Guidelines for Planning the Business Year

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Setting, maintaining and monitoring objectives and expectations between field sales organizations and manufacturers.

Overview

The business relationship between independent agencies and their manufacturer-principals is based on a partnership. By definition, this partnership is set up and becomes productive through joint planning, action-assignments, and implementation. But most important in creating a productive agency-manufacturer partnership is a clear understanding of each other’s expectations and performance within the business-planning process. Without an understanding of what is expected, who is responsible for what and what actions will be taken, the partnership will not prosper. Indeed, when joint expectations are met or exceeded, the partnership thrives and prospers. When expectations are not met, the relationship flounders resulting in discontent.

While on-going communication between the agency and the manufacturer is essential, the communication of expectations should be the focus of discussion at the beginning of the business-planning cycle. The recommendation is that an open and honest discussion take place at the beginning of each planning cycle — whether this cycle is on an annual basis or some other mutually agreed on period of time. The specific details of this discussion should include the following:

• A clear definition of and mutual agreement on each party’s expectations.
• A clear definition of and mutual agreement on the actions related to these expectations – actions linked to each expectation for each party.
• A clear definition of the anticipated outcome if the mutually agreed upon expectations are achieved, e.g. a bonus if the sales quota is achieved, X% increase in commission for pioneering new products, etc.

This document is merely a Guideline for planning the business year or cycle. As such, each situation and relationship between agencies and manufacturers is different. Any such relationship might require additional areas of specific discussion or the deletion of some topic areas listed here. In either case, the critical discussion points should center on the definition of joint expectations and actions and mutual agreement on those expectations and actions.

Once this list is established, it should be reviewed at the beginning of the business cycle. Because local market conditions and agency or manufacturer situations change, expectations and related actions will need to change as well. This review is a necessary component of keeping the partnership directed, focused, healthy and profitable for both the agency and the manufacturer.

Suggestions for Using the Guidelines

The following outline of discussion topics is a guideline to establishing mutually agreed upon expectations and objectives prior to the commencement of the business cycle. These topics and their specific content become the basis for ongoing communication between the agency and the manufacturer. For example, the following list of topics could be the basis of a planning meeting between a regional sales manager and agency principal and/others in the agency. Once discussed, a written summary of bullet points around each expectation and criterion would form the key communication link to objectives for the new business cycle. In addition, this summary provides background and context for discussions during future business planning sessions.

Discussion Guidelines for Planning the Business Cycle:

Meeting Topics

1. Goals and Objectives – A clear, concise summation of the goals and objectives for the upcoming year.

Suggested Topics:

• Increase or decrease for the agency’s expectations as compared to the prior year.
• Increase or decrease for the manufacturer’s expectations as compared to the prior year.
• Review of the quota spread.
• Key product line emphasis and points.
• Review of possible key account targets.
• What are the local trends and history for the last 2 – to – 3 years?
• Other ____________________________________________________________
• Other ____________________________________________________________

2. Planning: Strategic and Personnel – “Who’s on first”, who’s on second”, etc. What changes at the agency and the factory need to be discussed?

Suggested Topics:

• Strategic plans and direction: both at the agency and manufacturer.
• Ownership/succession plan.
• Personnel changes and assignments.
• Key contacts at the agency and manufacturer.
• Policy changes.
• Future markets.
• Other ____________________________________________________________
• Other ____________________________________________________________

3. Distribution – After discussion mutual goals in regard to distribution, consider discussing the following areas:

Suggested Topics:

• Planned additions — who, when, and what product(s).
• Planned deletions — who, rationale and when.
• Critical strategic distribution moves/changes: chain, buying group, target market, niche, and specialty markets, etc.
• Channel focus.
• Other ____________________________________________________________
• Other ____________________________________________________________

4. Compensation – So as to prevent any misunderstandings, a key element in the planning discussion is a concise and comprehensive review of the entire compensation program and contract.

Suggested Topics:

• Commission program by product.
• Review any or ad incentive/bonus plans.
• Additional compensation for value-added service (warehouse allowance, specification work, co-op programs, end-user calls, engineering work, etc.)
• Discuss whether the compensation program and contract is structured to accomplish both party’s expectations and the marketing goals and objectives, e.g. contract length, severance agreement.
• Other ____________________________________________________________

5. Promotion – For planning purposes, a brief promotion plan including both parties’ expectations should be reviewed.

Suggested Topics:

• Available and planned promotions (both local and national).
• Collateral available or needed (brochures, catalogs. sell sheets, etc.).
• Advertising schedule, if applicable.
• Review for local applicability and effectiveness.
• Trade show schedules, promotions and collateral required.
• Promotional target audiences (distributor, end-user, specifier, etc.)
• Electronic media and/or e-commerce where applicable.
• Other ____________________________________________________________
• Other ____________________________________________________________

6. New Product Introductions and Pioneering – It is important to establish the timing, schedule, expectations, and rationale for new product introductions and pioneering.

Suggested Topics:

• Planned introductions, schedules and expectations/responsibilities and additional compensation if applicable.
• Training schedules and locations.
• Sales goals and competitive analysis.
• New product rationale and applications.
• Field input on new product potential and results.
• Follow-up feedback and monitoring.
• Other ____________________________________________________________
• Other ____________________________________________________________

7. Training – With regard to training it is important to identify the key objectives in the coming year specific to the agency personnel training distributors and end-users. In addition, identify the objectives and plans for training the manufacturer and the agency personnel if applicable.

Suggested Topics:

• Required training skills for the agency personnel by product and application.
• Agency training sessions for distribution.
• Agency training sessions for end-users, specifiers, engineers, etc.
• Timing/frequency and scheduling for all of the above.
• Other ____________________________________________________________
• Other ____________________________________________________________

8. Reporting – Discuss any objectives and expectations specific to reporting. These should be thoroughly understood and agreed upon.

Suggested Topics:

• Objectives and expectations.
• Specific to the previous 7 discussion topics and points listed above.
• Format and frequency by type. For example, competitive analysis: use form provided by the manufacturer, twice a year.
• Other ____________________________________________________________
• Other ____________________________________________________________

9. Factory Visits and Joint Field Calls — Discuss any objectives and expectations specific to visits to the factory as well as joint field calls by the manufacturer. These should be thoroughly understood and agreed upon.

Suggested Topics:

• Factory visits: who? (rep, distributor and end-user), why? (objectives and expectations), when? (planning, timing and schedule) and how will costs be handled?
• Field visits and joint calls: to see whom? (distributor and end-user), why? (objectives and expectations), when? (planning, timing and schedule) and how will costs be handled?
• Other ____________________________________________________________
• Other ____________________________________________________________

10. Annual Written Business Plan: Priorities, Specific Objectives, Actions, Responsibilities and Timeline – The final step in the planning process is to summarize the discussion results in a written business plan. This will provide a progress report for direction, benchmarking and monitoring. The objective of the annual business plan is to have a concise written document that summarizes expectations and removes doubt and assumption from the planning process.

Suggested Topics:

• List: priorities, specific objectives, actions, responsibilities, and timelines by manufacturer and by agency.
• List those program components that are unclear at this point but will be reviewed and when.
• List the process for updating the business plan if necessary.
• Representative and manufacturer should review and “sign-off” on the plan.
• Other ____________________________________________________________
• Other ____________________________________________________________

(adapted from Guidelines for Planning the Business Year, by the National Electrical Manufacturers Representative Association)