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It’s Only Common Sense: The Solution to the Rep-Principal Partnership

Atticus: “Do you know what a compromise is?”

Scout: “Bending the law?”

Atticus: “Uh no, it’s an agreement reached by mutual consent. Now here’s the way it works. You concede the necessity of going to school, and we’ll keep right on reading the same every night, just as we always have. Is that a bargain?”

I love that exchange between father and daughter in the great movie, “To Kill a Mockingbird.” Now, as far as sales reps and the principals, Atticus and Scout have it right: We need a compromise. It’s not bending the law, but rather finding common ground where both parties can live and thrive comfortably in a productive and satisfying relationship partnership.

Here is how we can make that happen:

1. Make sure both parties want the relationship. In recent years, I’m finding that principals are so anxious to sign reps that they will take anyone. Reps, on the other hand, are so reticent to take on new lines that they succumb to agreement only after a great deal of coercion by the principal. This is not how it should be. Both sides must be sure they really want to work together. This means meeting, making sure they have the right chemistry, and that, indeed, they have common goals. It is amazing how often this first step is omitted. Both reps and principals must be sure they are the right choice for each other, or the relationship is doomed from the get-go.
2. Create a pact of understanding. Both parties must clearly outline want they want from the partnership. The sales rep should understand that their customer base will fit the products, services, and attitude offered by the principal. At the same time, the principal must choose a rep who has the knowledge, experience, network, and right attitude to successfully sell their products and services. Then, they must sit down together and negotiate exactly what they want from the relationship.
3. Make a plan together. Both parties need to work together to lay out a common plan of action. They need to decide on the target market and the technology they will sell. How will they prospect, generate leads, target accounts, and win those accounts? Together they need to make a common forecast of how long it will take. In short, they need to set common goals along with milestone plans on who will do what, when, and how they can expect to see results.
4. Set up a meeting structure. Create a schedule for regular meetings, agendas for those meetings, and what they hope to accomplish during those meetings. This is critical. As part of this meeting schedule, they should include ride-alongs where the principal visits the rep’s territory and they meet with key accounts together. These meetings should be scheduled in advance so there is absolutely no excuse for missing them.
5. Rep’s compensation. Here is where we talk about compromise. Sorry, Mr. and Mrs. Principal, it is just plain taking too long for reps to see any dough. That is a fact and the entire crux of the problem with your relationship. It must be addressed. Here is what I recommend (with some strong advice from the relationship with my associate rep, expert Keith Robbins): Pay as you go. Pay for accomplishment. Here is the plan:
   1. Pay a small success fee ($100–$200) for the first quote from a new customer. Principals want new clients. Reps want new customers. So, reward them by paying them immediately.
   2. Pay a small success fee when that first order is booked. Once again, something like $250–$500 is appropriate. Pay immediately. The experts say that it costs a company an average of $5,000 to $10,000 to win a new customer so paying the rep a small success fee is a bargain.
   3. Create an incentive for special markets. For example, you get AS9100 or your 31032. Pay an incentive bonus for every customer the rep brings in from that particular market.

The important thing is that the rep gets paid along the way. Don’t make them wait so long to see some money. Best of all, you are paying for exactly what you want. If this works the way I say it will, you’ll be smiling when you write these checks.

Finally, principals, put your compromise cape on. Pay the reps when you ship the product. This alone will change the game enormously. Look, you will pay them sooner or later anyway, so pay them early and you reap the goodwill benefits.

Before you say it, I’ll say it for you: This will create more work for your accounting department, but the extra effort will be worth it in the end. I guarantee it.

It’s only common sense.

Bonus: To get my PPT plan on how to successfully partner with your reps, send me an email, danbbeaulieu@aol.com.

Dan Beaulieu is president of D.B. Management Group.