Building Positive Relationships with Rep Principals – 8 Tactics to Bring You Closer Together
An independent manufacturers’ representative in the building materials industry must maintain strong relationships with the principals they represent to be successful and profitable. This relationship is critically important with primary principals whose product sales represent a large share of a rep’s business, yet it is also important to build relationships with those secondary, smaller manufacturers, whose products are complimentary to the primary principals.
A strategy for building these principal relationships needs to be developed and maintained.
To be smart, any independent manufacturers’ representative should always remember the following eight tactics:
- Agree on a fair contract
- Maintain regular communications
- Act as an employee
- Treat the customer service group as a customer
- Follow company procedures
- Aggressively market to architects, engineers and end users
- Travel with the sales manager
- Maintain an appropriate number principals
These ideas might sound simple, but by putting effort forward in these areas, a manufacturer’s rep is significantly more likely to succeed.
I have spent over 40 years as an independent manufacturers’ representative in the building materials industry representing both U.S. manufacturers as well as a few international ones. Although each manufacture operates differently the common thread that connects them is the importance of building personal business relationships with them as well as with their customers.
Most of my career has been representing manufacturers of architectural products. This has been both challenging and rewarding since it required balance of time and effort marketing to architects as well as handling orders and service with the buying customers.
The eight tactics discussed are ones I used over the years from trial and error experiences as well as from discussions with other successful reps during manufacturers sales meetings and building industry conventions and seminars. These tactics generally work with principals producing commodity products as well as architectural products.
Let’s look at each of these tactics one-by-one.
Agree on a Fair Rep Contract
Most manufacturers in the building materials industry use contracts with manufacturers’ representatives that have a clause stating that either party can cancel the agreement for any reason with just a 30-day notice. Although contracts vary regarding how long a terminated rep can collect commissions, in the real world this is negotiable. Manufacturers might consider how many years the rep has had his contract. Most importantly, the time allowed is based on the rep/principal relationship and how the rep has performed over the years.
Because of these one-sided termination clauses, much has been written about rep contracts for the building materials industry as well as many other industries. One of the best sources for additional information is the Manufacturers’ Agents National Association (MANA).
Maintain Regular Communications
As is true in all relationships, the proper level and type of communications is critical. The sales manager expects and deserves to fully understand what is happening in a rep’s geographic territory. If the line of communication is not active, the sales manager has reason to suspect that a rep may not be doing the work the manufacturer expects.
Maintaining strong communications with principals has many components. One way to start off on the right foot is to set sales goals and market development activities at the beginning of each year that meet both the principals’ and a rep’s business objectives. Large manufacturers often set these goals with little or no input from the rep. When this is the case, a rep needs to give the manufacturer his feedback on these goals. He needs to clearly state reasons why he agrees or disagrees with the goals and what he expects from his territory. These comments should be summarized in a brief email for the record.
Small and medium size manufacturers that comprise a large segment of the building materials industry often do not set specific sales goals. They expect a rep to grow the sales in his market to the best of his ability, but do not define a specific target. At least during the early years of a relationship, it is a good idea for the rep to communicate in some way with each principal concerning what he expects to accomplish during the year. This is good business practice for a rep and demonstrates to the principal the high level of professionalism with which the rep operates. It is also a good idea to provide verbal or written communication discussing the results of the previous year.
Act as an Employee
This is a philosophy that all reps do not accept. A rep is part of each principal’s sales team. Acting like a sales employee strengthens the relationship between the rep and his principals. The key element in this philosophy is understanding that customers belong to the manufacturer as well as to the rep. Reps who do not follow this philosophy covet key information about each customer and only share this information with their principals when they are forced to.
The justifiable fear of any rep is that at any moment in time a manufacturer can cancel the rep’s contract. A rep’s livelihood depends on the sales to every customer, but customers are the lifeblood of any manufacturer as well. When a rep does not fully share customer information with his principals, he puts up a major road block in the relationship. If there is not a 100% level of trust between the principal and rep, the long-term relationship is always susceptible to breaking down. A strong personal relationship with his principals is a key to the success and viability of any rep organization, no matter what is stated in the rep sales contract.
I believe in building long term relationships between the rep and customers, as well as between the rep and his principals. If a rep is doing his job correctly, his personal relationship with customers is always stronger than a principal can ever develop. There should be no fear in sharing all the information the principal needs.
Treat the Customer Service Group as a Customer
The customer service team of each manufacturer plays a critical role in helping a rep grow his business. If a rep builds his business providing the highest level of customer service at a fair price (not always the lowest price), his manufacturers must have a well-organized and dedicated customer service team to support his efforts; and therefore, the rep must develop a strong, friendly working relationship with each of them. As with all customers, the rep must fully understand all the needs of each customer service team member.
Amazingly, many manufacturers in the building materials industry do not recognize the critical role of the customer service teams. Often, these teams are not staffed with properly trained people, nor are they always properly compensated. Yet, a rep must begin by assuming that each person on the customer service team is a dedicated, hard-working employee until proven otherwise. Each customer service employee is doing his job within the processes and procedures established by the management team of each manufacturer. Furthermore:
- Treat each person with respect. Treat them as you would expect to be treated if you had their job.
- Never yell or even raise your voice. Such action does not help to solve a problem or accomplish a requested action.
- Listen to their needs.
- Hold each customer service representative accountable for their promises and actions. At the same time, be sure to provide them with the timely and accurate information they need to do their job. Under promise; over achieve.
- Keep interactions as fun as possible. Customer service team members should enjoy interacting with a rep and helping the rep provide the highest level of service to all customers.
Follow Company Procedures
This concept can present a challenge for a rep, particularly if some company procedures are out of line with the procedures and principles of the rep’s organization. Following company procedures is part of the philosophy of acting as an employee. Each principal has different procedures for their sales operation, including quoting, entering sales orders, reporting, and providing key information about customers and general market conditions. Properly and professionally handling this part of a relationship with principals is a key element in developing a long-term relationship that is profitable to the principal and to the rep. The rep must find ways to operate with each principal and their procedures in a way that does not burden the rep with undue overhead and reduce his time for selling.
Each principal also has their own philosophy of what they expect from their reps regarding sales reporting. This might include sales call reports, reporting on the status of quotes, providing periodic sales forecasts and reporting on marketing conditions in their territory. For a strong relationship a rep must come to an agreement on the appropriate type and frequency of reporting to each principal that also works for the rep.
Some manufacturers put full confidence in their reps and treat them as professional sales people. These types of manufacturers only expect reps to quote all projects in their territory, work with their customers to close as much business as possible, and to periodically provide a summary sales report.
Larger manufacturers and even some smaller ones who fully realize the importance of serving their customers are using various CRM systems to collect customer data. A CRM as defined by Sales Force, who sells one of the most sophisticated CRM systems, is a technology for managing a company’s relationships and interactions with customers and potential customers. The goal of all CRMs is simple: increase sales, improve business relationships, and improve profitability.
A rep must hold his ground about how much time a CRM system takes away from his selling time. The only resource a rep has is his time. A rep should make it clear to his principals that he too requires a reporting system to properly track leads and sales as well as to keep records about his customer base. If a principal’s CRM system does not work for a rep, the rep must suggest a modification that works for both parties.
For a rep’s primary principals, sales related communication should be at least weekly. Secondary principals should receive regular communication each month. If a principal does not have consistent communication and see action from a rep, it is natural for him to wonder if the rep is doing his job.
Aggressively Market to Architects, Engineers, and Building Owners
One of the most important activities that differentiates the building materials manufacturers’ rep from reps in other industries is the need to promote principals’ products to specifying influences such as architects, engineers, and building owners. This is particularly true for reps of architectural products. It is a time-consuming effort. It requires close coordination between principals and the rep to be successful. The final sale is made to general contractors or subcontractors or sometimes directly to building owners.
Most building material manufacturers understand the critical role of the specifying influences in the selling process, but only a small percentage of manufacturers know how to train and manage a sales force to be successful in having their products listed as the design standard or at least as an equal in specifications. Some manufacturers have a separate group of employees in business development who spend all their time marketing to architects, engineers, and key accounts. Others expect the sales team to perform this marketing function as well as quote, close sales, and build relationships with both the specifying influences as well as the buying customers.
When a principal expects a rep to perform this marketing function in addition to closing sales, the rep and principal need to have a clear understanding how much time the rep is expected to dedicate to performing this marketing and how much time is to be dedicated to closing sales and developing close personal relationships with customers. Commissions are normally paid on sales dollars, so the commission structure should reflect the cost burden the rep has in marketing to the specifying influences. The rep must insist on full control of this effort with each principal because it significantly affects the rep’s profitability.
Travel with the Sales Manager
It is important for sales managers to travel to meet face-to-face with customers to develop the principal’s direct relationship with his customers. These visits give the sales manager an understanding of the ever-changing market conditions the rep faces and assist a rep in the handling of manufacturing and/or customer service problems. The visits also allow the sales manager to provide market feedback to the rest of his management team to improve existing products and customer service as well as to develop new products customers need. The rep needs to have an understanding with each principal how these trips will be coordinated.
- Does the sales manager travel alone or with the rep?
- How often are these travels required?
If the principal and the rep have a good, long standing relationship, the sales manager might periodically meet with customers without the rep. He might receive feedback that will assist the rep in serving his customers more effectively. In most cases, the sales manager and rep should travel together, so they can make a joint evaluation of each customer. Both the principal and the rep need to have a clear understanding of what actions they must take together to be the preferred supplier for each customer.
I have found most sales managers find it difficult to carve out time to travel to meet customers, so frequency is normally not a big problem. It is most valuable for sales managers to meet with customers when there is a large order to negotiate or a major problem to be resolved. Customers appreciate seeing the sales manager accompanying the rep. Such visits make the customer feel important in the eyes of the manufacturer and help solidify the personal relationships for all parties. The rep should set the agenda and lead the meetings.
Maintain an Appropriate Number of Principals
The total number of principals that a rep has in his stable of manufacturers depends on many factors including the size of a rep’s sales force, a rep’s sales and profit goals, and the operating efficiency of his organization. These must be balanced against the sales volume each principal is expecting.
Most principals prefer that a rep carry as few lines as possible, so the rep will spend more selling time on each principal’s products. In my 40 years of rep experience the 80/20 rule provides a general guideline for reps. Approximately twenty percent of the principals represented account for approximately 80% of a rep’s sales volume and profit. The 20% group are called primary principals, and most all the rest are secondary principals. There may be a small number of tertiary principals. These might be ones that have products that are complimentary with other lines, take very little effort to meet the principals’ expectations, and at the same time provide a decent, marginal income.
All principals must be treated as important customers. Primary principals deserve a rep’s full attention and commitment to increase sales in line with agreed upon sales goals and other actions that are part of a market plan. Appropriate, timely sales reporting, regular communication about quoting and ordering products, and a positive and friendly relationship with customer service personnel and all levels of the principal’s management team are critical in developing a long-term profitable relationship for both the principal and the rep.
In many cases, secondary principals are not very demanding regarding total sales, reporting requirements, and general communication, because they understand that the potential volume for their products does not compete with the potential of the primary principals. They are more easily satisfied by whatever sales volume the rep can generate and have confidence that the rep will do his best to provide the highest level of customer service to build that secondary principal’s reputation in the territory.
Establishing appropriate operating procedures for each group of principals allows a rep to optimize the number of principals he represents and maximize his income. Although at any one time a principal may question the number of lines a rep carries or the attention the rep is giving to a certain principal, if the proper procedures are in place, the rep should be able to explain how and why he is generating an appropriate sales volume for the territory for each principal.
In conclusion I’ve found building a long-term relationship with each principal requires constant focus and communication. At the same time building these relationships develops life-long friendships and makes selling more fun. I have seen it happen. I have lived it. Make the most out of every professional relationship to enable success to find you.
Questions? Contact me today.