House Accounts Bug Reps

September 16, 2008
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A manufacturers’ rep who’s been a friend for many years was chatting about how many reps he knows who had major customers suddenly turned into house accounts by principals. The roster was a long one. Independent reps think there’s a special place in hell for manufacturer sales executives who pull this stunt. The tales of woe all sound alike - a rep firm spends years working their tails off to pioneer a line in a territory, and just as they start tasting a big payoff, the front office skims the cream off the top.

Where the rubber really hits the road is when reps are called upon to continue providing technical and other customer services, usually for nominal pay, to house accounts that once were in their pockets. Imagine how galling it would be if a divorced person were compelled to do housework in a residence the court awarded to the former spouse.

There are two sides to every story, and I’ve spoken with enough manufacturers over the years to anticipate what most would say in response. Reps are always complaining about having business yanked from under them, but they never mention all the sales that come to them “over the transom” with little or no effort on their part simply due to territorial rights. Repeat business is easier to obtain than new accounts, and reps tend to spend most of the time hanging around with old buddies while neglecting the harder prospecting work. And besides, while reps think of themselves as the center of the universe, sales require teamwork. Some customers may primarily buy the rep, but others stay loyal because of pricing, trusted brands, vendor relationships and various other factors. Plus, buying groups have diminished the importance of reps with certain accounts.

It varies case by case as to which side’s perspective is more compelling. Surely there are reps who have been unfairly squeezed out, and just as surely there are some who have been surfing a wave of prosperity that was generated by others.

When do you think it’s justified to make a customer a house account? Let’s give the industry a sampling of opinions on this.

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