What is a Manufacturers’ Rep Agency (Multi-Line Field Sales Company)?
Manufacturers’ agents are long-term independent marketing partners who grow with their principals and maintain a steady presence in a territory. More than just selling products, agents provide many extra services that add value to the partnership. Some warehouse, some provide engineering consulting services, others offer installation and maintenance services. The foundation of the agent-manufacturer relationship is a written contract which specifies such issues as territory to be covered, commission rate, computation and payment of commission, representative relationship and conduct of business, terms of agreement, termination, etc.
Advantages of Using Manufacturers’ Rep Agency:
1. Predictable Sales Costs That Go Up And Down With Sales — The manufacturer and sales agency agree in advance on a set rate of commission and the agency pays all selling expenses.
2. Lower Sales Costs — It is estimated that today’s average industrial factory direct salesperson costs $130,000 per year. Producing $2,000,000 in new sales each year, the cost of sales would be 6.5%. A field sales agency producing the same volume at a 5% commission rate would cost only $100,000.
3. Increased Sales — The average factory-direct salesperson is in a territory for two years or less before he or she is promoted, transferred or leaves to a competitor for more money. The multi-line sales agency has a lifetime commitment to the territory, thus holding better relationships with the customers.
4. Immediate Access To The Market — Sales agencies are an experienced sales team already in the territory. They are familiar with the area and have good prospects ready to consider the new line. Many agencies have multiple sales personnel and provide much deeper coverage than a single direct sales employee.
5. Free Consulting Services — Most independent sales agents have 15-20 years of successful corporate experience under their belts. Many have held executive jobs in large corporations, been a vice president of sales, general manager or engineering manager. The knowledge they have accumulated through the years is an added value to your mutual success.
6. Cost of Training And Turnover In Sales Personnel Is Eliminated — The training period for an established agent is minimal and largely related to learning about your products. A direct salesperson is paid a salary plus expenses while in training, not to mention the loss of sales during the training period.
7. Highly Experienced, More Aggressive Sales Force — Today’s multi-line field sales agent is highly educated and trained. Since there is no base salary to rely on, they must sell to live.
8. Sales Forecasting Is Equal Or Superior To A Direct Sales Force — The volume of future sales is no less predictable with agents, but it may be better since so many of today’s agents use sales analysis and forecasting methods which are often more sophisticated than those of the manufacturers they represent.
9. Broader Sales Context For Your Product — Because agents sell several compatible items, they call on a wider variety of prospects and customers, often finding applications for products denied the single-line salesperson. The easiest person to sell something to is the customer who is already buying from the salesperson!
10. Provides Marketing Flexibility At Less Cost — Sales agents can increase your volume by selling outside your present marketing territory. Agents can also sell a new line without conflicting with your present sales organization.
11. Creates A Systems Approach To Selling — Most customers today will agree to see and buy from only those salespeople who take problems off their desks and bring opportunities to their attention. The multi-line, complementary package of products tends to make sales reps systems oriented rather than single product oriented.
12. Every Call Is A Relationship Call For Your Company — Even when the agent doesn’t present your product, he or she is cementing the customer relationship which will benefit your company in the future.
13. Multi-faceted, Multi-skilled Sales Team — Many multi-line field sales agents also have multi-industry experience, some holding professional certifications in a variety of industries.
14. Better Market Intelligence — Since they carry a mix of products, multi-line agencies have a greater diversity of customers, and often can get wind of industry trends long before a factory direct salesperson.
15. Risk-free Exploration Of New Market Niches — Remember, you only pay the agent when a sale is made. If an agency ventures into a previously untried market and fails, not only does it cost you nothing, but you are almost guaranteed more revenue as the agency works to make up the shortfall.
16. Vested Partner In Manufacturer’s Success — Since, as we mentioned previously, an agency must sell to live, your agency is interdependent with your firm. Your success is their success.