Gift Rep Sandy

Some of the areas for potential problems and issues needs to be addressed as they occur in your day to day experience as, often, there is not a way to deal with the ‘unusual’ in an agreement or contract.  Having worked with both non-contracted vendors and contracted vendors, I can tell you, potential problems come up with both scenarios.

Non-Contracted Agreements can work with larger companies that have a set policy established when working with sales reps.  Some of the larger companies I have represented told me they have worked with dozens of sales reps in various different parts of the country without an agreement (and don’t intend to start using them!).  Most of these companies know exactly what they will or will not be able to do and can explain that to you at the beginning.  If you prove your value to them early in your business relationship (by generating good sales and customers for them), they, often, honor you by protecting your territory and customers.  They will see you as an asset to their business and will work to maintain this asset.

On the other hand, new or smaller companies often need the framework of an agreement – especially if they have not worked with sales reps in the past.  Because new or smaller companies have little experience with reps, they may not understand the value of an agreement.  Too many times, they enjoy the sales you bring them, but view you as competition rather than a sales partner.  If a buyer frequently contacts the vendor direct when placing their orders rather than contact you, their sales reps, your vendor may assume that you are not servicing the account.  If vendors see this regularly, they may just fill the order without paying your commission.  When you address this issue in the signed sales agreement, you have some protection, but not always.  Vendors, like buyers, are busy people and often will fill phone orders and forget to give you credit for the sale.  If this issue comes up, you need to weigh the relationship with my vendor verses the one or two sales or small customers. Mostly I decided the relationship was more important.   But honestly, I was never sure if this philosophy was the best approach.  You may want to decide ahead of time how you plan to handle a situation should this happen.

The way you handle a difficult situation can smooth a potential problem between you and your vendor.  I work with producers where I have an arrangement for the vendor to take an opening order for a new customer, but they turn the account over to me for future servicing and re-orders.  No commission is due until I secure a re-order from this store.  Working with an arrangement such as this shows the vendor you are working your best to take care of their customers.  Other options are to ‘train’ your buyers to always contact you for orders.  If your name and contact information is on ALL literature or catalogs you leave with your buyers, they are more likely to contact you rather than calling the vendor.  If this issue is addressed in an Agreement, it helps to clear up misunderstandings before they happen.

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Terms of sales are as different as there are companies to represent!  Because each company uses specific but different terms, I found it helpful to devote an entire sheet to the various terms a vendor will extend to new and repeat customers.

Standard terms for the gift industry are Net 30 days – where the products are shipped with invoices due in 30 days.  Most companies require some additional information or requirements for first time orders to a store.  These many include some of the following:

• Prepayment on first order only
• Credit card required for first orders
• Trade Credit Application on file before extending terms
• COD required until credit is established
• Minimum order amount (dollar amounts or quantity amounts)

Within those categories, a vendor may have other requirements or terms, such as:

• Free shipping on orders over $XX
• Free shipping on prepaid orders
• Free display for orders over $XX
• XX% discount for orders over $XX
• 2%, Net XX days, or a XX% if you pay early
• Prepayment required for order over $XX
• Prepayment required for order under $XX
• $XX handling charge for orders under $XX

As you can see, the possibilities are endless.  If you use a detailed questionnaire with your sales agreement, most of these terms can be addressed and listed for future reference.

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House accounts are store buyers the vendor has been working with directly within the territory you are servicing.  How you can deal with a producers’ house accounts depends on what your vendor and you decided together is in the best interest of your mutual customers.  Here are some of the options to consider:

• Servicing all of the vendor’s house accounts.  Should you and your vendor decide to use this approach, it is very helpful for the vendor to send a letter of announcement to their customers.
• Servicing only certain specified vendor’s customers.  A list of these customer should be provided by the vendor.
• Servicing none of the vendor’s house accounts.  In this scenario, having a list of these accounts listed in the agreement lets you know which stores these include.
• Servicing the house accounts at a reduced commission level.  This arrangement works as a compromise to the either/or options listed above.

I have worked with vendors using all four of the options listed.  Having a detailed list of which accounts are house accounts and how they need to be handled is essential to the agreement as it will provide the information you need when approaching your potential buyers.

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The first system to implement in your new business is a standardized or template sales agreement form.  Here are some of the points you need to cover in your template form:

1.  Territory. List the cities, states or regions where you plan to sell.

2.  Type (s) of accounts you intend to service.

3.  Exclusive representation. List clearly if you request an exclusive agreement in your designated territory.  Exclusive representation bare any other sales rep hired by this vendor to sell in your territory.

4.  Commission amount and payments. Agreed upon commission percentages are listed as another line item with instructions as to when and how they are to be paid.  Also, you, as a sales rep, need to keep track of all your commissions due from each company your represent.  You would be surprised how many commissions and payments come up “missing” and reappear after you inquire!

5.  Terms of sale. You need a section clearly stating the terms that you sell to the buyer.  Leaving this part of the agreement as an open form is helpful as every vendor has different terms of sale.

6.  Samples. Most vendors supply sample to you at no charge, but this item needs to be addressed in the agreement.

7.  Product literature. You need to be informed if the vendor has catalogs or product literature you can leave with potential buyers.  These, too, should be supplied at no charge to you and your buyers, but it is good to address this in the agreement.

8.  Incurred expenses. Independent sales reps usually pay their own expenses for gas, lodging, meals, etc.  But other expenses may be shared or paid by the vendor such as trade show expenses or special advertising, etc.

9.  Default or dissolution. Be sure to include a section listing what happens when you no longer rep for a vendor.

10.  Changes to the agreement. Make sure to note that the agreement may be altered ONLY by written notification by either party.  This stipulation will avoid any confusion over verbal comments or agreements.

11.  Signatures and date. Designate a spot at the bottom of the agreement for both you and your vendor to sign and date the agreement

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Many sales reps take on any line they can find (something I did, when I first started, since I didn’t know any better).

A better choice is to stay focused somewhere near your product specialization, niche market, and what your geographic territory resonates with. Some lines just won’t sell in certain regions or to certain retail categories. If you are selling mostly cowboy jewelry and souvenirs, you will typically have a difficult time selling children’s personal care products to the same buyers.  Lots of lines will not fit in with your areas of concentration. If you decide to sell them anyway, you may appear more like a flea market, and gift buyers will wonder just what do you sell! You will lack what is called “top of the mind” awareness, when people are looking for products in your area of strength (IF you have one… make sure you do)!

A good mix of 15-20 lines, depending on the size of each line, is probably a good place to start.  Too many lines (e.g. 40 or 50) will be difficult to manage, and hard for you to do a good job with in the beginning. On the other side of the coin, too few lines (under 10) may be a discouragement to buyers who is looking for the value in time spent with you. When I got started, and proudly went through my handful of lines, the first question nearly every retailer asked was, “Is that all you have?”

Since buyers are such busy people, they like to work with sales rep having a good mix of products they can choose from.  I only represented six lines when I started. And yes, buyers often did not take me completely seriously with such a small offering. But we all start somewhere! And when I kept coming back with more lines, I was IN!  So start slowly, focus on quality lines, and defer the skepticism… you will get some at first. Just tell the truth.

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Last post we talked about places and ways to find product lines.  We continue the discussion ….

Internet searches are a very effective way to find specific type of products you would like to represent.  Start your search by entering a keyword to describe the product you are looking for.  For example, “soy candles” or “soy candle manufacturer”. If you are looking for regional products, you might also add the name of your state to the search string, e.g. “soy candle manufacturer Idaho”, in my case.

Once you locate the website, you see the products the company offers and if you are still interested, contact information for the business owner.  A simple call or email to the sales manager or owner usually is all it takes to see if they are interested in sales representation in your defined sales territory.

Trade magazines such as Country Business often feature multiple gift companies, some with hundreds of different products for you to consider.  In the back of these magazines, you can find a list of the different advertisers and with their contact information.  Also, many trade magazines have a ‘Classified Ads’ section where companies often advertise for reps.  These ads are normally very specific about what they are looking for and what territory is available.

Other sales rep companies are often looking for sub-reps or co-reps to service their clients in other areas or states where they do not operate.

If you are a sub-rep, you are a subcontractor of another sales rep, under contract to sell that rep’s customer lines in your territory, because THEY own the exclusive rights in your region. For some reps, this is the easiest and fastest way to get into the rep business, as all the framework of your business has already been set up for you.  You will get a smaller commission (typically about 70% of the full commission, or around 10% of the wholesale price). And you typically submit orders through the home office of the rep “group”. However, you get product catalogs, order forms, policies and procedures, and commission rates, typically in one nice, neat little package. Your time is spent on developing your territory and expanding the customer base for the new clients, instead of recruiting.  Although this option does not give you as much freedom as independent repping, you benefit from a big wad of proven lines to sell, and a network, via the “mother” rep group company, to assist you in getting started.

Networking with other reps can also get you lines on a “no strings attached” informal or traditional referral basis. Rep companies often experience “full” periods in terms of the number or nature of lines they represent. If you are a good girl or boy, and develop a trust-based relationship with those other reps, they may send you leads for companies that approach them, but are not suitable for them to take on, for whatever reason.

Wholesale hub “matchmakers” and associations are available online, to help put reps and manufacturers together.  These organizations typically list a database of companies looking for representation (along with reps looking for lines, which you may view for a small monthly cost or annual membership fee.

The United Association of Manufacturers’ Representatives, or UAMR, is probably the largest member organization for reps to the gift industry. Fees for sales rep memberships are minimal, but the benefits are quite impressive.  The short time I was a member, I actually received more referrals than I could handle, giving me the opportunity to pick and choose which ones to pursue. And over the years, I repped for several companies I found through the UAMR. I finally let my membership go, BECAUSE I WAS GETTING WAY TOO MANY REFERRALS!

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When you are a newbie looking for lines (something you will not need to do very often, once you are established with a good reputation, since vendors will then start seeking YOU out!), some good places to start are listed below. Increasingly, the internet is the place to go, but there are several other tried and true possibilities:

Region gift trade shows are specifically organized as marketplaces where retailers (buyers) can find new lines to inventory from exhibiting producers, importers, reps, wholesalers, and distributors. If you can get in, these are also one of the best places to solicit manufacturers and let them know you are available to rep their line.

Now, I mentioned “if you can get in” to the shows… gift trade shows are not open to the general public. And to gain access, you must either be an exhibitor (and shell out the big bucks for a booth) or a buyer — and are able show some proof of your status as a buyer of wholesale gift industry products.

As a rep, you are not a “buyer”, so due to potential competitive espionage issues (stealing lines, for example) sales reps often are not allowed access into these shows. So while your intentions are pure, you may need to be a little sneaky to get into a particular show. Once you get into one show, it’s easier to qualify for attendance at other shows, if you follow the rules, which may be different for each show.

Gift marts or showrooms are large, multi-story buildings in major urban areas of the United States, housing hundreds of “showrooms” featuring gift lines. Giftwares are showcased at these marts year-round, although the doors are often open on an odd schedule (for example, on Monday, Tuesday and Wednesday of each week).  Most rooms are run by larger sales rep companies that cover several states. However, some sole proprietor reps – as well as distributors, importers, cooperatives, and others – often pay for annual or monthly exhibit space too.

Unless you are looking for work as a local “sub-rep” with one of the rep organizations showcasing in the mart, this is not necessarily a great place to find clients directly. A perfectly ethical way (although the showroom management may not agree) to take advantage of this method of client recruitment, is to visit showrooms well outside your target geographic area, and find lines you resonate with. Take brochures for the lines you are interested in repping.  You can then contact the prospective client companies later, to see if they are represented in your area.

Once again, gift marts are not open to the public.  Check which days the rooms are open, and make arrangements for passage into these marts ahead of time, before traveling there and finding you cannot get in. Generally, marts require the same type of proof as gift trade shows, to verify your status as a buyer. Often, if you are authorized to attend a gift trade show in the same town or region, you get automatic entry into the local gift mart by flashing your trade show badge.

Local gift manufacturers (including your existing clients) are often a great source for leads on sales representation. Besides your client list, check out the yellow pages, local chambers of commerce, and economic development organizations for companies in the gift categories you are seeking. Once you find one producer, often they will know lots of others, and often will refer you, even if they are not interested in your services – or even if they are! Regardless, talk with them about sales representation.  Chances are many of them never thought about having an outside sales rep, and may entertain the possibility once you contact them.

Retailers are an excellent source of information regarding manufacturers who may be seeking good reps.  Go to gift stores or souvenir shops that are typical of the type of store you wish to call on, and ask to talk to the owner and/or manager. Tell them you are looking for information and help, and are not there to sell something. They will know which gift companies are selling direct to the store, and once you break the ice, may suggest lines without representation that might benefit from a sales rep.

Gift store inventory! Products lining gift store shelves almost always include contain contact information on the labeling or packaging.  Every time you visit a gift store, regardless of where, check out the products they carry.  If you find a product you would like to represent, often a quick call will put you in touch with the owner or sales manager of the company.

Craft shows often attract producers ready to take their production to the next level, perhaps offering a pricing schedule that works. For some of these shows the exhibitors are more geared to manufacturing than handicrafting to start with, which is what you want.  When attending craft shows, look for lines that are unique in design, in a major sales category, where the owner is someone you feel you can work with, and who is professional with their business presentation.

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Here are some traits you need to consider when approaching a company to sell their products:

• Product compatibility: Does the line fit well with your product area specialty, niche markets, and/or geographic emphasis?
• Personality compatibility: Regardless of the quality or suitability of the line, how well you like and communicate with your key contact(s) at the client company, will make or break a relationship — no matter how well their products might otherwise sell.  And if you don’t like the person(s) you are going to work with, probably the relationship will affect your attitude and sales volume. You do neither yourself nor the client company a favor, to take on a line when early contacts or feelings about the client company are substantially negative.
• Professionalism and reliability: How your vendor treats you and your retailer customers will impact EVERY area of your relationship with them. Disastrous situations can arise if you take orders for a new vendor – only to find out they cannot deliver the products, or that they pay you in a haphazard manner.
• Good recordkeeping: Find out what kind of bookkeeping system they have in place, and whether they admit to experiencing problems managing collections or paying reps on time – if they will share this information. And of course, how they keep track of which sales belong to you (and/or other reps) is important to know!
• Honest and supportive approach: You want honest clients, who will tell you the truth and work toward solutions when problems arise, rather than manipulating you by providing information to pacify you. Sometimes you just don’t know until you are further into the relationship, but watch for the signs.
• Appreciate the need for an exclusive territory: If a producer hems and haws about giving you an exclusive territory, they are more likely to become a problem client. Often they will try and compete with you, to try and screw you out of your commissions after you establish an account. Sometimes, a newbie client will just not understand that overlapping sales efforts are counterproductive. But if your explanations do not suffice, MOVE ON, no matter how much you otherwise enjoy the line.
• Experience working with reps: If a producer currently uses reps in other geographic regions, try to get permission to talk to them and get feedback on their track record with other reps. If the client is new to using reps – a common situation – you are involved in an education process, whether you like it or not. Such a situation is not all bad, since you will not need to break bad habits. BUT newbies often come with unreasonable expectations and fuzzy ideas of how to work with a rep, which are sometimes hard to change, and can cost you money and time.

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Developing a client relationship as an independent, “manufacturers’” sales representative, is a business partnership, although somewhat informal compared to many legal relationships. You are a contracted, commission-only, sales force to your vendors. And they are a supplier of salable products for you to sell on commission. They collect the money, and pay you your well-earned commissions at least monthly – IF they are honest and value your contribution to their success.

With that in mind, you need to analyze not just their product line, but also their company as a whole, including key personnel, before you make a final decision to rep their products.

Consider vendors relationships as carefully as you would choose ANY type of business partner.  You will work closely with the owners, managers, and/or employees in each of the companies you represent.  Take a little time to learn about the company, and the history, and develop some level of rapport with the owners (and/or employees) within these enterprises.  Information you glean early on is a great help in deciding whether to take on a line. And also sets the stage for quality of the communications over the course of the business relationship, during your coming years of service.

Be aware also, that often the “smoothest” and warmest potential vendors are just out to scam you, or use you to their advantage, never intending to live up to their end of the bargain. Many producers see independent sales reps as someone to help market their products, and gain more customers (which is true), but without paying you your due. This will be more common that outright scam artists that never intend to pay you a single commission.

I don’t want to give you a bad attitude going in, but this IS a professional relationship, and you are better off in the long run requiring professionalism from your partners in this business. If a vendor has trouble giving you an exclusive territory, or paying you a full 15% or more, or  paying commissions on clients you bring to them even when they order direct, you are selling yourself short, and allowing them to make money on your elbow grease.

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One of the first questions a potential vendor will ask you when I are opening discussions on sales repping is “what territory do you cover?”   Just like choosing a category, you will need to look at what territorial region you would like to cover. Obviously, the first choice of territory would include the state and region where you live.  (And if you want to move, this is a good business to start, when you arrive at your new location!)

Selling to stores in your hometown, is a two-edged sword, especially in the beginning.  Because buyers often will already know you, the need for introductions etc. is unnecessary.  A familiar face can go a long way in helping to “break the ice” in recruiting a new customers.  HOWEVER, because they may already know you as THEIR customer, or a member of their church, or parent of one of their children’s friends, you may need time and hard work to portray yourself as their sales rep!  Which is another reason to move if you plan to start this type of business. (I’m kidding!)

As you widen your territory, servicing all the customers in your state or at least your part of the state is a good option.  Travel time, which cuts into sales time, along with the cost of fuel, vehicle wear and tear, and meals, means you should put plenty of thought into territory.  If you chose a territory that is too large, you may spend more time traveling to and from the sales region then you may actually spend on selling. (Actually, some of my routes, including profitable routes, are like this.)

Ideally, the best territory to service is less than a half day’s travel time, with some sales stops. That way, you can commute from home, and avoid the cost of overnight travel. Next best, is a territory within one full day’s travel time by car or van. So you might consider 300 miles as the maximum distance from home, if you sell in a rural area, and substantially less distance in urban areas.

Your travel model will often be a circuitous route, selling along one route to a town of some size. Stay overnight, sell around the more urban area the next day. Stay overnight. Then you can sell another day or two where you are at, but by the last day of the week, you will probably sell along a different highway route, back to home. Sometimes, you might stay in different towns every night during a week, but that is something to avoid if possible, unless the route is so lucrative, the logistics and expense are worth the effort. (And one of my routes is like that!)

Whether you are selling close by and returning home each night, or with overnight trips, you will typically need to plan routes that travel different highways to and from, whenever possible, to provide optimal coverage of your area.

Some reps specialize in a limited number of fairly exclusive lines, and sell to larger accounts, so will travel a lot further, even 1000 miles or more, making fewer stops, with longer presentation time at each stop. Each business model offers benefits and challenges, of course.

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