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What agents will do for a principalIntroductionKoch Group has been working with manufacturers since the early 1970's to evaluate their existing agency or rep networks and to help them set up effective agents or reps to help grow their businesses. Based on that work we have put together a list of activities that a successful manufacturers' agent will typically perform for their principals. Activities industrial manufacturers’ agents will undertake for their principalsSuccessful industrial manufacturers’ agents will:
Here's why they will 1. Supply ongoing incremental sales opportunities for existing and new principals from the agency's customer base. An established manufacturers’ agency will only enter into, or maintain, a representation contract with a principal whose products and services can be sold to a significant portion of the agency’s existing customer base. 2. Leverage their customer relationships to provide opportunities for new and existing principals. Most successful agents and reps have developed long-lasting relationships with their core customers and can obtain opportunities for their new principals to provide their products or services to these customers that might otherwise be extremely difficult, or even impossible, to obtain. 3. Provide a principal with a known cost of sales. Prudent manufacturers’ agents enter into a selling relationship only after having negotiated an agency/principal representation contract that specifies the commission rate, or rates, that will be paid to the agent for the sale of a principal’s products or services. Principals do not pay for agent travel expenses, insurance expenses, or wages unless uniquely negotiated for a short period of time such as a territory pioneering expense.
4. Maintain an on-going consistent physical sales presence in their defined sales territory. Results producing manufacturers’ agents routinely make scheduled physical and telephone sales calls on the majority of their active customer base. 5. Evaluate expanding the markets and geographic areas they serve to accommodate existing or high potential principals. Expanding the markets and/or geographic areas an agency serves requires careful consideration. This is a major business decision for the agency. A high quality manufacturers' agency that actively considers expanding the markets and/or geographic areas they serve will carefully evaluate the potential financial rewards and business risks. The agency will make the decision to expand if it is good for their overall business. 6. Focus selling efforts on customers and potential customers that they believe will supply on-going opportunities for the products or services they represent. High performing manufacturers’ agents know, or are familiar with, most of companies in their area that are, or would be, likely good prospects for their principals or potential principals.
7. Provide their major principals with fact based objective sales forecasts and market intelligence for their defined territory. Effective manufacturers’ agents have on-going access to, and direct interactions with, those individuals who make or influence purchase decisions for their principals’ products and services. Additionally, the agents have an in-depth understanding of how changes in the economy will likely effect most of their customers’ on-going and future buying decisions, or at least their continued sales. 8. Require technical training to learn about new principals’ products and services. Results producing manufacturers’ agents have proven selling skills. However, a top quality agency will need to be trained to correctly present the key features and benefits of the products manufactured, or the services provided, by their principals to be their most effective. 9. Provide an educated, experienced, motivated sales force that is aggressively working to produce new sales on a daily basis. Most manufacturers’ agents are compensated only if they develop a sale and must be successful sellers to survive! An agent that has been successful for a long period of time is an excellent seller.
10. Focus on selling the solutions their principals’ products or services can provide, not the products or services. Experienced manufacturers’ agents know that buyers of industrial goods and services most often purchase from sales people who are solutions providers, not just product sellers. A good solutions providing agent is often rewarded by receiving orders for the products or services of other represented principals for providing a highly valued solution to one of their customers. 11. Form long-term partnerships with their principals. Seasoned manufacturers’ agents recognize and respect the investment in time and money required to develop on-going sales in the territory and wish to preserve their principal relationships for as long as possible to maximize the return on their selling efforts. 12. Reluctantly assist their principals in obtaining payment for overdue invoices. All manufacturers’ agents have a vested interest in having their principals receive payment for the goods they have sold, since that is how the agent receives their commissions. However, agents do not want to act as collection agencies on an ongoing basis since it diminishes the agent's selling efforts and can change their perceived role at a customer from that of professional salesperson to that of a collections department.
13. Work appropriate trade shows with, or for, their major principals. High performing manufacturers’ agents routinely work appropriate trade shows for their major principals. The agents provide selling expertise not available directly from the principal and this activity will likely yield additional selling opportunities for the agents. Normally, agents receive some type of compensation for their participation such as a cash payment, a higher commission for a defined period of time, or some other form of compensation for their time out of the territory. 14. Follow up on valid leads supplied by their principals. Motivated agents want all the valid leads a principal can supply. Leads provided by one principal often become a lead for several of their principals, if the agent has correctly structured their agency with complementary lines. 15. Take on a new line that has no existing sales in the territory for a negotiated fee. Motivated manufacturers’ agents will take on a new line if the line is an extremely good fit for the agency’s existing customer base. However, the agent will usually require that the principal provide a “pioneering commission” for a defined period of time or until the sales activities conducted by the agent generate an agreed level of sales commission. This commission is meant to compensate the agent for the expenses incurred and the time spent to develop the initial business for this principal in the territory.
If you are a principal that wants to successfully work with industrial manufacturers’ agents to expand your business it is critical to understand:
As independent businesspersons, a manufacturers’ agents must make decisions daily that impact their business and provide the most ongoing benefit to their agency. See how Koch Group's decades of agent expertise can benefit your organization's search for, or use of, manufacturers' agents. Related industrial marketing tips
Koch Group has over 35 years experience working with high performing manufacturers' agents. If you would like more information about our industrial marketing services for manufacturers and industrial service providers, please use our contact form or email us at info@kochgroup.com.
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