Is the traditional Rep Group model dead?
I’ll be the first to admit that my Rep Group experience is narrow as the American Rep Group model doesn’t really exist in the UK and Europe. I’ve only worked for one (i.e. Highlands) and my knowledge of other Rep Groups is only based on anecdotal feedback from manufacturers I’ve met along the way.
Some feedback is very good, others, well… very poor. For instance, I’ve heard on more than one occasion that the extent of their interaction with a Rep was: “The guy picked me up from the airport, drove me to the meeting and back to the airport. Didn’t say anything at the meeting and never followed up…”
It seems to me that the traditional model has been reactionary – only to respond to manufacturer requests. However, isn’t it more fun, and intellectually stimulating, if we can help solve problems and shape strategy rather than “just” being part of the execution phase?
Why has the traditional model worked in the US?
My theory is as follows:
- It’s a very big country so for a manufacturer to effectively cover the whole country can be very expensive.
- Buying talent with intimate knowledge of their local markets and / or merchant teams is highly attractive. As is the ongoing closeness and contact that can be achieved through being local.
- For merchants and buyers having a multiline Rep visiting them is time-efficient, especially when dealing with lines that were not “key.”
What has changed?
I believe there are two key influencing factors:
- Historically, Rep Groups have been paid on a commission-only basis which we know is unattractive to younger people entering the workforce. Therefore, many Rep Groups are experiencing difficulties in hiring younger staff and their workforce will eventually age-out.
- Consolidation at all levels has resulted in squeezed margins, putting pressure on commissions paid to Rep Groups. This then forces Rep Groups to take on more lines to maintain revenues.
Forrester published two excellent reports called Death of a (B2B) Salesman (these downloads are available to purchase from Forrester):
Essentially, they conclude that unless you’re adding value to the sales process, your job as a salesperson will be replaced by technology.
At Highlands, we believe for Rep Groups to survive they must learn how to stay relevant. Relevant to the manufacturers they work with and the account base they serve. But also, they need to provide the breadth and depth of services that can genuinely help manufacturers deliver incremental growth. Defining and delivering value-add is the key. It’s either that or die.