The Alexander Group surveyed Reps and Manufacturers on specific attributes important to their unique relationships.  While there was general agreement in many key areas, unanimity was not found in all instances.  Today, I will focus on three key areas.  Areas where the two ends of our industry do not see eye-to-eye.  Areas that demonstrate serious underlying issues.  Areas that must be addressed if we are to move forward in the 21st century, together. 

 

The first key area “Sales Support.”  Or, as the Alexander Group calls it “Sales Enablement

When the Alexander Group asked the research participants to rank the importance of Reps’ access to ‘Manufacturer support programs and resources’, the data showed a significant difference between Reps and Manufacturers.  Reps ranked this as their number one (1) most important issue.  Manufacturers ranked it as the third (3rd) most important issue to them.  This difference in perspective is crushing and hinders our collective efforts because underinvestment in sales support functions simply transfers the necessary transaction and administrative work to sellers.  And, this takes away time better spent with customers.  To put a finer point on the importance of working together to achieve effective “Sales Enablement”:  McKinsey and Company has found that companies with world class sales enablement functions can realize one time improvements of twenty-to-thirty-percent (20% to 30%) in sales productivity with sustaining annual increases as high as five-to-ten-percent (5% to 10%).  Their research also shows that companies that invest one resource in sales support for every front-line sales resource drive significantly higher sales productivity when compared to companies that invest less. The best performing Reps and Manufacturers understand the importance of working together on “Sales Enablement,” with one of the study’s Rep participants stating:  “Preferred Manufacturers typically have executive support for investing in electronic technical resources that make both of us more efficient.”    Likewise, a Manufacturer study participant remarked:  “The best thing that we do is try to support Reps, and recognize what they are up against.”  We need to listen to these keen voices.  But, to move forward in the 21st century we need to all to answer tough questions.

Questions like:  Do we, Manufacturers and Reps, collectively share sales enablement functions, that are completely focused and committed to providing our customers with the speed and quality of service needed to satisfy them?

The NEMRA POWER PACT is designed specifically to address this question collaboratively.   And, the NEMRA POWER PACT answer is:

  • Reps should continue to upgrade and improve their inside sales and customer support operations, with people and process improvements.
  • Reps must spend time analyzing the customer experience with all the touch points their distributors and end customers experience in their firms.
  • Manufacturers should similarly analyze the level of support they are providing to their front line, customer-facing sellers.  
Manufacturers should map the processes between their company and their Reps and commit to sales enablement by making it easier for the customer and Reps to do business with them.  If we, as Manufacturers and Reps can only do one thing to improve “Sales Enablement,” we must set a goal.  Our goal should be to increase the ease with which we do business together to make our customers a top priority.  Through the NEMRA POWER PACT, Reps and Manufacturers can share a common focus: reaching customers with better products, solutions and services and a common goal: Exponential Growth.

The second key area difference relates to “Contracts and Compensation.”  When the Alexander Group asked the research participants to rank the importance of ‘Performance-based compensation and incentives’ the data, again, showed a significant difference between Reps and Manufacturers.  And by ‘Performance-based compensation and incentives’, we mean an openness to increased incentives for complex or high margin sales and the establishment of greater incentives for growth.  Reps ranked this as their second most important issue.   Manufacturers ranked it as the fifth most important issue.  This difference in perspective cuts to the core of the agreements that bind our relationships with one another.  And, such a difference means that our relationships are not working as they should.  The Alexander Group observed:  Our current practices are not always well aligned with our mutual goal and objectives.  That we haven’t devoted enough time to this important element of the relationship.  They concluded that while responsibilities and expectations have changed significantly in most cases, we are applying “old legacy” thinking when we should be employing new thinking about how to strengthen the Rep-Manufacturer relationship.  Fortunately, many Reps and Manufacturers understand the need to change our outdated models.  One Manufacturer participant in the study acutely summarized the problem, stating:  “We are working off compensation models that are decades old.”  A Rep participant added:  “We need to be more honest with ourselves to pay for the right work done. We're overpaying for some of the legacy products, and underpaying on new products.”

To move forward in the 21st century we must encourage a closer alignment, with better performance measurements to our relationship.   The NEMRA POWER PACT is designed specifically to address this issue collaboratively.  Performance based compensation can be a positive factor in driving sales growth but it comes with the caveat that an audit quality commission reporting with accurate POS and sales reporting system is in place and trusted by both parties.  Through the NEMRA POWER PACT, Reps and Manufacturers can share a common focus: reaching customers with better products, solutions and services and a common goal: Exponential Growth. 

The third, and final key area, I will focus on today is “C-Suite engagement”.  Or, more plainly put, the commitment of a Manufacturer’s executive staff to the outsourced sales model.

When the Alexander Group asked the research participants to rank the importance of a Manufacturer’s executive-level commitment to, and engagement with, the Rep model, the data once again showed a significant difference between Reps and Manufacturers.  Reps ranked this as third (3rd) most important issue.   Manufacturers ranked it as the sixth (6th) most important issue to them.  This difference in perspective is endemic, strikes to the core of our relationships.  and, undermines our collaborative success.  As one Manufacturer participant remarked:   “Our sales team is very engaged with the agencies, but the next level up rarely gets involved.”  A Rep participant added:  “The larger the corporate structure the more top management is removed. They have a different agenda. They have removed themselves from what’s important to distribution and end users.”  This is both regrettable and detrimental as the numbers definitely show how important “C-Suit engagement” is to our success.  The Alexander Group observed Manufacturers with higher levels of executive involvement with the Rep channel experience growth almost 50% greater than those with lower executive involvement.  Nine-percent (9%) vs. six-point-four-percent (6.4%) average growth over the past three years. And this is not surprising as seventy-four-percent (74%) of the firms with high level executive involvement have a culture oriented towards sales growth and technical innovation versus a finance and cost driven, operational excellence strategy. Simplistically, it boils down to two approaches.  One approach views the outsourced sales function as a business cost to controlled with an arm’s length relationship.  And, these organizations suffer from lower growth. The alternative approach views the outsourced sales function as an asset to be supported with an inclusionary culture that values and respects the seller’s role. And, these organizations enjoy greater levels of growth.
 
The NEMRA POWER PACT is designed specifically to align these relationships and deliver on the promise of greater growth.
 
To move forward in the 21st century we need, we must, address this disparity.
 
Through the NEMRA POWER PACT, Reps and Manufacturers can share a common focus: reaching customers with better products, solutions and services and a common goal: Exponential Growth.