- December 13, 2017
- Posted by: David Marshall
- Category: Business
When you’re a manufacturer with a national reach, you’ll often work with manufacturers reps as well as your own sales force. In fact, your sales force will often call on the manufacturers reps as part of their territory.
Manufacturers reps often have access to projects and clients that you might not otherwise get because they have good relationships with your potential customers, and can build turnkey projects with their own project lines.
Manufacturers reps are, in fact, independent businessmen and businesswomen in their own right. They can even be bigger than you, the manufacturer, in terms of revenue and reach. So your fight is for mindshare of the representative because you want them pushing their people to push your product over all the others.
That was always my focus at Robroy: to create an environment with my rep force in which I would have a legal-but-unfair advantage of their mindshare. I also wanted them to share market intelligence and business advice with me, which gave me the opportunity to be very nimble.
To that end, we actually acquired two competitors of ours, which gave us three brands of the same product for the industry. The idea was there would be three premium brands available to customers, better than any competing product on the market. There would be three different sales forces that would go out and market their products and get them specified in different projects.
That’s because in many large projects, most people want to see at least three names on the bid. Three separate companies all carrying their own product line. This is sometimes known as the Power Of Three.
Our goal was to ensure that the brands we owned were on the specifications required, and not our competitors. Thus, it would satisfy the Power of Three requirement, and therefore the competitive requirement on those bids.
Sometimes this would happen through our sales force, sometimes it would happen through our manufacturers rep. But in all cases, our company got the ultimate sale because we had the three leading brands in the industry.
Now, one particular manufacturers rep of ours in Houston didn’t really buy into this philosophy. And it took me — he admits this — seven years to convince him that this plan would work. But once he was convinced, he took off like a rocket. I acquired his business with one of the competitors we acquired, but he didn’t think having three brands in the same market owned by the same company could work.
What eventually changed his mind was that he began to find himself in positions where his distribution was in the best position to close the business because our three brands — and therefore his three brands — were the ones that were required in the project specs.
Technologically, the three products were all clearly superior, so we weren’t playing a shell game. And he was only repping his one brand because I would not give him any of the other brands until he had committed to my philosophy. But he became a true evangelist and his sales and his commissions went way up, by at least 500 – 600 percent.
This was an uncommon strategy in the electrical industry, but not in the world of business. For example, General Motors has so many brands — Buick, Cadillac, Chevrolet, GMC — and no one thinks anything of it. But in the electrical industry, this was uncommon for the times.
There were no worries about monopolies or anti-competition because each brand had its own sales force and its own distribution, so the competitiveness was in the market, not at the manufacturing level. In other words, no distributor had more than one brand, but we did have the captive manufacturers reps working for us as well.
In the end, this made all of our brands and our manufacturers reps more powerful, because they were able to draw from the three top products for their particular territory and any of the projects within it. And it made everyone a lot of money as a result.
I’ve been a manufacturing executive, as well as a sales and marketing professional, for a few decades. Now I help companies turn around their own business. If you would like more information, please visit my website and connect with me on Twitter or LinkedIn.
Photo credit: Andy Maguire (Flickr, Creative Commons 2.0)