The Value of
Using A Manufacturers Agent
from the MANA Research Bulletin
Section: E-a11
*Selling for others
is the business of a manufacturers' agents*
*They make their money by representing several manufacturers, on a commission
basis*
*They and their sales staff solicit orders for manufacturers in territories
upon which they have agreed*
Within that rather simplistic definition is the truth of the manufacturers'
agent - he or she is an
independent thinker and businessperson, dedicated to the free enterprise
system, motivated by profit, and imbued with initiative and confidence.
The most easily recognizable value of using the manufacturers' agency to
market products is the low cost of sales coverage it provides.
Since the manufacturers' agent is an independent businessperson
who derives income solely from commissions, he or she assumes the
risk for success or failure of his efforts -no sales, no income -
and he or she bears the expense of office operation, staff salaries,
and other sales expenses, making the manufacturers' sales cost per
product much lower than if a district office had been established.
The agency method of selling provides a sales cost that is directly
related to sales volume.
The agency's commission is usually a percentage of the product price, ranging
anywhere from five percent to 25 percent (sometimes higher depending on
the product and services provided). Studies show that the agency sales
staff can ring up twice as many sales as the company salesman for the same
time period.
There are several reasons for the manufacturers' agent's productivity.
They have more confidence in their ability to perform than the salaried
salesperson and that confidence is usually reflected in sales performance,
as well as knowledge of the territory.
The manufacturers' agent offers immediate geographical sales coverage for
a new product because he or she has already establishing customer contacts
through other lines. The manufacturers' agency is also a business that
can bring a new product to a distant territory, or to a territory so sparsely
populated with prospects that a district sales
office is not warranted. Since agents sell many different lines
in the same territory, they have already spent the time developing
the necessary reputation and acceptance to effect immediate sales
for a new client.
The manufacturers' agent contacts more people per call than the
company salesman. By representing multiple lines, they have more
products to sell, and therefore spend less time traveling between
accounts. By contacting many people with many products, agents can
quickly locate those in the territory who have requirements and the
authority to recommend and purchase. Since agents are close to the
market, they will have a far greater appreciation of the local product
needs than the manufacturer, and can provide constructive feedback
to modify product design, advertising, or promotion tailored to that
specific territory.
Using a manufacturers' agency also means immediate use of a highly
skilled technical staff. Many agents are graduate engineers who have
sought the challenge of selling without giving up their scientific
background.
The manufacturers' agent is valuable in intelligence gathering.
Since they are known and respected in the territory, and since they
know the territory and its needs, they also know the competition
and can usually obtain competitive product specifications and prices.
With their many customer contacts they have a distinct and valuable
vantage point which can aid the principal's product planning division
in appraising the ever-changing market.
Since manufacturers' agents are independent businesspeople they often have
their own direct mail program which can add much to the manufacturers'
local advertising program.
Manufacturers' agents work under the manufacturer's policy. That
means the agency will participate in trade shows, give frequent product
demonstrations at customer facilities or at locations convenient
to many customers; will keep you informed of activity in the territory
- and best of all, sell your product more efficiently than any company
salesman.
In summary, what is the value of using the manufacturers' agent? 1. High sales volume
2. Lower sales cost
3. Sales cost directly related to sales volume
4. Immediate local acceptance for your product
5. Immediate market penetration & resultant sales
6. Highly trained technical sales staff
7. Intelligence gathering / market research
8. Manufacturer policy represented in territory
9. Direct mail program
10. Efficient marketing
