Manufacturers reps are one of the most importantpieces to a showroom’s success.
When we started our business we were brand-new to this great industry. We quickly learned what a tremendous asset the reps — both factory direct and independent — could be to the success of our business. We worked as hard to cultivate relationships/partnerships with these nice folks as we did with our customers. Some of our best friends in the industry were/are manufacturers reps.
In the past month I’ve had three separate luncheons with good friends that operate their own rep agencies in Northern California. During each conversation the topic of how much change has taken place in the last two decades was discussed. It also prompted me to reach out to a few more good friends that own their own rep agencies. I gave each of them a short list of questions that would allow me to address the topic of the changing role of manufacturers reps.
Some of these people are 100% showroom-oriented and some sell to both the showroom side of the business and to distributors. Contributors include: Lee Davis (owner of San Jose, Calif.-based DSC Pacific); John Reilly (owner of Livermore, Calif.-based Zurier Co.); Mary Labowitz (owner of San Ramon, Calif.-based Premier Marketing); Dean Cummings (owner of Cordova, Calif.-based Repcor); and Jerry Williams (owner of Northern California-based WMS Decorative Resource).
What are the advantages of a factory-direct rep vs. an independent rep?
Lee Davis:An independent rep doesn’t get paid until something is sold. There are no factory salary, benefits, bonuses or expenses, thus the independent rep is much more cost-effective for the factory.
John Reilly: Because a factory rep is salaried and only representing one brand he/she can spend more time at each location training, supporting, setting up displays, etc. Also, they seem to have more leverage with the factory when it comes to getting the right support for sales programs, returns and solving problems/issues. Independent reps generally represent multiple brands and can introduce them to their showroom customers.
Mary Labowitz:Independent reps offer the most cost-effective, and if the rep is a good one, the most effective sales tool for any manufacturer. In the case of our agency, no factory could hire a staff of eight offering full-time inside customer service to answer phones, display installers and warranty parts stocked locally for the cost of our commission. Additionally, a rep agency with synergistic quality lines will have access to key decision-makers that a single factory rep will not. We simply offer a reliable source of several products with one point of contact.
Dean Cummings:Independent reps are more cost-effective for the factories because they represent a fixed cost of sales. In most cases there would be multiple bodies covering a given territory. The independent rep’s reputation is their most important asset. They provide a high trust factor for their customers (i.e. integrity, honesty, follow-up and service). Most work on a 30-day contract and can be fired with or without cause.
Jerry Williams:Factory reps focus on only one line and can focus on the customers that represent the best return for their effort. Independent reps represent a broader base because of the multiple lines they carry. The independent rep normally will have more relationships, which is an advantage when products change and/or expand. Independent reps also have a better pulse on the marketplace because their focus is multidimensional vs. the factory rep whose focus is one-dimensional.
What have been the biggest changes for a rep the last two decades?
LD:Technology and the cost of it! Another is manufacturers putting more responsibility of promotions, advertising and pull-through sales on the independent rep. It’s no longer one person working out of their car. We have to have larger staffs, larger offices and a warehouse. All of this equates to larger expenses.
JR:Two of the biggest changes have been big-box stores buying direct from the manufacturers and the addition of the Internet as another channel of product availability to the customer. In both cases the rep is competing with his own products in his own territory, which causes a loss of commissions. Another big change is the independent reps are expected to penetrate other levels of specifiers such as architects, engineers, builders, developers and designers. This has caused an increase in personnel and entertainment, which equates to more expenses.
ML:There has been a considerable amount of consolidation of manufacturers and wholesalers. (Hank note: I personally agree with that comment and see the big getting bigger and the small getting fewer.) Another change is manufacturers are expanding their product lines and trying to be more things to more people.(Hank note:When we started our showroom business in the early 1980s there were only four or five decorative faucet lines – today there are well over a hundred available.) In addition to this there has been a big increase in the number of showrooms – both distributor and independently owned. (Hank note: Once again, when we started our showroom we were the only one in Northern California – now there are several dozen.) A huge change has been the increase in supply sources for decorative products. Big boxes, the Internet, more showrooms and even retailers such as Restoration Hardware and Pirch now offer these products. I’m also finding today’s rep has to be more than just a salesperson. They must be a true business partner and consultant to their clients. This has made doing business a lot more complicated. In order to be successful, the independent rep needs to continually be more business savvy, diversify product lines and even expand territories.
DC:One of the biggest changes we’ve seen is the global consolidation of manufacturers and their distributor partners. A down side to this is it has removed a portion of “the personal relationship” side of the business. Good reps must control their own destinies by calling on all the decision-makers involved in making a sale. It’s not just the distributor any longer. We have to “sell” contractors, builders, developers, architects, engineers and designers. At Repcor this represents about 50% of our selling efforts. The old “coffee and donut” rep is a thing of the past. Another big change is technology. The Internet, emails, iPhones and tablets have made communication easier and quicker. (Hank note: Repcor historically was an independent agency calling primarily on wholesalers. With the expansion of lines being represented, they now have incorporated a “Luxury Group” of salespeople to specifically call on showrooms.)
JW:One of the biggest changes has been the addition of more players. There are a lot more manufacturers and showrooms selling decorative products. Plus, we’re seeing more and more private-label brands, which cut into the independent reps’ revenues and earnings. In my opinion, independent reps must work harder and smarter in order to remain profitable and successful. Also, more and more brands continue to be introduced into the marketplace. This makes it more difficult for everyone. There is only so much showroom space to show and sell all these products and there’s only a certain amount of market share available. The independent rep with a broader customer base can react quicker and better to changes than a factory rep that has a more limited market focus.
What do you believe will be the biggest changes in the roles of the rep in the next 5-10 years?
LD:Reps will be adding more value to what they do by being involved in areas of advertising, promotions, warehousing, accounting and collections.
JR:I believe there will be more distributor-owned showrooms. They see it has a high-margin opportunity and their manufacturer partners want it. Showrooms will grow in size. There will be a greater diversity of products being shown/sold offering more of a one-stop shopping opportunity to the consumers. (Hank note: Amen! I’ve been preaching this for years!)
Another change will be that distributors will expand their services to compete with big boxes and the internet. Manufacturers will be helping wholesalers and independents do a better job competing with the Internet. I also believe a majority of the marketing efforts will be directed to women. With more wholesalers getting into the showroom business it will make it more difficult for the independently owned showrooms to survive. Some will be acquired and some will simply go away.
ML:Reps will have to spend more time with the specifiers of products. Education of showroom sales consultants and specifiers will become more important than ever. Tablets will make libraries and three-ring binders obsolete. Everything will be online. Reps and manufacturers will need to adapt and change quicker than the showrooms. (Hank note: That’s a scary comment!) There will be even more consolidation at all levels. We will see bigger and better websites and social media will continue to grow as an important marketing tool.
DC:Consolidation will continue! (Hank note: All the reps interviewed agree on this point.) Smaller rep firms with two to five people will have a harder time surviving. The rep selling time will be spent 20% with wholesalers and showrooms and 80% with key “influencers.” A lot of specifying will be done before a wholesaler or showroom ever sees it.
JR:Independent reps will play a bigger role in the specification of multi-unit projects.
Time to exercise
Here’s an exercise we did at our business and I would encourage every showroom and rep firm to consider doing the same thing.
For showrooms:Develop an evaluation form similar to an employee performance evaluation form to rate each of the major reps calling on you. Be honest, open and fair. Rate the good, the not so good and everything between about that rep. Then sit with them and do a constructive, one-on-one session reviewing the evaluation. The goal is to help each other do a better job.
For reps:Develop an evaluation form to rate your showroom customers. Then sit with them and talk constructively about how you believe their showroom business can be improved. Yes, this is stepping outside the box of simply selling products, but it can be a very constructive and worthwhile exercise if it’s done correctly.
I hope we all can agree that reps are important to the success of every showroom business. I’m strongly encouraging you to work hard to develop strong relationships with these fine people. They can make the difference between being a winner or a loser.
This article was originally titled “Rep chatter” in the January 2016 print edition of Supply House Times.