I was born into the world of industrial manufactures using independent agents and distributors, so the seemingly complex nature of the of this sales strategy never occurred to me because it was all I ever knew. It was May of 1974, and my first job was with Sterling Power Systems (now Sterling Electric) as the Chicago inside salesman. Sterling worked thru a national network of agents, who acted as their presence and manager of territories thru out the United States.
It wasn't until some years later, that my brother-in-law Bob entered the sales world as an independent sales agent himself, selling injection molding machines. His world as an agent was very simple, promotion and engineering support to the end user as direct sales (very much the European model for users and OEM's). He looked at me like I had rocks in my head and started peppering me with sincere questions.
"So, let me get this straight, Ron, you're telling me, an agent in your world can represent 4-10 manufactures?" Check! "And each of those manufactures can have 1-8 distributors in the same territory?" Check! "And each of those distributors can have 1-30 sales personnel in a territory?" Check! "And all of these distributors and their salespeople are calling on the same OEM's competing against each other?" Check! "And these distributors also represent a multiple offering of your agency's lines?" Check! " So can you find yourself in the same OEM account with the two different distributors?" Check! "And you're telling me that your small agency can manage efficiently that number of processes and be successful and profitable?" Check!
Bob paused to consider this and responded, " Your full of shit, there's no way!"
A lot of manufactures have struggled in the North American market selling to OEM's, Systems Integrators and End Users because they struggled to understand or even believe that this seemingly chaotic systems could work. But it does and very well, I might add. Companies like ABB (as Parametrics), Yaskawa, AcTech/Lenze, Hitachi, LS Electric (LG), SEW EuroDrive, Nord have all made their way in this market working with Manufacture's Representatives. But the success does not come without a learning curve and an open mind to learn new ways and a commitment to persistence. It's the mistakes that I made over the last 40 years' operating in this marketplace, and found ways to correct, that can add value to the right manufacture looking to either enter or grow in North America in a productive and cost-effective way.
The flow chart above will give you a visual idea of what choosing the independent agent/distributor route looks like. Major global powerhouses, like the companies listed above, prove that this sales strategy, if done correctly, can me enormously successful. In future blogs I will break this down to make it more understandable. I will discuss some of the concerns manufactures face in using independents, so stay tuned as we unravel the crazy marketplace together!
