The Sales Power of Independent Manufacturers’ Representatives in the Building Materials Industry

This blog, originally published in 2015, is being revised with a new title and with greater focus on the building materials industry. The goal of building material manufacturers is to maximize sales at the lowest possible cost and at the same time maintain an outstanding service reputation with their customers. Should the sales team be comprised sales employees, independent manufacturers’ representatives, or a combination of both? A sales employee is totally directed and paid by the manufacturer.  An independent manufacturers’ representative, or “rep,” is a firm who sells products of many manufacturers. The manufacturers’ rep may also help his manufacturers market their products or even be a distributor of products. Reps can be small, one or two-person operations, or they can be larger firms with multiple branches covering large geographic territories. For many reasons large building material manufacturers seem to prefer using employee sales teams in recent years.  Many are overlooking the benefits of a rep.  For small manufacturers or startups, independent manufactures’ representatives are an ideal choice for the sales team.  This type of sales team helps keep sales costs down and can gain quick entry into key markets.   Advantages of Using Independent Manufacturers’ Representatives Cost of sales efforts – Sales costs are directly tied to sales volume. Since a rep is only paid commission on products sold, there are no fixed costs of salary, fringe benefits, travel, or other sales expenses. If sales volume decreases, commissions also go down.   Although the cost of a sales call varies widely from industry to industry, information from the Manufacturers’ Representative Educational Research Foundation indicates that the estimated cost of an individual sales call for a sales employee might range from $250 – $500 per call. This cost includes salary/commission, fringe benefits, other sales costs and overhead. For a rep sales team, these costs are paid by the rep organization. Long Term Personal Relationships – These are a key to the success of any business. Individual reps normally work in a smaller geographical territory than a sales employee. Since a manufacturers’ rep owns his business and lives in his territory, his personal relationships are built over decades. Sales employees turn over much more often due to promotions, resignations or terminations and for many other reasons. Proximity – Since a rep lives in the compact territory he covers, a contact for service to customers is close by. When an architect or engineer or a buying customer requests an office or job site visit by a representative of the manufacturer, a rep can often make the visit within a few hours. Since a sales employee normally covers large geographic territories, his office may be a number of states away from the customer,...

Read More