fast entry into a new market.
8. You struggle to retain top performers.
If you’re typical among manufacturers, you’ll have a rather high turnover of sales personnel. This disruption of continuity minimizes your ability to maintain maximum penetration you’re your key customers. In contrast to the mindset of many in a direct organization, a reps whole professional life is focused on selling to a given set of customers or to a specific customer over the long haul. Independent reps are committed to selling as a career, rather than using their position as a stepping stone. And, they generally have higher compensation levels to incentivize them to stick around. All those things create tenure and trust with your customers, which translates into a competitive advantage for you.
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