Winter 2022 – ERA XCOM Digest
Click on listing title to view the corresponding article.
Click on listing title to view the corresponding article.
Kingsland Coombs, CPMR, CSP
Control Sales Inc.
Sr. Vice President at Large
So long 2021, the “Great Disruptor.” Our industry faced a myriad of challenges last year, many of which are still with us. And yet, as is true with any business disruption, 2021 was also an example of survival, recovery and adaptation. It is important to reflect upon what key tenets emerged as essential to the rep model last year, and why we are better for having had the experience.
It was year two of a global pandemic, and while demand recovered, the supply chain was in disarray. Our principals’ growth expectations did not magically cease to exist, nor should they have. If there was potential to win business and ship product, we still had to deliver. If we could not hit our normal targets, the focus turned to our ability to demonstrate value. Our value was our ability to gather, communicate and act on critical information, including program status, component delivery requirements, early PO placement, customer production timing, principal capability to meet needs, BOM alternate sources, expedite capability and push out acceptance.
Reps navigated institutional barriers and brought the right decision makers together: engineers, buyers, product managers and distributors – and in some cases, working successfully with distributors to procure high win percentage components for our OEM customers in advance of POs (typically standard product). How was this done? By leveraging our role as a trusted resource. It may sound corny, but that is ultimately the core value of the rep model – high customer knowledge and great relationships with customers and distributors. Relationships that at their best are professional friendships, nurtured from shared experiences and success. In 2021, our ability to function as a trusted resource to our customers is what demonstrated value to our principals more than anything else.
2021 was also an opportunity for reps to expand the role of inside sales. To help manage the unpredictable supply chain, many reps asked inside sales to interface more with principals, distributors and customers to immense success. As we saw our principals implement new CRM platforms at an unprecedented pace, inside sales integrated and adapted our internal processes to meet new requirements. With the exponential growth of incoming sales data, inside sales employed data mining techniques to identify leads. Armed with basic product knowledge from online training resources and study of customer applications, inside sales helped qualify leads and improve the quality of CRM updates. In 2021, reps benefitted from empowering, recognizing and rewarding our highly skilled inside salespeople.
Finally, a discussion of 2021 would not be complete without an acknowledgement of the psychological toll the pandemic and its economic impacts have had on all of us. For reps, it has been an opportunity to renew our commitment to the overall well-being of our employees. While we were able to address physical well-being with remote work, being remote deprives us of social connections and professional friendships that help manage stress and make work fun. To improve social connection and enhance emotional health, many reps have offered professional networks to our employees. Groups like local ERA Chapters, National ERA Committees, CPMR training classes, Women in Electronics and more all offer connections to outstanding peer networks. Also, the ERA virtual training offered during 2021 was embraced by both outside and inside sales as a welcome break from the day to day, and a reminder of the joy in learning and being a part of something larger than yourself. There is much more to learn on this topic in 2022 as we recalibrate our company cultures to protect our greatest asset – our people.
Sr. Vice President/Manufacturers
In the past year it seems to be increasingly difficult for me to put together a thought-provoking article that reflects what is not only happening in the electronics industry but how it affects manufacturers, reps and distributors. Especially when this never-ending COVID issue will not go away!
When my friend and colleague, Chuck Tanzola from The Fusion Sourcing Group, Inc. approached me with the idea to do an article together, I felt it would be a great way for us to show two sides of an issue from two different perspectives. But after some thought, it seems that the two sides may not be very far away from each other, at least from my perspective.
As Chuck has pointed out in his article on p. 19, contracts between manufacturers and their reps have always been a very interesting and sometimes painful process. On the manufacturers side, we have so many to answer to when it comes to the legal aspects of our responsibilities, so in the end we are expected to carry out this task to the best of our ability along with some legal advice. On the rep side, it is always important to show any manufacturer partner that they have what it takes to represent their products within the territory and to receive fair compensation for the service provided. In the end of any negotiation, it comes down to an agreement that is mutually respectful of a successful partnership.
Chuck has brought up three specific topics and, in each one, I can certainly understand his side of the story and the questions they invoke. They are valid topics and I do hope that most of my fellow manufacturers develop a communication strategy to avoid adding these to a contract agreement.
I agree that the contract should structure commission payments to provide ROI on all accounts. I do not agree with controlling cost because it does change the attitude of the rep and the activity level will change naturally when this is enforced.
My philosophy has always been when entering into an agreement to hire a rep firm for a certain territory, you need to find the most suitable group and team that will complement your direct sales team. Engage with them based on their ability to perform as the face of your company in their territory. Yes, it is always important that they understand the products you are providing and that you are somehow synergistic to other lines they already represent. This always provides a better opportunity to be at the right customer with the right group of products with the right solution for the customer, and help everyone to win the final design and production order.
Manufacturers should not try to manage the indirect salesforce the same way you manage your direct team. Your direct team needs to provide the necessary information and education to help the rep to learn about your company, its products, culture and philosophies. Then, leave it up to those who know the customers from a personal and professional aspect to manage each opportunity to provide success. Trust has been my recipe for success with our rep organization and is reflected in our contract.
I believe manufacturers need to focus primarily on the business aspects of the contract and how it can improve the company growth structure. They should not dictate or try to “micromanage” a rep firm that has already proven that they are qualified to sell their product line in the territory. If the rep has made it to the contract phase or already signed a contract, then they must have what it takes!
In my opinion, changing a contract once you already have committed to a long-term relationship with your rep partner is a recipe for failure. I certainly think as manufacturers we need to sometimes tweak a contract due to a sudden shift in the business climate. If business is good, don’t try to limit the rep – encourage them to do more. If business is slowing down or struggling, find out what are the causes and then see if there is a way to remedy the situation together. Accept that it may not be the rep at fault and losing a new design or a big piece of business should not be the only catalyst to make a change in a contract.
Let’s face the facts. Limiting compensation of reps never seems like a good idea for either side of the fence. In the end it does not provide the intended financial gain the manufacturer is looking to provide to their management team. On the other side, it changes the level of motivation of any rep salesperson who, in their mind, is doing the very best they can to provide the window to a customer that is important to the growth of any organization.
Any time a contract review is necessary between the two parties, communication is always the key to an ongoing successful long-term relationship between a manufacturer and all their reps. There should always be room for exceptions, negotiation and changes through discussion. This should be handled professionally and in the end be fair for both sides.
I strongly believe that what Chuck’s father taught him about putting yourself on the other side of any situation is the best way to truly understand how to handle an issue when reviewing or changing a contract. I hope our insights spotlight the discussions necessary between a manufacturer and their rep organization to allow for continued success as partners. Please feel free to provide your feedback to me directly at email@example.com on other best practices that help to implement a good and fair contract with your rep organization.
Ellen Coan, CPMR
CC Electro Sales
Sr. Vice President/Education
Budgets and forecasts start 2022 with a lot of ambiguity. Will there be a travel budget? Where can we put that money to grow our company efficiently? How do we forecast when we don’t know if we can ship product? We just keep adjusting our sails and keep our seatbelt fastened tight!
Continuous education is the key to all of the above. Attending the ERA National Conference and listening to presenters on many key topics, as well as talking to so many great entrepreneurs that your head is spinning with all your new knowledge. My favorite saying is about why we have one mouth but two ears. Yet, we need to use our knowledge to share this amazing industry with the next generation. Some companies have hired new talent and are learning from them as they simultaneously teach them what reps do (that may never be understood well – but let’s keep explaining!) The next generation can review POS data and make cold calls/emails and review the results toward design wins and practice their synergism. They can shadow seasoned salespeople and ask questions that shed a new light on best practices. They can work with the distributors to help solve issues and keep everyone informed of the latest territory news. They can review markets and target products to find the design cycle to fit the need, and beyond!
ERA assists with teaching a new generation, as it offers a White Pin Internship Scholarship to find and hire (intern to full-time is the goal) new talent and a Next Generation Special Interest Group (NGSIG) to help the newest members of our industry network and keep communication open to discuss relative topics. No matter where a rep firm is in their personnel search or training, ERA is here to help.
As we welcome 2022, keep your eyes wide open to all the possibilities. They grow exponentially with the power of knowledge. ERA is here to foster that growth in ways you have yet to imagine. See you soon!