New Home Sales Teams

							Outsourcing Field
     Sales
   A Better-Than-Ever Response
    to the Competitive Pressures
   Facing Today’s Top Executives
        Presented by the
 Manufacturers Representatives
Educational Research Foundation
       Corporate pressures and
             responses


   Greater profits
   Faster buildup of shareholder equity
   Focus on core competencies
   Outsource - security, maintenance, payroll, human
    resources, purchasing - and now field sales
          Roots of the trend to
          outsource field sales


   Performance-based compensation
   Practical approach to downsizing
   Diversification into multiple markets and specialized
    distribution channels
   Explore new opportunities with minimal investment in
    sales infrastructure
   Lower overhead, standardized sales costs
              Benefits of
        outsourcing field sales


   1. Increased sales
   2. Predictable sales costs that go up and down with
       sales
   3. Standardized sales costs
   4. Lower sales costs
   5. Immediate market access
   6. Broader market penetration
   7. More experienced sales force
              Benefits of
         outsourcing field sales


   8. Multifaceted, multi-skilled sales team
   9. Wider, deeper coverage
   10. Stronger local relationships
   11. Reduced sales force turnover
   12. Training required only on product
   13. Closer-to-the-customer forecasting
   14. Better market intelligence
           More benefits of
        outsourcing field sales


   15. Knowledgeable advice and information - hear it
        like it is!
   16. Risk-free exploration of new market niches
   17. Problem-solving approach outperforms product
        selling
   18. Vested partner in manufacturer’s success
          What is a
manufacturers’ representative?


   Independent professional provider of field sales and
    marketing services to manufacturers or suppliers
   Typically handle a portfolio of related but non-
    competitive lines
   Work under contract in a defined territory on an
    exclusive basis
   Income directly tied to productivity
            The traits of today’s
              manufacturers’
              representative

   Professional
   Multifaceted
   Technologically adept
   Ubiquitous
   Come in all shapes and sizes, from small defined-
    focus firms to multiple-office firms handling all facets
    of marketing
             Bringing value to
            buyers and sellers


   Portfolio synergies
   Broad-based solutions
   Consultative approach
   Partnering relationship with customer
   Greater speed of market penetration
   Entrée through portfolio leverage
   Basic economics of sales before sales costs
         What manufacturers’
        representatives are not


   Not an additional channel - they are the
    manufacturer’s sales force paid differently
   Not middlemen - they neither take title nor mark up
    costs
   Not distributors - and very different from distributors
                           Differences


       REPS                                DISTRIBUTORS
   Sell only in a defined territory      May sell anywhere
   Do not handle competitive             Often handle competitive
    lines                                  lines
   Sell as agents; do not take           Buy for resale; take
    possession                             ownership
   Compensated largely by                Compensated by margin of
    commission on sales                    sale price over cost
                    More differences


       REPS                            DISTRIBUTORS
   Typically handle 12 to 14         Often handle several
    lines                              hundred lines
   Typically entrepreneurial,        Large firms often publicly
    owner-operated                     traded
   Add value through design-in,      Add value through time-
    application engineering,           place utility
    product synergy
                    More differences


       REPS                          DISTRIBUTORS
   Interface with                  Rely heavily on rep for
    distributors, refer orders       referrals, training,
    to distributors, receive         engineering support
    commission on sales
    through distributors
   May warehouse (for a            Maintain inventory
    fee), but do not
    maintain inventory
               The big difference


      REPS              DISTRIBUTORS
   Focus on customer      Focus on selling what’s
    needs                   on the shelf
          More than a source, a
                resource

   High caliber personnel - entrepreneurial, competitive,
    goal-oriented
   Success tied to contacts in the territory rather than
    the corporate hierarchy
   Rooted geographically, creating stable relationships
   Saves time for the buyer by presenting multiple lines
    in a single call
Win - Win - Win

The Customer Benefits Too
          Bringing value to the
                customer

   Stable relationship with someone who knows the
    corporate culture
   Long-term commitment to the territory
   Multifaceted resource
   More efficient (multiple line) sales calls
   Consultative selling
   Bridges intra-company communications gap
        More customer benefits


   Advocacy, ability to secure exceptions to supplier
    policy
   Help in order strategy, distribution or direct
   Perspective on market conditions and trends
   Solutions approach -- looking at the forest, not the
    trees
    What happens when buyer needs
      diverge from seller’s SOP?


   Rep has more at stake with other products sold to the
    company, and thus will fight harder for needed
    accommodations
   Rep has more freedom than direct salesperson to
    carry the fight to the top
                The Economics


   Comparing commissions with the cost of hiring some-
    one full time is misleading
   1. It ignores costs borne by representatives that
    would transfer to the manufacturers
   2. It ignores administrative and facilities costs in the
    territory and the home office
   3. It overlooks the likely faster growth a team can
    bring compared to one person
       What costs does the rep
               cover?

   Finances the sale, usually receiving commission only
    after goods are shipped
   Pays for recruiting, training, employee benefits,
    travel, client entertainment, automation, order entry,
    and more
   Handles extra roles in expediting, returns, trade
    shows, administration
   Eliminates manufacturer’s legal exposures
      Myths and misconceptions


   Myth: The distributor can handle the whole field
    sales process
   Truth: Distributor function is different, logistical
    instead of problem-solving
   Truth: Distributors, stocking competitive brands,
    cannot be one manufacturer’s advocate
   Truth: Reps and distributors work as teams
       Myths and misconceptions



   Myth: The Internet, EDI and eCommerce render
    personal contact superfluous
   Truth: they support sales by delivering and gathering
    information, so “face time” is more productive
   Truth: High tech can’t replace high touch in creating
    demand, negotiating contacts, analyzing solutions,
    dealing with exceptions
      Myths and misconceptions


   Myth: Reps don’t take a long-term perspective
   Truth: It would be reasonable not to, given the reality
    of 30 day termination clauses
   Truth: Reps invest in their territories and clientele,
    and in sales that develop slowly
   Truth: Reps needs long-term mutually profitable
    relationships with principals
       Myths and misconceptions



   Myth: Reps are independent and difficult to
    control
   Truth: Independent is a legal term that protects
    manufacturers
   Truth: The best control is from directing, motivating,
    and partnering with reps
   Truth: Reps and manufacturers need to feel inter-
    dependent
      Advancing the profession



   Enhancing management skills for reps and
    manufacturer personnel who manage reps
   Disseminating information and advancing public
    understanding of the rep system
   Three-year Certification program shows commitment
    and demonstrates achievement
   Reps offering new services, participating in new
    selling paradigms
    Leading indicators of skilled
             rep firms

   Have strategic plans
   Strong territory relationships
   Able to share intimate market knowledge
   Technologically current
   Active in industry associations
   Network for best practices
   CPMR certified management
       Information sources about
                  reps


   Manufacturers Representatives Educational
    Research Foundation www.mrerf.org
   Agency Sales Magazine (MANA)
    www.manaonline.org
   Industry-specific rep organizations, such as                         (person
    using presentation should put in the appropriate association name)
       Reps -- More than a source


   Synergy of multiple lines
   Economy of shared costs
   Permanence of shared costs
   Intimate knowledge of customers
   Solutions orientation
   Perspectives they bring to principals
   Prosper only by creating prosperity!