Fall 2023 – ERA XCOM Digest
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Industry Update – by Kingsland Coombs, CPMR, CSP
Kingsland Coombs, CPMR, CSP
Control Sales, Inc.
Sr. Vice President at Large
kingc@controlsales.com
Summer 2023 White Pin internship success
I am thrilled to report on the tremendous success of three summer 2023 ERA Mark Motsinger White Pin internships. Feedback provided to the White Pin internship committee from both the candidates and their rep employers was overwhelmingly positive. Here are some of the highlights from the committee’s check-in calls.
Firm: John E. Boeing Company (JEBCO), Nashua, N.H.
Intern: Imad Hankour, UMass Lowell, Mechanical Engineering
Rep Firm Owner: Don Higley
Imad Hankour had a great experience working with Don Higley and the team at JEBCO. The training wheels were taken off quickly as Imad spent time shadowing the account managers and working on several important projects. “The Boeing team was very patient with me, and they gave me a variety of tasks,” said Hankour. “It was a mix of engineering and sales and always something new. It never got stale and there was always something to learn.” He also mentioned that he spent the most time “shadowing the FSRs and witnessed in person what they do. After graduation, I want to do the same thing.”
“Imad was a fast learner, and he was fearless,” said Higley. “He worked with customers and distributors and was in contact with our principals who were very encouraging and supportive of the program. The internship was not only great for Imad but was a great experience for the company. Imad taught us quite a few things that we did not know. We can’t wait for him to come back to work in May.”
“The White Pin Internship is an excellent program,” said Higley. “It was well worth the time and effort. This was the first intern we have had in 10 years and because of the great experience we will continue to pursue it over the coming summers.”
Firm: TAARCOM, Inc., Santa Clara, Calif.
Intern: Dylan Phillips, Worcester Polytechnic Institute, Computer Science, Data Science
Rep Firm Owner: Ian Trevelyan
This was Dylan’s second internship with TAARCOM. “In his second year, Dylan understands the industry better, knows the jargon and had great back/forth communication with customers and principals,” said Trevelyan. “His value to TAARCOM increased enormously in his second year.” He added, “Dylan completed various business development tasks including software coding of distributor POS reports, commission database, various upgrades to our website and CRM data entry. Dylan is interested in joining TAARCOM after graduation and looks to develop his skills for outside sales.”
“The TAARCOM team was thrilled to have our returning summer intern, Dylan Phillips, participate in the 2023 White Pin Internship program,” said Erin Fox, sales and marketing distribution manager at TAARCOM. “ERA’s commitment to fostering learning and growth is truly commendable. Thank you, ERA, for investing in Dylan’s development and opening doors to a brighter future! The TAARCOM team is deeply appreciative of the experience.”
“I met Dylan at a golf outing in the Bay area,” said Walter Tobin, ERA CEO. “He was engaging and conducted himself professionally with us older guys. He was not intimidated. Kudos to the TAARCOM team for the proper onboarding of Dylan.”
Firm: C C Electro Sales, Inc., Plymouth, Mich.
Intern: Liam Liburdi, Michigan State University, Applied Engineering Sciences
Rep Firm Owner: Matt Cohen
Using his technical sales focus of study at MSU, Liam Liburdi was excited to contribute to the sales process on customer calls with the outside sales team. “Liam started his summer embodying the field application engineer (FAE) role in our firm,” said Matt Cohen. “He completed a two-hour training on AI hardware, and it never left him all summer. He used ChatGPT to come up with a sales plan and introduced it to a hard-to-penetrate customer.”
“Liam was a self-starter from the beginning, learned highly complex products, provided sound research, and got comfortable texting, emailing and calling customers,” said Cohen. “Liam helped with format and content in a principal’s quarterly business review (QBR) that will help us for the next 18 months. His tenacity will benefit him for his upcoming career.”
Interestingly, Cohen also shared that MSU as well as other universities are offering technical sales classes and training, and some are even focused on the manufacturers’ representative model.
The ERA White Pin committee will begin the process for the 2024 summer program in late fall 2023. Rep firms do need to submit applications to qualify for the subsidy. Rep and internship application forms can be found here. Application forms should be submitted no later than February 28, 2024. Applications will be reviewed in the order of date submitted.
College career fairs are taking place right now, so if your rep firm is interested in an internship, make sure to participate. The successful 2023 interns were recruited based on academics with a focus on technology, high energy and a curiosity for outside sales.
Education Update – by Ellen Coan, CPMR
Ellen Coan, CPMR
C C Electro Sales, Inc.
Sr. Vice President/Education
ellen.coan@ccelectro.net
What is in a job description?
What is in a job description? A lot—for our next generation. Our role as a salesperson has changed and the description needs to be updated to include marketing communications. People don’t want to be known as “salespeople.” That term is a connotation that items are being forced on others. When we hear about a salesperson, a used car salesperson comes to mind. While they are important, well-intentioned people, their reputation (unfortunately) has become tainted. It is not the career choice of many.
Instead, you may want to describe that we share ideas through marketing and work together to create exciting new products through collaboration. It is people-to-people communication. After the job description, we can describe the working environment and mention things to be aware of as we describe it—such as, openness to creativity and doing things a new way. Work-life balance. Creating sustainability goals or an environmental vision for our manufacturers and customers. While I have watched our ERA NEXGEN group and White Pin Internship program develop, I realize that the next generation is a master of researching customers and products, while they share best practices of how to reach the creators of the “next best thing.” ERA has hosted countless Conference breakout sessions and STEP training modules that address the soft skills like listening, trust and resilience, while peppering in the negotiation and tools to find the next big customer, or how to use video or ChatGPT in your introductions and beyond.
Fall is the time to attend job fairs and find your interns! Purdue University offers a business and engineering combined degree, and Michigan State University has an applied engineering degree that has dedicated sales leadership classes included. I have given them ERA white papers on the manufacturers’ rep model to share in class. Talk to your favorite university and you might be amazed at what is right next door—students with an interest in what we do. Share your passion for this crazy industry! My suggestion is that you craft your job description carefully to capture the true essence of what we do. The intern is a breath of fresh air in your office that stimulates so much more than monetary gain. You learn from them as much or more than they learn from you in the short summer timeline. It is a great way to move forward in this ever-changing world!
Manufacturing Update – by Ken Bellero
Ken Bellero
Schaffner EMC
Sr. Vice President/Manufacturers
ken.bellero@schaffner.com
Navigating the complexities of manufacturers’ representatives who are considering adding competing lines
A topic that has been discussed over the years between manufacturers and their reps has been what is the right decision when it comes to considering adding a competing line. This article is my attempt to present some of the issues that could arise and cause major problems when a rep feels the need to, or may be presented with the decision to, add a competing line based on a merger or acquisition of a competitor by one of their key lines. I will also suggest some best practices if, in fact, a rep must seriously consider taking on a competing line. My expectation is that reps will consider some of these suggestions before making this decision.
Our representatives play a crucial role in bridging the gap between manufacturers, distributors and their customers. They act as the face of the brand, promoting products and ensuring a smooth distribution process. However, conflicts will arise when manufacturers’ reps are approached to add competing lines to their portfolio. Here are some aspects to take into consideration when entertaining the thought of adding a competing line.
• Conflict of interest. When a manufacturers’ representative considers adding competing lines, conflicts of interest can arise. They are put in a delicate position of balancing the interests of multiple brands, potentially compromising their loyalty and commitment to each. This conflict may lead to strained relationships with both manufacturers and customers, as trust and transparency become questionable.
• Brand dilution. Adding competing lines to a rep’s portfolio can dilute the brand image and value. Manufacturers may worry that their products will be overshadowed or receive lesser attention from the reps, resulting in decreased sales and market share. Customers and distributors may also have concerns, as they may question the reps’ ability to prioritize and effectively promote products.
• Market segmentation. Representing competing brands can lead to market segmentation challenges. The manufacturers’ rep may have to divide their efforts and resources among various brands, potentially spreading themselves too thin. This can result in a lack of focus and reduced effectiveness in promoting any individual brand, leading to suboptimal results for all parties involved.
• Ethical considerations. The addition of competing lines raises ethical questions for manufacturers’ representatives. They must navigate a fine line between promoting their existing brands while not undercutting the competition. Transparency and open communication become paramount to ensure that all parties involved are aware of potential conflicts and are comfortable with the representation arrangement.
With the ever-changing landscape of the electronics industry, due to consolidations and mergers, it may be necessary to consider solutions to these conflicts if they arise.
My suggestion is that the manufacturers’ rep should consider several strategies as potential solutions:
• Clear communication. Open and transparent communication between the reps, manufacturers and distributors is crucial. This ensures that everyone is aware of the potential conflicts and can make informed decisions.
• Segmented representation. Manufacturers’ reps can consider segmenting their representation by product category or target market. This allows them to focus their efforts on specific brands, avoiding direct competition between the lines they represent.
• Prioritization and balance. By clearly prioritizing their existing brands and ensuring a balance in their representation, manufacturers’ reps can maintain trust and loyalty with all parties involved. This involves setting expectations and boundaries to manage potential conflicts effectively.
• Non-compete agreements. Manufacturers can consider implementing non-compete agreements with their reps to protect their brand interests. These agreements can outline the scope of representation and establish boundaries regarding adding competing lines.
The decision by manufacturers’ representatives to add competing lines can create conflicts and challenges for all parties involved. However, with open communication, strategic planning and a focus on maintaining loyalty and transparency, these conflicts can be navigated successfully if handled correctly. My expectation is that manufacturers’ reps that are considering this scenario understand the decision and how it may affect them in the future. By implementing appropriate solutions, manufacturers’ reps can continue to play a vital role in promoting brands while ensuring the best interests of manufacturers, distributors and customers are met.
As always, if you would like to reach out to me directly to discuss this topic or any others that are pertinent to our industry, please do not hesitate to email me at ken.bellero@schaffner.com or give me a call 732-910-1717 anytime.
Distribution Update – by Gary Zullo
Gary Zullo
Arrow Electronics
Sr. Vice President/Distributors
gzullo@arrow.com
Investing in the future — the 2024 ERA Conference
I’m going to come right out and say it. This is a pitch for our community to come out en masse for ERA’s annual conference in Austin, Texas, on February 25-27, 2024.
Rightly so, we tend to be more explicit in prioritizing investments in uncertain times. There’s a heightened focus to ensure that monies spent generate tangible return on investment. I would make the case that investing in our talent, whether it be in good or challenging times, is one the most tangible ways to generate return.
The theme this year of “Energizing our Customers’ Experience”—with a particular focus on enabling field selling resources—is a perfect focal point for a market trying to navigate its way back to growth. Often where markets are looking for direction, the customer process can have a tendency to slow down. The impact places a premium on our business development and customer base expansion activities, and a tangible output of how our field selling resources generate return.
Last year’s conference sold out and had an extensive waitlist. The timing couldn’t be better to come together in Austin and to collaborate and share best practices as a community. In addition to the rich content of the conference itself, it offers a highly productive environment for meeting with key partners.
I’m in. See you there!
Membership Update – by John Hutson, CPMR
John Hutson, CPMR
The MacInnis Group
Sr. Vice President/Membership
john@macinnis-company.com
Empowering members with knowledge
I hope that this edition of The Representor finds all of you rested and relaxed after an enjoyable summer. I suspect that you too may have found the post-COVID spike in the summer crowds a little trying at times, but it was certainly great to be getting back to a post-COVID normal.
As we transition from summer to fall, you may be finding your 2023 metrics to be as trying as those summer crowds. It was well predicted that 2023 was going to be a correction year, but these ups and downs can still test your patience. Riding the slow-moving ups and downs on a merry-go-round may be fun as a child—and may still be for some of you—but this is not our preference in business. The good news is that the subtle movement of a carousel is better than that of a rollercoaster.
I cannot help but recognize the value of an ERA membership as we continue to ride these “carousel conditions” into the waning months of the year. Be it during disruptive, corrective or stable times, making informed decisions is always a best practice. ERA continues to provide its members with many invaluable sources of information that can keep you informed, and the single greatest repository for this information is the ERA website. When was the last time you spent some time on ERA.org? It is loaded with tools that can help you navigate your business through all market conditions.
A few that you may consider are:
• Resource tab: Here you will find links to all kinds of valuable information that includes access to industry experts across many disciplines, the Manufacturers’ Rep Toolkit and Member Resources, which includes updated POS reports.
• Publications: It might be a recent piece, or one from the past, but the White Papers & Publications section might help inspire your next great idea. • Events: Educating through networking is a cornerstone of ERA, and we are planning more events, both online and in-person, than ever before. Be it the upcoming conference, a local chapter event or an online ERA LIVE event, remember to participate and learn from the collective.
• HoverMap: Would you like to get some fresh perspectives from another rep, but you misplaced their contact information? Why not use the Hover Map to track them down?
• ERA SearchLink.ai: This powerful search tool may help you find the contact that you are looking for that can turn your business around. Have you integrated it into your organization?
• Lines Available: Maybe there is a gap in your product portfolio that can be filled with a manufacturer member from the Lines Available bulletin. Have you looked recently?
• Online Tools: This is a collection of many digital tools, with ERA Podcasts being just one. Have you listened to an ERA Podcast recently while driving to your next meeting?
For those who prefer a more stable business environment, it is good to see that 2023 is more of a carousel and less of a rollercoaster ride. Nonetheless, ERA’s website has information that can make this ride more enjoyable. If you have not done so recently, I encourage you to take a time out, update your password, sign in, take a deep dive and enjoy the experience.
Rep Update – by Cameron English, CPMR
Cameron English, CPMR
English Technical Sales
Sr. Vice President/Industry
cenglish@englishsales.com
Quality of sales representation & the dangers of weak representation agreements
As a representative covering the Southwestern U.S., I am often approached by foreign companies wanting to expand into the North American market. The lack of awareness about the way U.S. manufacturers’ representative and distribution channels live and breathe is sometimes astonishing. The lost-in-translation aspect and cultural disconnect is something to which we should pay attention.
What is at risk? If our agreements degenerate into non-exclusive and shortterm— and with regards to termination, one-sided in nature—our quality of life as representatives will also degenerate, especially in the area of “pioneering lines.”
Our company has established a policy guideline as follows. If we engage a pioneering line (no existing residuals), we expect the agreement to maintain:
• Extended credit for commissions on sales for a minimum of 180 days after termination (lifetime of product is preferred)
• Elevated commissions for all new business to incentivize the sales team
• Territory visits by invitation only
• Reports are deal flow-focused, meaning not a routine-generated exercise or guarantee to be submitted monthly, only as needed in the pursuit of business
• Splits are an absolute non-negotiable, meaning if the business goes offshore, it is tracked and compensated for
Recently, I was approached by an Asian semiconductor line that wanted to establish business in North America. They were in the process of establishing a distribution network and needed to get their representative network built. Here was the structure of their proposed agreement:
• Commission subject to change depending on profit to the supplier, but base rate was offered at 2 percent • No reference to paying on POS
• Non-compete to represent a competitive supplier for two years after termination
• Non-exclusive territory
• Each order needed to be registered in advance in order to receive credit and, in turn, compensation
I took exception to all of the above and countered with:
• Full commission at 5 percent
• 180 days of commission credit for all existing sales and all sales captured after termination
• Exclusive territory—credit for every sale in our geographic area for both POS and direct • No non-compete after termination
• No registering each order
When we discussed these issues and the offered commission rate that was lower than the industry standard, the president of the supplier said that their competition was at 2 percent commission. After researching the competition sales position in the U.S., I pointed out that the competition maintained a representative network supporting $11.5 billion in sales in North America, so it was not a fair comparison to a situation that required a representative to build a territory from scratch.
It has been observed that an estimated 600 days to first commission compensation is the norm for getting a territory started. This number reference includes getting the design win, getting the program through proto stage, pre-production and full production. And then, it usually takes 30 to 60 days for the supplier to receive payment from invoice. I would add that the typical agreement pays the representative commission 30 days after the supplier is paid.
Have you ever been told, “Just take our products with you and sell them when you make calls for your other suppliers!” Well, in the words of a good friend and fellow representative, “If it is that easy, why not just do it yourself?”
How about the position some agreements try to take on commission rates? You may hear, “Commission rates are subject to change based on profitability of the situation related to the customer opportunity.” My response to that is, when you give me authority over your cost accounting, I will agree to that statement. There are times when the competition does get tough. In the worst-case scenario, let’s make sure that the agreement states: “Commission rates will be negotiated prior to the customer receiving a quote.” This at least gives the representative an opportunity to advocate for a fair reduction in percentage. I would add that a 5- to 4-percent reduction is actually a 20 percent move in the total revenues paid to the representative. Is the manufacturer moving 20 percent off of the quoted price?
Our industry talks about “long tail” products when the issue for us as representatives is long tail return on investment.
What does this all mean for us as professionals? Unless we stand firm on maintaining high standards in regard to agreement structure and expectations, we risk eroding our level of quality of return on investment as an industry in general.
In his recent white paper, “The Solution to Cost-Effective Sales Coverage is Hiding in Plain Sight,” available to ERA members on era.org, Cesare Giammarco outlines the cost for a manufacturer to maintain a direct sales force. The startup and maintenance cost are substantial. This cost hurdle represents leverage for us as representatives. The suppliers need to have a sales force to build their position in the market. When it comes to demand creation, we are the only option next to a direct sales force. When you analyze the data, a representative strategy is clearly more efficient in most cases.
This begs the question: why would any of us as representatives agree to a weak contract? In fact, we should be demanding retainers and up-front start-up fees to engage a supplier. I would add that the established suppliers, who are making the investment, paying every month for on-going sales should question any representative that would engage a pioneering line.
If we are to uphold a commitment to professionalism, it is imperative we maintain strong agreements. The minute one of our ranks accepts a less-than-quality representation agreement, the entire industry is in jeopardy of seeing diminished expectations. When standards are degraded, return will soon follow.