The Brave New World of Heavy-Duty Reps

Distributors Can Learn Much as Roles Evolve

Independent heavy-duty manufacturers’ representative agencies are reinventing themselves with a focus on market data and performance metrics. This change has been simply a matter of survival.

The key issue: How to change roles and provide new services, increase professionalism and find new ways to leverage strengths such as local market knowledge.

The distribution landscape has changed dramatically throughout the heavy-duty parts and service market. With distributors consolidating into larger organizations and using communications technologies to extend their reach, a locally-owned distributor may no longer be a particular fleet customer’s only preferred source of supply.

The related spread of national accounts and other sole-source contracts have made it harder for manufacturers to sustain market penetration simply by old fashioned selling to local distributors.

The rise in global competition has kept selling prices relatively flat, while the cost of doing business has continued to rise. In response, manufacturers have adopted a lean mentality in every cost center, including the care and feeding of a nationwide factory sales force.

Distributors looking for ideas to help solidify their role in the channel could learn by looking immediately upstream in their own markets. If, when looking at the reps in your market, you don’t see a new fire, and a new professionalism, then your area is the exception rather than the rule.

Many of these players have reinvented their businesses in recent years, to the benefit of everyone in the channel. They’ve taken on new roles, providing a host of new services from marketing to order entry, and their approach to selling and working with distributors has shifted.

Years ago, reps were stereotyped as the glad-handing salesmen who would take on any line available and court local distributors for stock orders over lunch, or a round of golf, or a round of martinis.

Survival became a question not only of image but of value.

To counter lingering concerns about ethics, the reps that saw the writing on the wall recommitted themselves to business practices that would keep them above reproach. To counter other concerns about serving too many masters, they began to rethink the lines they represent and to craft a product package.

This package contains more value, a combination of technical knowledge with product solutions specific to customers’ needs. They began their own round of consolidation, building larger agencies with the resources and market presence to provide new services to their principals.

In the days of golf and martinis, the rep’s role was all about personal relationships built over years with local distributors. They were primarily the manufacturer’s ambassador to local distribution.

Those relationships are still fundamental to the rep’s value, but they are no longer enough.

The currents of change in the heavy-duty market have pushed a growing number of manufacturers to consider reps, based on the rep’s traditional advantages. For one thing, the rep’s compensation is tied directly to sales, so in a fluctuating economy, the manufacturers’ sales costs rise or fall naturally with changes in demand.

Spreading sales and support functions across several manufacturers makes it possible for reps to sell at a lower overall cost. Representing multiple lines also gives the rep a reason to be in every single factory in his territory, bringing opportunities to see and capture business that might otherwise be overlooked by a single-line sales force—especially sales to smaller customers, where margins are often higher.

And the length of time a rep spends developing his territory gives him the advantage of years, even decades, of knowledge about the customers in the area—the sort of knowledge it would take a new factory salesperson many years to match.

Just as market forces began to favor them, reps who embraced a more professional attitude found themselves in a position to provide more value, and to take on more of the functions that were previously handled by the factory.

Perhaps the biggest change is the rep’s involvement in marketing. Many reps have taken on a huge role in the regional marketing of their principals’ products.

Fleet and end-user calls have become a much larger part of their sales approach than ever before. Most of their sales calls today find them in the offices of the distributor’s customers—providing technical support for maintenance and new equipment specs to purchasing influences.

The modern rep’s involvement with distributors has more to do with training and technical support than load the distributor’s shelves. They concentrate on offering solutions and generating demand to pull product through the distributor’s operations or through any channel that will serve the customer best.

In their push to become more professional, many reps have embraced information technologies, to the point that they often are ahead of the factories in their use of the latest tools.

Laptop computers and BlackBerrys are commonplace in the rep’s world now, as are other sales-force automation tools such as internal sales-reporting and customer relationship management (CRM) software. Whether it’s entering orders directly into a manufacturer’s information system or using databases to focus their marketing efforts…data has become the rep’s most important tool.

All of these changes have reestablished heavy-duty rep agencies—or professional field sales companies, the new label many of them prefer—as one of the most effective and efficient ways a manufacturer can get his products into the truck market.

It’s been persuasive enough that a growing number of heavy-duty parts manufacturers now either use independent reps exclusively, or use a "blended" approach combining factory reps in some markets with independents in others.

Where reps once were most valuable to small and mid-sized manufacturers—primarily those with sales of less than $50 million per year—there’s been a recent trend toward use of reps even among larger manufacturers.

A joint call helping a customer solve a problem will also be valuable hands-on training for distributor salespeople, who always face the struggle of staying on top of the dizzying mix of products a typical customer may need. Here are some ideas on how to use the “rep resource” more efficiently:

• Tap your reps for technical training sessions at your facilities. Lunch-and-learn sessions should displace three-martini lunches as the primary reason you’ll find a rep lurking about your premises.
• Build a solid relationship with the professional rep firms in your market; it can pay for itself. Reps today are doing a lot of market research and reconnaissance for their principals and may be glad to share emerging market opportunities with you.
• Reps can help you stay more wired-in to your market. The reps go everywhere, see everything, and experience has shown they have a more independent vantage point with regard to who’s doing what, with whom, in their markets and in their industries overall.

Even as changes sweep through the heavy-duty markets and reps take on more roles in the supply chain, their primary value is the personal relationships they build. By getting over any lingering feelings of mistrust, distributors can make those relationships work for them and reps and distributors together can help each other be more successful.

Special thanks to our friends at Modern Distribution Management for help with this article.