Overall, the sales rep/principal relationship is not working the way it used to. In fact, it is archaic to the point of being unworkable. Let’s look at this issue from both sides and examine why it just doesn’t work.
From the rep’s point of view, here are their challenges in 2021:
- Reps are wary of principals, especially in the PCB industry where they have been treated badly over the years.
- PCB shops tend to be unreliable. They don’t always make their deliveries on time and their quality can be sporadic.
- There is no respect for reps. If a rep scores a large account, often the shop owner will think he is making too much money and reduce his commission, or worse yet, terminate him.
- There used to be 1,500 shops; now there are about 200. As those 1,300 shops went out of business the reps did not get paid their due. In fact, even with healthy PCB shops, the rep is often the last to be paid.
- Speaking of getting paid, after a rep signs with a company, it can be the better part of a year before she even sees a penny. Think about that—90 days to get quotes, another 60 days to win some business; another 35 days for the boards to be delivered, and then 60-day terms before the principal gets paid (after which the reps get paid). Then, add 20 days from the time the principal receives the money and he sends out the rep’s payment. This equals a grand total of 265 days before a rep sees a red cent.
- Meanwhile the rep is out traveling, visiting and entertaining customers, etc., footing the bill on his own dime for almost nine months. In today’s vernacular, that sucks.
- Never mind the fact that often companies have no idea what business they are in, who their ideal customers are, or even what kind of business they want the rep to bring in. In the end, reps are just not treated right. They are not treated like true partners, which does not make for a good relationship.
- Oh, and by the way COVID-19 did not help the rep situation.
No wonder the common belief is that principals are unreliable, untrustworthy, and incredible; you can’t believe anything they say or promise.
Now from the principal’s point of view:
- Reps no longer like to prospect; they are all relationship managers, not hunters. Most customers already have people to take care of their customers, they don’t need the reps doing that. They need the reps out talking to new potential customers.
- Reps don’t even know what the company does well. They won’t take the time to learn what the company’s ideal customers are. All they do is call on their own customers, the ones they have had for 20 years and try to cram their business into their principals’ shops, regardless of what the principals’ sweet spots are.
- Reps want money up front. Every company has a horror story of paying a rep a retainer of $1,000 to $3,000 per month and getting nothing for their money.
- Reps will not be held accountable, will not write reports, won’t do forecasting or any amount of planning. That’s why they became reps, right? So, they would not have to answer to anyone.
- Reps complain about everything. All they do is complain about quality and delivery. Some owners have been known to say, “If we did everything perfectly, we would not need sales reps.”
- Reps will not prospect. They get lucky and bring in one or two big accounts and then just sit back and do nothing but collect their commissions checks. In some cases, they got the account years ago and do nothing to sustain that account’s business. No, it is all handled by the principals’ team.
- Reps are unreliable, untrustworthy, and incredible; you can’t believe anything they say or promise.
So here we have it, and it’s getting worse all the time. It’s becoming more and more apparent to me that the rep/principal partnership needs a serious paradigm shift. We must come up with new and innovative ways to make this relationship work.
I am not ready to throw in the towel. In fact, this little exercise was just a teaser, an evaluation to show you what challenges we face today when it comes to make the rep/principal partnership work.
There is a solution, and over the next few weeks, I’m going to make my case for it. When all is said and done, we will have presented an entirely new and innovative way to make this challenging partnership work, better than it ever has before.
Are you ready to take this journey with me? Are you ready to make a dent in the world of reps and principals and change it for the better and forever? Fasten your seatbelt; it’s going to be a heck of a ride.
It’s only common sense.
Dan Beaulieu is president of D.B. Management Group.