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Exploring standards for manufacturer’s representation agencies

Friday, October 28, 2016 - 07:00
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What new standards might a manufacturer’s representative agency adopt to remain a viable resource in the auto care industry? As a former buyer and category manager who has been exposed to the wholesale and retail segments, no perfect formula comes to mind; but a string of observations deserve consideration for further discussion.

A customer-centric approach rather than a product-centric attitude is fundamental for generating superior business outcomes for the retailer and WD selling to the DIYer, commercial and jobber segments.

Why a product centric approach is wrong

Selling stuff, passing out pamphlets, negotiating price discounts and optimizing product coverage is not enough. Vendor websites and training clinics are common. Sophisticated customers may value these attributes as a commodity that can be easily replaced. Well intentioned sales reps look to their accounts as “partners,” but that strategy can also backfire. 

One morning, an account manager and her local rep pushed hard to add more SKUs to a hand cleaner assortment, promising healthier profit margins, and yet the competitors stocked the same thing. “What about meeting the needs of the walk-in customer and balancing it against those of the commercial repair shop who would be paying less on wholesale purchases?”   

The manufacturer’s rep replied that promoting the items all year round would cultivate brand loyalty. And that reducing the alternative brand presence would boost sales. My reaction to that specious presentation was to clarify the sales rep’s understanding of the difference between the divergent needs of these two customer segments.

Another time, a manufacturer’s rep dropped off a seasonal price sheet for winter chemicals in which discounted pricing for starting fluid was higher than its competitors. I showed him the other brand’s price advantage with a lower minimum purchase order requirement. To demonstrate my need for competitive pricing, I shared a unit sales forecast for the upcoming 14-week peak cycle. He replied that the vendor wouldn’t budge on their pricing.  

Whose interests are being served? I resented that this one way “partnership” revolved around the vendor’s quest to sell product. When trust between the buyer and the agency breaks down, communication and collaboration falls to the side. Internally, management pondered aloud whether rep agencies are honest brokers. Many times they discussed dropping one rep agency, pocket the commission difference and manage the product line themselves. But punishing a rep agency is a zero sum option when there are smarter, open-ended, long-term solutions.

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