What Is a Manufacturers Representative? 10 Reasons to Not Hire One.

Known by various names, a manufacturers representative (independent sales representatives, rep firm, manufacturer reps, or sales agents) is an independent contractor working on your behalf under their own brand within a specific geographic area.

They typically specialize in a few industries where they’ve built strong relationships.

Many industries have utilized manufacturer representatives to fill in coverage gaps within territories. These salespeople earn a commission rate between 5% and 10% on everything sold within their assigned territory (run-rate) as their primary income source, unlike the salary plus commission structure of direct sales employees.

Is the Manufacturer Rep Model Still Relevant?

Estimates of Age:

The manufacturer rep model has a surprisingly long and interesting history.

Some industry experts estimate the manufacturer rep model to be over 150 years old.

Early Beginnings (19th Century):

• The roots of the model can be traced back to the 19th century, with independent agents acting as intermediaries between manufacturers and buyers, often specializing in specific regions or industries.
• These early “commission merchants” were responsible for finding new customers, securing orders, and collecting payments, similar to the role of modern manufacturers rep firm.

Golden Age (Post-WWII):

• Following World War II, the manufacturers rep firm model experienced significant growth, driven by the expansion of manufacturing.
• Rep firms became increasingly specialized, developing deep knowledge of their assigned territories and industries, offering manufacturers a cost-effective way to access new markets without directly building their own sales teams.

Modern Adaptations (Late 20th Century – Present):

• The rise of globalization and digital technologies brought both opportunities and challenges for manufacturers reps. Few firms embraced technology beyond CRM’s to enhance their value proposition and adapt to changing market dynamics, struggled to keep relevant.
• Competition from direct sales teams, online marketplaces, and alternative sales channels intensified, putting pressure on traditional manufacturers reps.
• The focus shifted from dropping of factory catalogs and visiting accounts to building deeper customer relationships, offering specialized expertise, and providing strategic market intelligence.
• Generally, manufacturers reps have struggled to adapt their skillsets and offerings to meet these evolving customer needs.

What Do Manufacturers Say About Manufacturer Reps?

Rep firms, with their deep industry knowledge and established networks, have offered manufacturers a cost-effective way to cover territories. However, the relationship isn’t always smooth sailing. Like any partnership, it must be mutually beneficial, otherwise it can become a source of frustration when expectations are unmet and communication falters.

Our experience and research goes to the heart of this relationship, exploring the common complaints voiced manufacturers about their rep firms.

By understanding the common pitfalls, manufacturers can equip themselves to navigate their true needs more effectively, unlocking their true potential.

Top 10 Complaints by Manufacturers Using Manufacturer Reps:

Rep Firm Focus Deficiencies:

• Overstretched Attention: Manufacturers fear when sales agencies spread themselves too thin across too many lines, that sales reps won’t dedicate sufficient effort and expertise to promote their products.
• Lead Neglect: Manufacturers worry sales reps aren’t diligently following up on leads, letting potential sales slip through the cracks.
• Value Proposition Misrepresentation: Concerns arise that independent sales reps won’t effectively communicate the unique selling points of the manufacturer’s product, potentially leading to lost sales to competitors.

Insufficient introductions:

• Quantity: Manufacturers often feel disappointed by the number of introductions provided, falling short of their expectations based on the rep firm’s promises.
• Quality: Even with decent quantity, the introductions might not align with the manufacturer’s ideal customer profile, leading to frustration and wasted effort.
• Networking Gaps: Concerns arise if the rep firm lacks strong connections in the target market, hindering their ability to generate relevant introductions.

Line Card Selling:

• Line Card Expansion: Manufacturers worry rep firms prioritize adding new logos to their line card over selling existing products, neglecting promotion and support for established clients.
• Multiple-Line Selling: Manufacturers fear sales reps will push their entire portfolio instead of prioritizing their offering, leading to customer confusion.
• Diluting Brand Focus: Concerns arise that the sales agency may not adequately represent the manufacturer’s brand and unique value proposition, focusing more on generic features across their portfolio.

Data black hole:

• Customer Relationship Management: Manufacturers struggle to leverage the full potential of their CRM data since rep firms legally operate as independent contractors, resulting in a loss of account, contact, activity data.
• Communication: Rep firms often operate in silos, rarely sharing progress reports, account updates, or activity data with manufacturers. This lack of transparency hinders collaboration, breeds mistrust, and makes it difficult for manufacturers to assess the true value and effectiveness of the partnership.
• Missed opportunities: Without access to the sales agents data and updates, manufacturers miss out on valuable insights hidden within their own CRM. This disconnect hinders cross-selling opportunities, lead qualification, and overall sales effectiveness, leaving manufacturers frustrated by untapped potential.

Commission Structure Friction Points:

• Resentment over Unattributed Sales: Manufacturers struggle with paying commissions on sales they personally generated without the rep or those closed through other channels, leading to disputes about credit attribution.
• Disagreements on Commission Eligibility: Unequal commission structures for different sales channels, house accounts or unclear criteria for earning commission percentages can create tension and demotivation.
• Potential for Unfair Compensation: The percentage of sales structure might not accurately reflect the effort or contribution of individual team members, leading to feelings of unfairness and resentment.

Lack of Communication and Transparency:

• Black box effect: Manufacturers often lack visibility into the rep firm’s sales efforts, lead generation efforts, and sales pipeline. This can lead to trust issues and difficulty in assessing the rep firm’s true value.
• Unclear reporting: Reports provided by the rep firm might be vague, incomplete, or lack actionable insights. This makes it hard for manufacturers to measure ROI and make informed decisions about their partnership.
• Poor communication channels: Difficulty in reaching the rep firm, slow response times to inquiries, and lack of proactive communication can further exacerbate the feeling of being out of the loop.

Difficulty in Tracking and Measuring Results:

• Vague attribution models: Confusing commission structures and unclear attribution of sales to specific efforts make it challenging to determine the rep firm’s true impact on the manufacturer’s bottom line.
• Lack of data-driven insights: Rep firms may not be adept at analyzing data and providing actionable insights that can help manufacturers improve their sales and marketing strategies.
• Absence of shared dashboards and metrics: Lack of access to shared dashboards or real-time performance metrics hinders collaboration and transparency, making it difficult to track progress and identify areas for improvement.

Rep Firm Portfolio Fluctuation:

• Lost Relationships: Frequent changes with lines can disrupt crucial connections, making it difficult to maintain momentum.
• Reduced Co-Selling Opportunities: Manufacturers face the frustration of synergistic product lines disappearing from the rep firm’s portfolio, disrupting established co-selling efforts with key decision-makers.
• Continuity Concerns: Frequent changes in the rep firm’s line card can create uncertainty and hinder long-term sales strategies.

Inability to Adapt to Changing Market Dynamics:

• Outdated sales approach: Sales agencies that focus on multi-line selling may struggle to adapt their sales strategies to evolving market trends, customer preferences, and competitor activities, leading to missed opportunities.
• Lack of technological adoption: Failure to embrace digital marketing tools, sales engagement platforms, and other technological advancements can hinder the rep firm’s ability to compete effectively.
• Hesitance to upskill: Rep firms might be unwilling or unable to upskill, leaving them unprepared for shifts in the competitive landscape and customer needs.

Lack of Marketing or Sales Support:

• Limited marketing team resources: Rep firms lack the resources or expertise to effectively promote the manufacturer’s brand and products, hindering market reach and brand awareness.
• Passive lead generation: Reliance on leads from the manufacturer or leads generated by partners might not be enough to drive sales in their territory.
• Lack of co-marketing initiatives: Missed opportunities for joint marketing strategies and collaborative efforts can limit the reach and impact of both the manufacturer and the rep firm.

Is a Manufacturer Representative Right for Your Company?

Consider your product strategy, sales goals, and resources to determine if commission only, fractional outside salespeople can achieve your objectives.

Outside Salespeople: You require road warriors, that typically cover large territories and have established relationships within your industry.

• Commission-only independent contractors: They don’t receive employee benefits or a salary.
• Established Run-rate: You have an established run rate within the territory you’re looking to assign sufficient for the Rep Firm to work the area.
• Commission on everything: Unlike account based commission, this means you pay even if your representative didn’t directly originate the sale.
• Footprint: Budget constraints prevent you from hiring direct W2 salespeople to increase coverage within territories due to employee overhead.
• Alignment: You’re looking for a quick-fix to build sales, and plan to hire dedicated resources once sales growth reaches a specific level.
• Complimentary Lines: The agency has synergistic product lines that you require to sell a complete solution, or obtain deeper market penetration.

Common Mistakes to Avoid with Manufacturers Reps.

• Treating them like employees: They are independent contractors, so avoid requiring tasks that could jeopardize their legal status.
• Lack of training: Provide accessible online training to help them understand your product’s strengths and market positioning.
• Neglecting marketing support: Don’t expect your rep firm to succeed without your support in building brand awareness within their territory.

Exploring Better Alternatives:

While manufacturer representatives can provide a temporary fix to covering vast territories, their focus might not always be the perfect fit for every scenario.

Wave Representatives offers a wide range of inside sales solutions tailored to your specific target market and resources:

Inside Sales Representatives (ISR):

• Dedicated Focus: No more juggling multiple territories. We hire, train and manage YOUR dedicated inside salespeople giving you undivided attention, ensuring regular calls, meticulous follow-up, and a thriving sales pipeline.
• Scalability and Flexibility: Need to ramp up quickly or adjust your sales force dynamically? Inside reps offer the agility to scale your team based on demand, ensuring you always have the right level of support.

Channel Development Representatives (CDR):

• Enhanced Channel Relationships: With dedicated inside salespeople focused on channel sales, you build stronger bonds through regular communication and an improved product support needed to increase sales.
• Channel Expansion Expertise: Your dedicated Channel Development Representatives can help you identify new partners, and provide ongoing sales support to maximize impact.
• Strategic Partnership Building: Break through the 80/20 rule and focus on nurturing your existing partnerships. Let us expand your reach and unlock new revenue streams through a robust channel ecosystem.

Sales Development Representatives (SDR):

• Direct End-User Engagement: If your target audience lies directly with the end-users, our sales development reps are your champions. They connect, qualify, and nurture leads, warming them up for a seamless handoff to your sales team.
• Shortened Sales Cycle: By identifying and qualifying leads before they reach your sales team, our reps significantly reduce your sales cycle and accelerate conversions. More qualified leads, faster closed deals – that’s the power of focused end-user engagement.

Download our comprehensive “Channel Datasheet“ to discover how Wave Representatives can assemble an Inside Sales team that perfectly aligns with your business objectives, to develop a thriving channel network for sustainable growth.

Ditch the commission carousel and partner with Wave. Contact us now!