Determining Real Differentiation
As the foodservice market continues to evolve, rep groups and manufacturers are seeking new ways to better support channel partners and end users. We’ve asked Dr. Revenue – nationally-known sales and marketing consultant John Haskell – to share his thoughts on potential best-practice considerations. Following is Part 2 of a four-part series, this time discussing how to determine and evaluate real differentiation in rep capabilities.
Differences that are real distinctions:
Tiered management provides substantial internal sales force management. Sophisticated in house marketing departments are coupled with highly professional customer service call centers that take substantial pressure off manufacturer’s resources.
These are real differences that provide measurable value for the manufacturer. Only a major Rep firm can run their business in this highly professional manner.
If the manufacturer knows how much business they can tap into with the right representation, they know what type of reps to solicit.
Only the best sales people:
Performance expectations for sales people who handle the customers within the structure of the Power Rep firm is significantly different/better that that of other more traditional, smaller Rep firms.
The Power Rep field sales people have to be better. They are paid much more and they must earn it. In most cases their direct supervisors and the owners of their Rep firm are Reps themselves. They know what is necessary and they expect results.
The world of the Power Rep is an “up or out” world in which only producers survive.
TAM — a term worth a lot:
In a given territory what is the “Total Available Market” [TAM] for specific products, eg cooking equipment? If the manufacturer knows how much business they can tap into with the right representation they know what type of reps to solicit. Knowing TAM, the company can begin to evaluate the quality of representation that they can attract.
A word on line over-lap and conflicts:
The power rep firm may have minor over-lap. These firms are smart enough to know how to handle minor product conflicts. In several cases I’m familiar with the analysis of over-lap and conflict came down to less than 10% of the total volume and potential of either line.
In one case a management and ownership change at a major producer caused the new management to go back to the Power Rep firm the previous management had seen fit to dismiss.
The president of the Rep firm pointed out to the president of the manufacturer who was taking over this product line that his Rep firm had added several new lines that did conflict with the previous line. The President of the company wanted the Power Reps to return to representing his line.
The Rep pointed out the over-laps which were fairly significant. The reply from the new President, ”That’s a price we are more than willing to pay. We want you and your team to represent our firm regardless. We’ll do so many good things that you will end up selling much more of our product. I’m not worried about conflicts.”
That situation demonstrates the power of Power Reps and the hold they have on territories and manufacturers.
If a manufacturer is small and the commission dollars that are available to pay out to Reps are small, there will be no interest among the few large, powerful Rep firms.
About Dr. Revenue
John Haskell, Dr. Revenue® is a professional speaker and marketing/sales consultant with more than 40 years of experience working with companies utilizing manufacturers’ reps and helping rep firms. He has created the Principal Relations X-Ray, spoken to hundreds of rep associations and groups, including many programs for MANA and MAFSI. He is also a regular contributor to Agency Sales and other trade magazines. For more information see www.drrevenue.com or contact John at firstname.lastname@example.org.