Reprinted from the 2009 October Business column in Metalforming magazine.
By: Michael Bleau
As the economy continues to ramp up, sales coverage becomes a more pressing issue. Due to recessionary layoffs, you may have been forced to cut some of your direct sales people, which is a good way to reduce your fixed cost-of-sales; unfortunately it also has a negative effect on revenue. Conversely, if you’re one of the growing numbers of stampers who are growing their sales ranks through independent reps then you are already seeing the upside of such relationships during market downturns and the potential for revenue growth with variable costs-of-sales. If you’re not there yet, take this opportunity to expand your coverage and effectiveness by building a network of sales representatives.
Service Stampings Incorporated (SSI), a PMA member company since 1973 is 100% dependent on commission-based sales reps. The Company works with nine reps that blanket the Midwest and Eastern portions of the US, including Louisiana, Oklahoma, and Texas. Established in 1957, SSI has been a leading supplier of short- and medium-run metal stamping services used within the electrical, transportation, and numerous other industries. Rob Stohlman, vice president of sales, sums up his philosophy in how he works with their rep network, “Keep it simple and get out of their way.” Rob continues, “We treat our reps like valued business partners, akin to customers. It’s my job to be an enabler; to do everything I can to make it easy for them to want to sell our products and services.”
It’s this attitude towards their sales network that has allowed SSI to stave off potentially huge business losses during the worst recession in our lifetimes. SSI has seen only a 17% drop in revenue during the harshest months of the recession and is now enjoying a business boost as the economy improves. Furthermore, with a variable cost of sales tied strictly to commissions, SSI is able to maintain a full, active sales force to sustain strong relationships with their current customers while prospecting for new sales.
When Rob started with SSI almost three years ago he immediately hit the streets to meet with their existing reps. “I needed to understand what motivated them and how the relationship had gone so far. So I drafted a list of 20-questions to ask during these initial meetings. I asked questions like, what is SSI great at and what does SSI suck at, which really gets them to open-up. After other probing questions determine how together we can improve and leverage market opportunities I finish by asking them to describe in 10 words or less how can we make each other more money?” Rob continues that the response from the reps was overwhelmingly to make the rep’s job easier. Having myself established rep networks for European manufacturers wanting to enter the US marketplace; I understand exactly what Rob’s reps were communicating.
Among other forecasting, product training and strategy meetings, many manufacturing companies require their reps to submit daily, weekly or monthly sales activity or ‘call reports’. Time-consuming paperwork quickly erodes your reps available selling time and willingness to engage you with one of the their customers. In sales, time with customers truly equals money, so anything that takes away this time is considered a waste. Sales reps will take the path of least resistance in representing their manufacturers. If each engagement with you means more paperwork, then less engagements for you means less paperwork—do the math. Reporting requirements also challenges the issue of trust. Your reps are business people, sales professionals who recognize the value of their time and the relationships that they bridge between you and their customers. If between the two, you can establish a trusting, transparent level of collaboration, then you will consistently know what the other is doing to compliment your mutual sales efforts. For the manufacturer, this means taking a concerted, active role (out from behind the desk) in supporting your reps and making sure that any roadblocks within your organization that may hamper their success are removed. If for lack of performance the manufacturer feels the need to ‘clamp down’ and make the rep accountable, then there are deeper issues at hand that needs to be addressed. Simply throwing paperwork at the problem will not resolve these issues. Granted, both parties need a level of accountability, which can be gauged by the end-customer. This can simply be quantified by the most accurate customer satisfaction survey that I’m aware of; repeat purchase orders.
SSI applies a few simple, but effective approaches as they grow their sales network. Key to this is leveraging their membership with the Manufacturers' Agents National Association (MANA). When seeking out new reps they search the MANAonline.org database to find suitable candidate within a geographic area of interest. A concise letter addressed to the principles of the rep agency describes the business proposition, and is quickly followed by phone calls to determine levels of interest and compatibility to narrow the list of candidates. Ultimately the decision to work together has to make good business sense for both parties.
If your business development strategy involves an expanded sales network, then now is the time to act, at the crest of the economic recovery. Apply the lessons learned from companies like Service Stampings Incorporated, begin to establish relationships with independent reps and watch your sales grow.
Served in various capacities within capital equipment engineering, robotics, project management, sales and marketing.
L&A collaborates with Industry Scope, Prior to L&A Nancy was Vice President of Public Relations for a full service B2B agency.