My name is Kelly Smith and I have been a salesperson in one form or another since 1997. I have always operated in manufacturing sales, and always sold engineered products (parts made to print specific to an OEM). 9 years ago, a business partner and I decided to start our own independent rep firm. Meaning we represent manufacturing companies looking for independent sales representatives in our primary territory (in this case, OH, IN, and KY). I have learned a lot during this time and seen the best, and worst of the manufacturer/rep dynamic. wanted to share my experiences in hopes that I can help manufacturing companies better understand what to expect when hiring a rep firm, and what differentiates a good rep from a bad rep.
Independent sales reps generally represent more than one manufacturing company, and typically try to represent complementary lines (like fasteners and installation tools). The manufacturer is not responsible for covering any of the expenses of the rep. The rep is not a direct employee and therefore does not require things like expense accounts, company cars, or benefits. Most reps work strictly on commission. The rate varies depending on the industry, and product line.
Independent sales reps are typically very experienced salespeople, and therefore don’t require a lot of training in the process of selling. They have established relationships in their territories, and can in most cases get an audience for your product very quickly. With some basic product training, they can hit the ground running very quickly. Rep firms that work with multiple principles (mfg companies) may find an opportunity while at a customer representing one of their other lines. In many cases, it is considerably cheaper over the long term to hire a rep instead of a direct employee.
Good reps don’t come without a cost. Most well-established rep firms will ask their customers to turn over existing customers in a given territory, usually at a lower commission rate. Some companies are hesitant to do that. In lieu of existing business, especially in cases where a new customer base will need to be created from scratch, sometimes a retainer can be negotiated until commission dollars exceed the retainer. If there can be no agreement made on this front,
many reps may turn down the opportunity because they are then accepting all the risks. Any experienced rep will tell you that all they have is their time and their reputation.
In almost all cases, even turning over business, or paying a retainer, is still much cheaper than hiring a direct salesperson. Definitely look for reps that want a true partnership, and won’t treat your company as just another line on a line card. Communication upfront is key to any successful rep/principal relationship.
Lastly, please keep in mind that you will not be receiving 100% of the reps’ time. Try to find reps that have a limited line card, and complimentary lines, and can provide the amount of time needed to truly build a territory from scratch. Be leery of any rep that promises they can bring you company XYZ because if the day comes that you are no longer working with that rep, there is a good chance they will take that business with them.
The best place to start would be MANA (Manufacturers’ Association National Association). They have a database of reps. They also provide a ton of resources for reps and manufacturing companies, including best practices, and a blank contract agreement.
Also, check to see if there are any local sales rep networking organizations in your area.
I am planning to blog as frequently as possible to help provide information related to sales, manufacturing, and independent reps. If you have a specific subject you would like to see, or any questions about this material, please feel free to contact me using the contact information below.
Thanks, Kelly Smith
Innovative Tech Sales