The Hidden Secret to Rep and Distributor Sales

I was speaking with a manufacturer who was contemplating converting his direct sales force to a rep network.

He was having difficulty replacing salespeople leaving his company either for retirement or other reasons (some of which were revealed in our research for GRN Coastal on Today’s Recruitment Market) and he was trying to justify to his superiors the “added cost.”  His inclination was to continue with directs as his company’s management offered that the cost of sale was lower utilizing the directs than paying commissions for existing sales.  The reason is that outside salespeople are a fixed cost … their salary plus their benefits.

One manager shared his logic in a specific territory. He could hire 3 outside salespeople for the cost of putting a rep on, in his territory.  Obviously, this was a “well-performing” territory and a relatively dense, and small, geography (try covering Texas, Florida, Pennsylvania or California with only three people!) I then asked him how many inside people he already had to satisfy that same territory and the supporting system. He had not considered distributor inside sales / customer support needs, and the number of people he would have to dedicate to this role, in his formula nor had his management team. Essentially, inside sales / customer service was a “hidden” cost.

The Power of Inside Sales

The role of the inside salesperson has certainly changed over the years.  When I first began in this industry, inside salespeople were expected to expedite, write up orders and give pricing.  Essentially “inside sales” was a euphemism for “customer service”.

Many of us still use the inside sales position as a stepping-stone to a possible outside sales position, which is generally more lucrative if that person shows enough aptitude and personality.  Perhaps the past few years of material shortages and constant pricing changes has brought us back, maybe  temporarily, to include that in the position, however, an inside sales role is different than a customer service role. Different skills, different personality, different set of expectations by management and of the person.

Years ago, I spoke to one of the more respected owners of a large independent distributor with many branches who has since sold his company.  He told me that his business plan focus was primarily on his distribution methods.  His first priority was warehousing, inventory and the ability to get product to his customer where needed and when needed.  Next in his plan was quality inside salespeople followed by good outside salespeople.  At the time it was not a standard practice, so I asked why.  He said his outside people were important as they were a reflection on his company, showed new products and methods and developed and maintained relationships.  However, his inside people were on the firing line.  They were the ones needing to satisfy the customer’s needs at the moment called.  They needed to be educated, caring and take action immediately.  He said they also were contacted often by customers and frequently spoke to at least twenty times the number of customers on a daily basis as his outside salespeople.

In my agency, our development of inside salespeople was critical to our growth and the quality manufacturers we were able to represent.  Each had previous experience either in distribution or manufacturing with some very specific capabilities including engineering. Each had been in a position where they were able to recognize the necessity of getting responses in a timely manner regardless of their backlog.

Our outside associates would take their inside partners with them to visit distributors, contractors, and engineers. They often participated in customer sales meetings and discussions that made their expertise easily identified.  The result was a relationship that enabled all to understand capabilities and knowing they were a “go-to” available for assistance.  Our inside people also made the same, or more, compensation, bonus and benefits as our outside salespeople.

Reps also have had the capability for maintaining their inside people in many cases longer than a manufacturer retains their direct salesforce, let alone inside people.  This enables inside people to consistently have relationships with customers that often carry the agency, and the manufacturer, through good and trying times.  They are expert in their territories not just on products, but on the relationships they have developed.

I was once asked to fire an inside salesperson who had worked in purchasing for a distributor by a regional manager who had heard it from an inside salesperson at the factory.  He and I got on the phone with the requesting person to find out the issue.  She said he was calling too often and not accepting answers that were unacceptable to the customer.  The issue was on deliveries where the factory was not providing shipping dates.  Our regional manager checked with her boss and found that the answers were on the system, but under a different screen and that she merely had not been looking in the correct place.  Reps had no access to the screen in question, and it was later decided to make that available to them.  Our associate knew the importance to our customers of getting the correct answer and was pushing the factory to get the customer an appropriate answer. Although he may have, at that time, been a little aggressive, he was doing his best.  The factory now considers that associate to be one of the best in the country at understanding their system and taking care of our customers.

Another example enabled us to write a $6 million order.  The end user came to us with a specific problem that was very unique for a large international company.  Our factory engineer said they could not build the product in the manner it was specified.  One of our inside associates, who had worked for a manufacturer previously producing the same products, called and then wrote back to the factory’s engineering and sales team explaining how he thought it might be accomplished in a similar manner to which they produced other products.  They met with the customer and made  the suggestion as he had indicated, and we were able to write the order with a supporting distributor.

In contacting over 40 contractors recently, a key lesson learned by me was their growing utilization of reps for information and direction.  Having a relationship with a rep’s inside person was at least as valuable as the relationship with an outside people because in this era of immediacy, they wanted to make a call and get everything they needed quickly. This is also the same feedback that we receive relating to distributors. The contractors are able to specifically identify inside people they depend upon.  Today’s representatives often have their inside people in the same training sessions as their outside salespeople, and often they become the “specialist” in the product line.

Frequently the only limitations to inside salespeople are the firewalls placed in systems as what occurred to us previously by a manufacturer.  We had a manufacturer that treated their reps as distributors because the IT people could not differentiate the two.  The situation came to a conclusion when the manufacturer was receiving so many calls that reps were unable to respond. It was either change the firewall or expand the phone system or hire more inside salespeople at the factory because the system could not handle the number of calls being received.

All of this came to my attention last week because Channel Marketing Group is working with a national sales trainer on Team Selling and other sales training skills. In preparation, the trainer asked me what our industry might need most to understand / an area that might be misunderstood. The importance of inside sales and this “team” selling I feel is critical to the success of every company. Inside and outside sales need to be in sync, whether they are distributors or manufacturer reps. And manufacturers need to view manufacturer inside sales as a valued extension of their organization

Channel Marketing Group will be hosting a free webinar on Team Selling for manufacturers, reps and distributors in October. The session will be conducted by Greg Nanigian from GNA Training on Wednesday, October 12^th at 11:30. You can reserve a spot by clicking on this link. Watch ElectricalTrends for more details (or email us to be put on the notification list.)

Key Questions & Opportunity

The question is, are you taking advantage of your hidden sales secret (asset?) Do you value them based upon their value to your organization?

And to manufacturers, do you feel you recognize the value of your reps’ inside sales staff? Need ideas on how you can recognize independent manufacturer rep inside sales personnel? Email me and we can schedule some time. After 40 years with an agency, and talking to many peers, I have some ideas.

Unlocking the power of inside sales, and for manufacturers, becoming inside sales’ emotional favorite, can be your secret weapon.