Randy Hirotsu, vice president of purchasing, Rosendin Electric, San Jose, Calif., one of the largest electrical contractors in the United States, said reps should focus on bringing his employees product solutions that could make them more productive out in the field. He gave the example of a cable tray manufacturer that offered products with the lugs already welded on the tray, which saves electricians a ton of time. “I need manufacturers’ reps to bring me solutions. Electrical distributors are not good at that,” he said.Most manufacturers believe reps need to have a standardized CRM software tool to manage their sales activities and improve their sales force productivity. Said one manufacturer, “If a rep is not on their own CRM system driving their own sales model, I am not sure how they can be successful.”
Several smaller manufacturers that we surveyed do not embrace CRM tools. “I think there must be many manufacturers who either don’t believe their reps’ sales forces are doing the job, or they have a desire to download the contact strength of the independent sales rep for their own purposes later on,” one manufacturer said. “We may be an outlier here, but we regard CRM tools as clutter to strong sales results. We just don’t believe a mechanized sales process is the key to success in the electrical market. Relationships are.”
That respondent also said face-to-face selling and a focus on old-fashioned “features, functions, benefits” selling and selling with samples spell success. “Excessive reporting and downloading the reps knowledge base is counter-productive toward that end,” that manufacturer said.
A key challenge related to CRM will be how reps integrate their CRM software tool with manufacturers who want to capture and track much of the same information. This will require “data bridges” between different manufacturers’ CRM systems and reps’ CRM software tool. These data bridges will need to work through security challenges to protect both the manufacturers and reps.
As a result of the previous “Rep of the Future” research study, NEMRA designed its own CRM tool — the NEMRA-Network (NN) for its reps and manufacturers, and the trade association is currently building bridges between its CRM tool and popular CRM tools out on the market, including Salesforce.com and Microsoft Dynamics.
Reps will need to spend more time on demand creation than demand fulfillment. In simple terms, demand creation is time spent generating new business, while demand fulfillment is time spent on servicing accounts. In the rep world, demand creation is what NEMRA reps do to get and grow customers, while demand creation is about educating consumers about why they need a new product or service. Demand fulfillment means possessing assets to satisfy customers that have identified a need for a product or service. These activities are primarily between a manufacturers’ representative and an electrical distributor. Demand creation activities are between a rep and a specifying engineer, contractor, owner, end-user, etc. Rep firms need to employ both demand creation and demand fulfillment activities.
According to our telephone research with manufacturers and reps, on average 70% of a rep firm’s activities are currently spent in demand fulfillment activities and only 30% in demand creation activities. This includes both inside and outside salespeople at rep agencies. This research also revealed that best-in-class electrical distributors believe the key values that reps bring to a marketplace are feet on the street focused on contractors, end-users and specifying engineers. Over the last 10 years, manufacturers have successfully driven many of their administrative costs (demand fulfillment activities) into their manufacturers’ reps cost stream, which challenges reps to increase their demand creation activities and remain profitable.
Almost universal agreement exists among the manufacturers and reps who participated in our research that these numbers should be reversed. Respondents believe 70% of a rep firm’s activities should be engaged in demand creation activities and only 30% should be in demand fulfillment activities. Can reps really afford to spend 70% of their time in demand creation activities? According to our telephone research, a few best-in-class reps claim they are doing it. They said their outside salespeople spend 85% of their time in demand creation activities and only 15% of their time in demand fulfillment activities, and that their inside salespeople spend 60% of their time in demand creation and only 40% of their time in demand fulfillment activities. These rep firms have separate “customer service specialists” who spend 100% of their time in demand fulfillment activities. The key to reps employing the right demand creation organizational model is for their principals (manufacturers) to understand and support rep investments in the resources required to achieve their mutual long-term success.
