February 28, 2005
When I first started in this business in the mid-'70s as a budding guitarist down on his luck and in need of a job, I went to work in a Midwest music store -- family-owned and very stable. We had a "Pro" or "Combo" department, and I sold guitars, amps, drums, PA equipment and band instruments, and learned most of what I needed from the reps who came calling, with or without appointments, almost every day of the week.
Some of the reps were well-liked, and the owners welcomed these into the store, took time out of their day, had lunch, sometimes dinner, and paid great homage and respect to them. Others were "jobbers" whose purpose was to sell as much as possible and get on to the next sales call. The strength of the relationship between the owners and the jobbers was weak at best, but they sold products from distributors and manufacturers that the music store could not get anywhere else. They were indispensable but not very popular, like insurance agents or used-car salesmen.
As the music and sound business grew in the late '70s, the sales representative business began to mature. Many rep firms enjoyed a certain economic power by their ability to hold audience and sway their manufacturers as well as bring to dealers what they needed. Rep firms could plan for the future, because if it was anything like the past, all signs were positive and strong. Of course, this would continue as long as nothing changed.
Then the unthinkable happened -- everything changed. With the advent of the fax machine, the widespread adoption of 800 numbers, and the increasing trend toward consolidation of manufacturing, marketing, branding and sales in the hands of a few large national distributors, retailers and manufacturers, the power of the rep started to erode. Manufacturers could reach out more directly through the use of technology, and they could establish solid, direct relationships with customers. The rep lost a monopoly on that relationship part of the business.
Furthermore, when the manufacturer was looked to, if not forced to, provide product training as their offerings became increasingly complex, the reps stumbled. Some reps were able to integrate training into their operations, but others were not so fortunate.
Next came manufacturer mergers and acquisitions, which were painful to reps. The "best" reps were claimed by major manufacturers and had to drop other key lines, or they lost key lines and had to start shopping for additional lines to shore up their businesses. The mediocre reps were left to scramble for the crumbs. Either way, the opportunity to increase revenue in the short term by picking up new lines -- a major component of survival and success in the rep world -- was severely limited. Several rep firms tried to merge with direct competitors or with rep firms in adjacent industries. A few folded, and many more simply faded. Some found ways to expand and grow, but on the whole, the past four years have been difficult for the independent rep.
The good reps will still help music stores, contractors and other resellers, and they will still find ways to earn money and add value in the sales channel. The rep model works because there is no substitute for the drama, the exchange of knowledge and the excitement that comes with the activity of "closing the deal" and "sealing the brand" that only occurs with face-to-face dialogue. Manufacturers cannot afford to put enough of their own "feet on the street," although the direct sales model can work for some.
That doesn't mean the pressure is off. It is building, and being a rep is a real challenge. So is being a dealer, and being a manufacturer or distributor is no walk in the park either. We all need each other, to a greater or lesser extent. Being a rep, being in the middle and adding value, is always going to be a challenge
. Is the rep model extinct? Not at all!
Are We Condemned to Repeat the Past?
Go to any sales meeting held by a manufacturer with its reps, and here is what you'll likely see:
New products get introduced with a lot of fanfare and applause.
New promotions and sales programs take up a good part of the day.
PowerPoint presentations and lots of slides.
The reps receive their marching orders.
A good time is had by all!
But underneath the surface, not all is rosy. Manufacturer sales and marketing managers are under constant pressure to increase sales, and managing the rep force to achieve the sales results is a major challenge at most firms. This is not because the reps don't know how to sell. It is not because the expectations are not realizable. It's mostly because everyone in the room sees the end result and the path leading up to it differently.
This would become more apparent if you could visit each group separately after the sales meeting:
At their late-night gatherings, the reps can be heard saying things like this:
I can't get another 10 percent from my territory. We're getting killed by the competition. They need more features and lower prices.
What do they want from us? We're already ahead of last year by double digits.
They want us to load up our customers and then the guy down the street, too.
I don't know where they expect us to sell this stuff.
I can't demo this product; no one I show it to cares.
And if you could eavesdrop on the manufacturer salespeople after the meeting, you'd hear:
These reps have too many lines.
They're not knowledgeable enough about product and customers.
We're going to have to do it ourselves if we want these results.
Why don't the reps do what we tell them to do?
We're paying them too much, and they're not working hard enough.
And so on. My point is that the manufacturers and the reps are seemingly at odds with one another. Sure, there's a lot of ego in the room, more than enough to go around. But that's not why both sides see things differently. The underlying cause of this "disconnect" is a lack of pertinent information delivered in a specific format to help the rep accomplish what the manufacturer needs. I'm no rocket scientist, but whenever reps and manufacturers are not communicating well, the reps aren't listening, and the manufacturers aren't making sense. It is a two-way street.
The solution is actually simple: most reps lack adequate information systems (line of business) to retrieve sales history and customer profiles in order to set out a plan of attack and then execute it. Most manufacturers do not adequately target customer profiles and applications in the planning stage when developing new products or programs/promotions.
Sure, the manufacturer sees a huge line item in the budget for rep commissions. It's tempting to think that if the rep can't deliver, then either the rep should be replaced with another rep or all the reps should be replaced with a direct sales force. And the rep sees lots of fancy PowerPoint slides, what-if scenarios, and college-degree-fueled reasoning and wonders how he can possibly get a good customer who sees 10 reps a week to pay attention to something cooked up in the Ivory Tower. But most manufactures will agree that replacing that line item in the budget sounds easy but is very difficult, if not impractical and risky. And most reps know that their biggest challenge is to figure out who to pitch what, how to pitch it, and how to generate excitement.
What reps need is very tactical information: customer profiles, demonstration training that takes into account why customers (end-users) should buy a product and sales history that is relevant and quick to dissemble. Who better than the manufacturer to supply this information?
Answering the most basic of questions -- who, what, when, where, how and why --in a measurable and realistic manner is what success in sales requires. Leave PowerPoint at home, and get back to the very basics of sales -- make it specific and repeatable, coupled with good market information, and the rep will be happy to earn every penny paid.
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