When to Hire a Manufacturer’s Rep
Perhaps surprisingly, John Roba is quick to admit that there are a number of circumstances in which suppliers don’t require the services of manufacturer’s rep firm like his.
For example, he says, suppliers of small, retail-type goods that tend to sell on small margins generally don’t need a manufacturer’s agent to rep their product. And then there are cases where a supplier is large enough to field its own in-house sales force in place of hiring a manufacturer’s rep firm.
“I tell factories all of the time, ‘Look, you probably don’t need my services,’” says Roba, founder of John Roba & Associates.
So when does it make sense to hire a manufacturer’s agent?
Manufacturer’s reps who spoke with RV PRO for this article say they can be of most assistance to suppliers in certain specific instances: When a product is at least somewhat technical in nature and requires instruction in its proper use; when a product has selling merits that need explanation; and more generally, in cases where a supplier wants to aggressively market a new product in the market or sell an existing product into a new marketplace like the RV industry.
“The dealer, in order to sell the product properly, needs to know all of the product’s features and benefits,” explains Tom Manning, president of Tom Manning & Associates. “Where does he get that information? He could read a trade magazine or a manual, but that’s not going to happen most of the time. So what we would do is go into the dealership and train their personnel. Dealer training is a huge part of what we do.”
Rob Rapose talks about the merits of Torklift products with a parts associate at a dealership in the Pacific Northwest. Formerly the national sales manager for Torklift, Rapose now represents several companies in his role
In terms of helping a product gain market share by highlighting its merits, Roba points with pride to the success his agency has had with OP Products, promoting the company’s Pure Power product. The holding tank treatment has become the No. 1-selling product in the territory his company represents, he says.
“Why is that? Because we went out and created that market for the company and the distributors by educating dealers as to why it’s better and how it functions, hands-on type stuff,” he says. “Now when a dealer calls up the distributor he doesn’t say ‘Send me a case of holding tank treatment,’ he says, ‘Send me a case of Power Pure.’ That’s what makes suppliers successful.”
Of course, some might reasonably ask: Don’t distributors naturally fill the role of educating dealers about various products and promoting those items?
Manufacturer’s reps respond with a qualified “yes,” acknowledging that distributors do offer those services to some extent as part of their larger, primary role as warehouse operators and shippers.
However, Rob Rapose, owner of Rapose Enterprises LLC, notes that because distributors may carry upwards of 15,000 SKUs, it’s not realistic to expect them to be an expert in every product they offer. And with literally dozens of products competing in some product categories, such as cleaners or holding tank treatments, distributors aren’t likely to devote the amount of attention to any individual product as a manufacturer’s rep firm that has been hired to promote a specific brand, he adds.
While respectful of distributors’ role in the marketplace, Roba says, “Distributors do not create markets for products. They don’t sell products so much as they take orders.”
Reps vs. an In-house Sales Force
So if having a designated sales force to help move product is so valuable, why shouldn’t a company simply field its own sales force?
“Simply put, you can earn more sales faster at a lower cost with a manufacturer’s rep,” says Gary Chancy, president of Leisure Time Marketing. “The reason we do that easily and cheaper is because a rep is operating on a commission basis based upon performance.”
Rapose adds, “I really believe that, as a rep, if you’re not generating sales for the company that hired you, you shouldn’t be making any money.”
While every situation is different, manufacturer’s reps say a company might reasonably expect to spend upwards of $150,000 per sales rep if it employs its own sales force – a figure that not only includes salary and benefits, but also things like insurance and covering travel expenses. In comparison, a manufacturer’s rep is typically paid on a commission basis, either entirely so or with some additional money for things like travel and product training.
According to manufacturer’s reps, the reason they can do the job for so much less than an in-house sales force is because they draw revenue from several suppliers they are hired to represent, which allows them to spread out their costs. Depending upon the size and scope of a manufacturer’s rep firm, those firms typically handle anywhere from five to 15 product lines.
“It’s a more cost-effective way to get products to market (because) you as a supplier are sharing the cost with other suppliers that are trying to do the same thing,” explains Manning. “It’s particularly helpful for a smaller supplier to get into a market that they might not otherwise be able to reach.”
Representing multiple brands to dealers doesn’t notably diminish the ability to represent an individual company’s products because manufacturer’s agents say they take great pains to make sure their products are complementary – never competing.
And manufacturer’s agents are quick to note that suppliers that pay for their services get more than just representation at dealerships and trade shows.
“They (suppliers) aren’t just buying a service; they’re buying the rapport the reps have with their customers,” explains Jim Stark, president of Dealer Resource Group.
Karl Etshied, former executive director of the RV Aftermarket Association, concurs with Stark’s assessment.
“The agents know everyone. They get suppliers to a place those companies simply couldn’t do by themselves,” he says. “I think the RV industry has a lot of good products today because of the agents. They do a hell of a job of moving things through the chain.”
A Day in the Life of a Manufacturer’s Rep
Most weekday mornings, Rapose is up before the crack of dawn preparing for the six to 12 calls he’ll make to RV dealerships in the Pacific Northwest that day.
He wouldn’t have it any other way.
“I’m not really a ‘desk guy’ by nature,” says Rapose, formerly the national sales manager for Torklift in Kent, Wash. “It used to be that any chance I had to go out into the field and do field training, I took it. So this is a perfect fit for me.”
Chris Polley (center) of Tom Manning & Associates talks about the merits of King Control products with Eric Peterson and Jennifer Phipps of Russ Dean Family RV in Pasco, Wash. Polley emphasizes the importance of having a working display as a way to increase sales.
Other manufacturer’s reps who spoke with RV PRO for this article expressed similar sentiments. Meetings with dealers are a favorite occurrence – which is good, because that task typically occupies anywhere between 75 and 90 percent of their time.
And while selling the merits of the products they represent goes with the territory, so to speak, manufacturer’s agents say an even bigger part of their job these days is education and training. There’s a reason for that.
“Anytime somebody knows more about a product he’s selling he will be more comfortable and sell more,” Chancy says. “We are continuously trying to train dealers … with seminar, webinars and with face-to-face training. It just makes sense that more educated dealers are going to sell more product.”
Roba concurs, adding that savvy suppliers have strongly embraced the educational side of the business.
“What manufacturers are looking for today is more consultative-type selling, as opposed to straight sales calls,” he says. “They want to see the educational pull-through, where you’re going out and doing educational seminars on the features, benefits and service of their products.”
And while sales and education are two fundamental cornerstones of the job, manufacturer’s agents say that to truly serve their dealer customers requires they be a jack-of-all-trades. As such, it’s not unusual to find them doing store sets in dealer showrooms, assisting with other forms of merchandising, even manning the parts counter or answering the dealership’s phone lines to help out in a pinch.
Despite the job’s long hours, the many miles they log on their own vehicles and the breadth of responsibilities that come with their jobs, manufacturer’s agents tell RV PRO the rewards of their job exceed any drawbacks.
“I can’t imagine anyone could pay me enough to make me quit what I’m doing,” Rapose says. “It’s not about the money; it’s about doing what I’m supposed to be doing.”
What to Look for in a Manufacturer’s Rep
Assuming a supplier decides to grow its business via the manufacturer’s rep route, how, exactly do they go about selecting the right one for their company?
One big consideration: Given that the RV industry is a close-knit community where business is still done upon the basis of personal relationships, industry knowledge and connections are vital, according to manufacturer’s reps.
“This is not an instance where you want to hire someone who is learning the industry and the players as they go,” Rapose says. “That’s pretty much a recipe for failure.”
Several members of the Leisure Time Marketing team are representing products at the NTP Distribution Show.
Another important consideration, according to Roba, is picking a firm with the right amount of product lines. Specifically, he warns that a firm with too many lines isn’t likely to be able to give a new supplier the level of attention its product deserves.
“The toughest thing to do when you become successful in the repping business is to say ‘no,’” says Roba, adding he personally turns down about 80 percent of the requests he receives. “Some guys will be repping 15 to 20 lines. Well, there’s no way you can give a particular line – particularly a new line that’s not generating any money – the amount of time necessary to make that product successful.”
Stark’s advice for suppliers considering hiring a rep firm is blunt: Do your homework. That means critically evaluating a rep firm’s strengths and weaknesses, any areas of specialty or expertise that might help sell the supplier’s product, and overall compatibility between the two organizations.
“A supplier needs to find out whether or not the agency can provide the service they need,” Stark says. “They have to determine whether a particular agent is a fit for their product and has enough knowledge of the market they need to go after.”
“A lot of it depends upon the product line,” adds Chancy. “For example, is the product technical? What are the requirements to sell your product? Find the person you think would qualify to do that and cover the territory you want.”
Rosie Hirsch, president of RV Lifestyles Inc., cites two other vital traits suppliers should look for in any agent firms they consider hiring – versatility and persistence.
“We’re a one-stop shop,” she says of her own rep agency. “You have to be if you’re going to be a rep. You’re going to have to be very detail-oriented, with good follow-through. You have to show up; this is a service industry. The more service you provide, the more you assist your clients, the better off you are.”
For his part, Manning concurs with Stark that an in-depth conversation between a supplier and a manufacturer’s rep firm needs to occur regarding each party’s responsibilities and expectations before either side commits to any agreement.
“There is not a cookie-cutter answer for (hiring) reps,” he adds. “Suppliers need to talk in detail to (rep agencies) to find the proper fit for both companies to be successful.”
Signing on the Dotted Line
When it comes to signing contracts defining the obligations of the manufacturer’s rep and supplier, there’s really no one-size-fits-all approach, manufacturer’s agents tell RV PRO.
Rapose says he is willing in some instances to enter short-term contracts with suppliers to help them get established in the marketplace or to accomplish a limited objective. Roba, however, takes a different approach. He says that because of the high upfront costs his firm tends to incur – especially when introducing new products to the RV market – he needs commitments from suppliers to be longer-term.
Generally speaking, contracts tend to cover items such as the effective date, territory, specific duties, rate of commission, and how that commission is paid, according to manufacturer’s reps.
“Sometimes it’s not a big deal for us. We have agreements that basically just outline the territory and commission fee and that kind of thing,” Stark says. “Some vendors have very involved contracts they ask us to sign, while others are much less intense.”
But just as suppliers need to evaluate manufacturer’s reps to see if there is a fit, manufacturer’s reps say they will typically take a long, hard look at a supplier before committing to taking that company on as a client. In a nutshell, reps say the things they look for in a client include a product with good growth potential, a built-in healthy margin given that they sell products on commission, and – especially when it comes to new supplier companies – the ability of that supplier to deliver the product to the market.
Additionally, a number of manufacturer’s reps told RV PRO they won’t represent a company they don’t believe in because they don’t want to risk damaging their relationships with dealers, distributors and others.
“You’re a representative, not just of that (supplier) company, but of your own business,” Rapose explains. “And when I take a product to a dealer and say, ‘This is the best product on the market,’ it better doggone be.”
Manufacturer’s Reps at the Glance
Dealer Resources Group
Jim Stark, president
Home base: Valrico, Fla.
Years in business: 11
Number of employees: 19 in outside sales
Leisure Time Marketing
Gary Chancy, president
Home base: Huntington Beach, Calif.
Years in business: 34 years
Number of employees: 6 in RV portion
Rob Rapose, president
Home base: Ellensburg, Wash.
Years in business: 10
Number of employees: 1
Territory: Northwestern U.S.
Roba & Associates
John D. Roba, founder
Home base: Clarence Center, N.Y.
Years in business: 40
Number of employees: 8
Territory: Nationwide, but specializes in Midwest, Northeast and Mid-Atlantic territories
RV Lifestyle Inc.
Rosie Hirsch, president
Home base: Agoura Hills, Calif.
Years in business: 8
Number of employees: 5
Tom Manning & Associates
Tom Manning, president
Home base: Coldwater, Mich.
Years in business: 25
Number of employees: 5 in outside sales