Guide to Manufacturers' Agents and Reps

Here's what to consider when looking for, negotiating with, hiring and working with manufacturers' representatives:

1. Decide whether to hire a number of reps to cover different parts of the country or to use an agency with a staff of representatives nationwide.
2. If you're selling into different channels of distribution, decide if you want a rep to sell into multiple channels, or if you will hire different reps for each channel. The former requires fewer calls to more customers. The latter could increase costs, as two reps may be covering the same areas.
3. Consider how often you'll expect reps to call on customers: The wider the area they cover, the fewer calls to individual customers they can make in a given time.
4. What and sales materials and samples will you supply them with? Or will they have to buy them?
5. Other than receiving orders, what type of reporting do you expect of the rep? Some firms ask for a sales report on each call, others a weekly, monthly or quarterly report. Come up with a schedule and a report format.
6. Do you want/expect your reps to look for secondary markets for your products?

Tips & Tactics
Helpful advice for making the most of this Guide

• Remember that your reps are the face of your business. Their success depends on what you do for your representatives and how you do it, and likewise, your success depends on what they do for you and how they do it.
• Do not expect the impossible from a rep or agency. Your customers make the decisions about what to buy and how much they are willing to pay.
• Almost all reps work on commission. Independent reps are paid, depending on the contract, when the products are delivered or when the customer pays for the products.
• Come up with a commission policy that covers the percentage, payment schedule, bonuses for exceeding goals, and how discounts affect their commission. Also consider how you will deal with their commissions upon termination of the relationship.
• Using independent representatives could mean that they are geographically closer to your customers than in-house salespeople.
• Some independent representatives or agencies offer warehousing services for the lines they represent.
• If you have different "confidential terms and conditions of sale" for different channels, keep track of whether the prices vary by channel. If so, be prepared to deal with issues that arise if customers in different channels find they are paying different prices for the same goods.

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