Joe’s dirty dozen rules of how reps should view prospective Manufacturers to represent
We’ve all been there: You spend countless hours representing the “latest and greatest” new organization, only to discover it wasn’t so great after all, and the only thing that’s “the latest” is your mortgage payment, thanks to all the time you’ve spent trying to get your new protégé off Square One. Worse yet, you’ve probably wasted the time of customers and business partners you talked into assessing your new find with a sincere, “I’ll make it up to you.” (Believe me, you will!)
When it’s all over, and the rose you thought was blooming among the thorns withers in your hand, you’ll think about how much more you could have accomplished with the time, effort and money you just squandered.
Bottom line? Time is money, and the last thing you can afford to do is waste it by representing the wrong organizations. But how can you separate the wheat from the chaff? Here’s a short guide to help you decide whether an organization is worth your valuable (and I mean that literally) time. Hopefully, it will help you make the right decision BEFORE you commit yourself and your customers to a new manufacturer, while giving you some additional tools for strengthening this new relationship.
At the Beginning: The Rule of Twelve
While this may seem basic to most readers, ask yourself, “Is there a market need for this newcomer? How much of a need?” On a scale of one to ten, run, do not walk, from anything less than a seven. How do you determine the level of market demand? Ask the experts-your customers. And here’s a plus: If the opportunity goes south, you can remind them they were willing victims.
Assuming you’re dealing with a seven or higher, the next step is to ask: Who are the people behind the organization? The more information you have about the people at the switch, the better equipped you are to decide if you want to hitch your bottom line to their star. Here are some rules to help you make that assessment:
Joe’s Rules
- Determine if the organization is an established, functioning U.S. corporation. You may dismiss this as too basic. Don’t. It’s amazing how many organizations masquerade as viable corporations when they are anything but.
Once you’re sure you’re dealing with a viable corporation, ask for proof of all applicable regulatory approvals, product liability insurance etc. They won’t get past big national distributors without at least $3 million in liability coverage. Depending on the product they manufacture, that coverage requirement could be even higher. Vendor apps are now extensive…and with good reason. Working with an organization without the proper approvals and liability coverage puts you and your customers at serious risk. In the same vein, beware of partnerships; they all start off great and usually deteriorate with success. What will the impact on you be when their marriage is over?
And if the company claims to be to be a diverse organization (woman- or minority-owned), be sure it is certified as such. True diverse organizations often have access to government funding and a leg up for certain contracts.
- Be sure the company has a U.S. presence. Here are some clues: It will have a toll-free number, (not just someone’s cell number), a fax number; a respectable website; a professional, English-speaking customer service rep during normal business hours; the ability to ship and service product, send literature and in general, act, look and sound like an American corporation.
All too often, offshore companies think they can get by with strictly a virtual U.S. presence. In truth, they need to know the ropes in the U.S.; they need a solid U.S. presence, with real inventory and experience shipping product in and around the country. In fact, in the complex world of modern commerce, companies must have highly refined shipping skills in all their business locales. It’s not enough to blindly ship product from China and hope it makes it to its destination.
- Be sure they have the capacity you need. While the manufacturer may think the fact they can’t make product fast enough to fill market needs, is a good problem to have, there’s no faster way to lose the faith of distribution organizations.
- Ask yourself if the people running the company have a command of the English language. While this may seem far too basic, language issues are a big problem in today’s global economy. You can’t adequately represent someone if you have ANY communication issues. Trying to sort out this kind of relationship is the fastest route to brain pain.
- Ask yourself how convincing they are. Company leadership should be prepared to convince you, your distributor and reps and, ultimately the end user, that they represent a solid value proposition. If you find you are inclined to do this for them, that’s a pretty good sign they’re simply not ready for prime time.
Of course, you could choose to lend them your presentation methodology and expertise on a consulting basis. Remember that your presentation is your intellectual property. It has evolved over years and, because it works, has real monetary value. If they just need a little help to sharpen their presentation skills, direct them to the article in this newsletter entitled Presenting your Value Proposition to Distribution in a World Where No One Cares.
- Give them the IDN, GPO, IQ test. Our industry is now in the midst of a major transition, where some old ways of doing business no longer work. If the manufacturers intends to sell anything to U.S. hospitals, they have to come to terms with a couple of acronyms: ID N (Integrated Delivery Network) and GPO (Group Purchasing Organization). If their attitude is anything less than accepting of these new realities, they’ve failed an important test.
- Question their Distribution direction. Here’s my favorite catch 22: You won’t represent them unless they have several national distributor contracts in place and Distribution won’t give them an agreement until they have representation. But the truth is, if Distribution really believes in their product and knows they can sell it, they’ll take it on. So interest from Distribution is a pretty good predictor of success. That’s not to say you can’t have some influence on Distribution’s decisions. Take a look at Presenting Your Value Proposition in this edition to get an idea how.
- It’s all about attitude. If the owner has hired you because he thinks you’ll be cheaper than direct sales staff, rather than for all the good reasons to hire an independent, and sees you as anything less than a positive peer-to-peer business associate, RUN! (Here’s an article that discusses the benefits of hiring independent sales reps.
- Listen to your gut when it comes to assessing obstacles in the new organization. It’s almost inevitable that there will be people who will throw roadblocks in your way. If your gut tells you someone is intent on making your life difficult-you’re probably right. You may decide you can deal with the obstacles as long as you have the support of management, but be aware that your nemesis will continually try trip you up.
- Be open-minded about the company’s knowledge and capabilities. On those lucky occasions when a manufacturer has something to teach you, recognize this for the good sign it is. This means the people running the company have honed their skills and business savvy long before you walked into their facility. In that case, you can bring to bear your deep understanding of the channel, forging a winning partnership.
- Welcome them to your world. If a company is really good at what it does — whether that’s manufacturing, packaging or importing — it just needs your expertise about connecting to the channel. If this is a solid, well-run business, management will appreciate and value your expertise. This is the synergy you want.
- Help them look down the road. You have valuable insight gained through experience. Once you’ve decided this is a company to stay with, help them develop a roadmap for the future, based on outcomes and milestones. The more reliant on you they become, the more certain it is they’ll continue to take you along for the ride.