A car stuffed full of product samples, a yen for travel and an eagerness for customer face time: this rush to press the flesh and sell, sell, sell was once the mantra of the manufacturers’ representative.
But as other aspects of the automotive aftermarket have changed, so has life for the manufacturers’ rep. Now, these reps — an outsourcing sales and marketing solution for suppliers, who have a deep reach into distribution channels — are focusing on quality over quantity, yet their roles are no less important.
“Twenty years ago, we used to fill our trunks with catalogs and samples and hit the road; the point was to get in front of as many people as possible,” says Joel Rosenthal, vice president of Gantt-Thomas & Associates, Inc., a rep firm that covers territory in the Southeastern U.S. “Today, quality’s the goal. There are fewer customers.”
This image of a manufacturers’ rep as a traveling salesperson may still be prevalent in the minds of many in the industry, but the rep is much more than that. They’re considered the glue that holds a large part of the distribution chain together, involved in many different areas.
The representative acts as a liaison between supplier and distributor (or retailer) and, according to those we spoke with, the rep has a reach and influence that at times surpasses the manufacturer’s in-house salesperson.
And as the industry changes, the role of the rep must also adapt.
A less costly solution
Though the number of reps hasn’t necessarily increased, it’s surmised that the ratio of reps in the aftermarket compared to a manufacturer’s homegrown sales force is on the rise. (We say surmised because concrete numbers reflecting working reps are not available, due to the sovereign nature of this business and to the fact that some rep agencies cross over among different industries.)
The Automotive Aftermarket Industry Association (AAIA) notes there are about 240 members in its manufacturers’ rep segment.
Dr. Marilyn Friesen, executive vice president of the Manufacturers’ Representatives Educational Research Foundation (MRERF), places the number conservatively at about half a million across all industries. “For every one that you actually see, there may be 10 more in the woodwork.”
“In many cases today, we, as a manufacturers’ rep group, have more people in a given market than manufacturers themselves,” says Chick Capoli, president of Chick Capoli Sales Company, Inc. The New Jersey-based rep says some of the largest suppliers in the industry rely on manufacturers’ reps, one reason being the consolidation and cost-cutting measures employed by nearly all manufacturers in the aftermarket.
“The cost of a direct salesperson right now might be as much as 12 percent of sales,” whereas, a manufacturers’ rep might only command 4 to 5 percent of sales, says Capoli, who handles such vendors as Visteon, Remy International, Osram Sylvania and Ate Brake Systems.
An industry white paper places the cost of hiring and managing an in-house sales team at $160,000 per year per salesperson.
Remy International CEO Thomas Snyder reinforces the notion that his company’s mixture of in-house salespeople and reps comprises a successful relationship.
“We certainly use a mix, and we consider reps to be very valuable,” says Snyder.
However, other manufacturers, like Cardone, report an effective system using only in-house sales. The explanations are as varied as the available choices.
Federal Process Corporation is currently pleased with its lineup of reps and their ability to get the word out on their product line up, but that hasn’t always been the case.
“There’s nothing like a good rep, and nothing worse than a bad rep,” says Vice President Richard A. Schmidt.
Reps are unique in the fact that they work in so many different corners: from the retail store to the jobber and warehouse distributor, not to mention direct interaction with the manufacturers themselves.
They also often handle product training and marketing. “They’ve become the linchpin in many transactions and many relationships,” offers Friesen.
Rosenthal, of Gantt-Thomas & Associates, Inc., says his firm can move relationships forward “in a broad footprint of geography.”
For example, “where a manufacturer could put a salesperson in Kansas City, they wouldn’t be able to build a relationship in Iowa or Nebraska,” unlike Gantt-Thomas, which covers what it calls the “MINK” states (Missouri, Iowa, Nebraska and Kansas).
With more people in the field, rep agencies can follow up with customers a lot more frequently: some they visit weekly, others once a month.
For instance, Gantt-Thomas works closely with O’Reilly Auto Parts to attend every new store installation and process all warranties and returns in O’Reilly’s distribution centers on a monthly basis, according to the firm’s website.
“We really work hard to find ways to do more for customers,” says Denny Hershey, principal of Eastman Kosutic & Associates, a Cleveland, Ohio-based rep agency that covers Ohio, Michigan, Indiana and Kentucky, among other states. “Doing more for customers will really be what defines us in the future. We have to go beyond just selling to the buyer.”
This “above and beyond” the traveling salesperson approach also takes the form of extended training: Eastman Kosutic has a sister company that provides technical training for service customers, a sizable portion of a rep’s customer base. The agency represents such companies as SKF, Siemens, Meguiar’s and Henkel Loctite Corporation.
Loyalty is not singular
Of course, suppliers using independent reps face a downside as well: Reps are not beholden to one manufacturer, unlike in-house employees.
Some are not even beholden to the automotive industry, as many reps cover such diverse markets as convenience stores, food and drug, electronics and agricultural.
A manufacturer “controls the destiny of his own sales force and can encourage its staff to focus on one product line,” notes Capoli. He recommends that manufacturers’ reps remain focused and not represent too many suppliers at once, which will inevitably lead to a decline in quality of business.
“Some reps try to be all things to all people.” Those reps who try to service “50 to 75 masters,” he adds, give the segment a bad name.
“We represent 12 (suppliers), which is highly unusual and highly focused.”
An upside to this perceived lack of full loyalty to the supplier is the representative’s loyalty to his own profession. MRERF’s Friesen claims that the entrepreneurial nature of the rep provides a benefit to the manufacturer.
“They’ll step out and they’ll take a risk,” she says, citing the rep’s tendency to introduce “missionary lines,” or products with no existing identity or territory in a marketplace.
The fact that reps typically work only on commission also contributes to a solid work ethic, according to those we interviewed.
Friesen also says reps, being firmly rooted in their professions, “know their customers very well, they know their territory and they’re in it for the long haul. A direct salesperson in an organization (however) is often looking at moving to the next level.”
Moreover, reps are motivated to make their sales calls without administrative oversight, and this oversight is more work for a company with an in-house sales force.
Ready to move with the changes
Like the rest of the aftermarket, manufacturers’ reps cannot escape the lingering specter of globalization and what hand it may deal the distribution chain.
Reps also face competition from program buying groups, who can dictate competitive prices and place the reps at a competitive disadvantage.
Warehouse distributors, which were once among a regular list of customers, are most likely members of program groups nowadays, says Tom Powell, from Atlanta-based PSKB Inc.
“In some cases, the buying groups take the rep completely out of the equation.”
However unique they purport to be, rep firms have succumbed to consolidation, buyouts and mergers, just as other links in the distribution chain.
Rep firms report that, like the retailers, WDs and manufacturers, smaller agencies are also falling by the wayside.
This mirrors another problem that harkens back to the “quality over quantity” philosophy reps must now adhere to: there are simply fewer companies out there to buy products, so those existing accounts must be nurtured for all they’re worth.
Diminishing commissions also pose a problem.
“The commission rates have been on a downward trend,” says Powell. “The commission rates are going down and the expenses are going up: It’s not a hard one to figure out.”
But for now, reps will continue on the path laid forth by generations of salespeople before them. The future is merely an open road of opportunity.
