During a recent financial planning meeting, our banker commented that most of our core vendors had either been with us from our beginning or that our company, Marketing Concepts, was the vendor's first and only rep. As an outsider to our industry, he was curious as to how often vendors changed rep companies, and how we would deal with that problem. In the course of answering his questions, I touched on several points that got me thinking about the particular dynamics of our industry and what makes it tick.

Most vendors commit their resources to research and development, manufacturing and marketing. They leave field sales, product support and and training to their reps. The daily business of dealer relations, sales administration, sales support and training dealers and consultants is extremely expensive as well as time intensive. Although all of our vendors have sales departments, these departments are structured to support their reps, who are the first line contact with dealers and their customers.

Both vendors and dealers establish systems and hire personnel to sell to and service their customers (vendors' customers being the dealers and dealers' customers being the end-user). They believe the have made it easy for the customers to do business with them . But in some cases they could not be further from the truth. The rep's in-depth involvement is very valuable to both dealer and vendor who need them to keep the partnership growing smoothly.

When it comes to supporting dealers sales efforts reps know better how to navigate the vendor's sales systems, getting answers more quickly than a dealer who all too often finds himself talking to voicemail (fondly referred to by them as "going to voice jail"). When there's a problem within a dealership, reps know who the decision makers are that can quickly solve the problem, and with whom to present product and programs or set up training programs.

The top rep firms have many common characteristics, all of which make them desirable partners. Their line cards are very stable and show little change over the years. Leading rep firms have built their companies' growth and success on a foundation of hiring the best talent, keeping them motivated and doing everything possible to minimize turnover. Their line cards are made up of vendors who share their philosophies and desire for excellence.

Leading rep firms today are heavily invested in state-of-the-art sales administration and support systems. Because dealers and vendors look to reps as the first line of product training, they have invested a tremendous amount of time and money in keeping their people trained in the latest technologies impacting the industry. Hosting frequent training seminars and maintaining a website to help customers connect to the right vendor with the right product is prerequisite of any top rep firm.

It can't be emphasized enough that partnership's ultimate and final customer is the end-user, and the end-user's satisfaction is best achieved through the rep distribution network. If one of the partners is remiss in meeting their obligations, then the distribution network is compromised. More often than not, it's the rep that steps in to help guide the end-user to a solution.

Vendors place a high value on contracting with leading rep firms and take great pride in having the best and most talented reps in the industry. Vendors will only make a rep change after all avenues have been taken to save the relationship, and they view changing reps as a last resort. When a vendor makes a rep change, this will often slow their sales momentum dramatically, sometimes setting it back as much as a year or two. The typical rep contract has at least a 30-day termination clause. This means the vendor has to give, in advance, thirty days notice to the rep of their intention to terminate their contract.

When a highly integrated partnership like that of the vendor/rep/dealer is disolved (even if it's only one of the three partners that's being replaced), it is a very rough time for everyone. The vendor has to interview and select a new rep firm, one whose line card complements their own products, and one who is knowledgeable and preferably already calling on their core accounts. This firm should also share with the vendor some common ideology when it comes to sales and marketing. Even with the plethora of rep firms out there, this is no small task. It is not uncommon for this process to take longer than the termination clause, leaving the vendor and their dealers to fend for themselves.

Once selected, the new rep firm goes through a ramping-up phase, learning the vendor's product line, policies, programs and how to maneuver through the vendor's systems as quickly as possible. After factory training, they meet with the vendor's dealers to learn the specifics of their business as it relates to that vendor.

Although it doesn't happen often, change is inevitable, and a rep's line card will evolve accordingly. Mergers between vendors will cause consolidation of their rep forces, or a vendor will broaden their product line, creating conflicts with a rep's other vendors. Leading rep firms are highly sought after and if one finds themselves in this kind of situation, it's not very long before they are picked up by another line -- sometimes by one of their previous vendor's competitors.

When a rep firm is faced with the situation of a vendor making a change, or the need to drop a vendor, they must keep their eyes and ears open for the next opportunity. The good rep firms will network with their other partners, rely on their firm's talent, good name and their website to market themselves.

Bruce Marlin is president of Irving, TX-based Marketing Concepts, founded in 1984 Bruce Marlin can be reached via e-mail at Bruce@Mar-Con.com.

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Date Written: January 1999

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