Why
Reps?
Definitions, Strengths & Weakness
What is an independent manufacturer's representative? What they do well
and what they do not do well. Why should we use independent reps?
Definition:
A manufacturer's sales representative is an independent sales agent or
agency that contracts with multiple manufacturers to provide on-site sales services in a
defined territory. The rep is paid a commission only on sales in the territory. The
defined territory is usually on an exclusive basis, but there can be exceptions such as
contract-specified house accounts. Purchase orders are accepted by the manufacturer and
are subject to the manufacturer's terms and conditions. Product is shipped and billed by
the manufacturer. An independent manufacturer's rep does not take title to the
manufacturer's products for re-sale to customers.
Strengths:
The independent manufacturer's rep's number one strength is knowledge of
the business base in the territory. The rep should be able to identify the decision
makers, who are the current suppliers, which of your competitors is favored to replace the
incumbent, as well as providing technical and pricing criteria for winning the business. A
multi-line rep with synergistic lines will be able to accurately pinpoint new
opportunities that no amount of advertising can ever uncover. Reps do not do
"marketing research" but can provide a lot of practical in-sight for product
development, pricing strategy and corporate intelligence.
Weakness:
A multi-line rep serves many masters. It is imperative for the
manufacturer to establish and maintain Mindshare with the rep. A rep's top three income
(commissions) producers will always get 80% of his Mindshare. Pro Rep Sales Consulting can
help you raise and maintain the level of Mindshare with your reps.
Mindshare:
What is Mindshare? Mindshare is that portion of the rep's thoughts and
pro-active actions on behalf of the manufacturer and their products. It is the focusing on
a manufacturer and their products by the rep at the start and at the end of each day.
Why should I use reps?
The number one reason for using manufacturer's reps is their knowledge of
the customer base in a well defined territory. They know who the key decision makers are,
what products are currently being used and what new projects are underway. Early
penetration into key accounts can be accomplished by using reps with synergistic product
lines.
The number two reason is simple economics. Reps are the last to be paid, only after the
sale, shipment and payment by the customer. The cost of sales to a manufacturer for the
rep is at a pre-determined commission rate with no adders such as FICA, health insurance
or other costs associated with direct employees.
Contractual Agreements
A mutually binding contract should always be in place when using
independent reps. The contract specifies a number of necessary legal definitions such as
independent contractor status, commission rate, split commission definition, exclusive
territory, house accounts, termination agreement and others.
If your firm is not currently using independent manufacturer's
representatives and would like to investigate the usual contractual arrangements, please
click here : FREE REP CONTRACT and
get a free, no obligation actual rep contract.
Pro Rep Sales Consulting
P.O. Box 500
Barker, Texas 77413
Office: 281-647-6484 Cell: 713-480-2406
info@pro-repsales.com
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