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Reps must operate more efficiently. Manufacturers and their reps need to eliminate the dual processes in their order entry processes, according to our research. Today, distributors send orders to the rep and reps then send the orders to manufacturers. Rep respondents were split on if they should let go of the order entry function. They will not survive by just focusing on entering orders. The electrical channel needs to continue to push efficiencies around EDI transactions. Reps have to stop touching orders, and they must work together with their manufacturers and distributor trading partners to figure out how to better share information and take out all redundancy around order entry.
The table below illustrates how many reps now take advantage of some of the most popular tools currently available in the electrical market to improve efficiency. In addition to these tools, a majority of respondents are actively using the RepFiles’ mobile cloud-based system for managing marketing material, with 56% of the rep respondents “currently fully utilizing” using RepFiles and 68% planning to “fully utilize” RepFiles. In addition, 47% of reps have a formal system in place to measure line profitability by manufacturer, and 60% of reps make manufacturer time allocation decisions based on manufacturer line profitability analysis.
Sales technology must become a rep’s core competency. Best-practice distributors are going strong in digital and are becoming omni-channel distributors that provide a seamless customer shopping experience in both the online and offline worlds. Mobile is growing quickly and manufacturers’ digital data is becoming more robust. Sales technology is advancing rapidly, and reps will quickly be left in the dust if they do not execute the right digital technologies to dramatically improve sales productivity and customer solutions.
With more information available online, customers have become much more savvy shoppers. This is changing the amount of face-to-face selling time they are willing to give a rep’s salesperson and will force reps to shift their focus from providing information to providing a customer experience. Current manufacturer and rep processes will have to be re-coded to enable better support and continual customer engagement.
One of the reasons for this digital transformation is that commodity-based products will most likely continue to be relatively low tech while products with embedded technology will increase. One product area where this will happen is in lighting controls, a niche that has turned into a software business. The services that surround lighting controls will introduce more complexity and require new skills, and there will be increased integration of controls and user interface technology in new lighting products. Over the next five years, the digital impact on the sales process for reps will be game-changing. Reps who use technology as a way to improve upon what they are currently doing will be rapidly passed by the reps who understand that technology has changed the world and those companies that measure themselves not against what they are doing today, but against the most progressive companies in the digital arena, such as Uber and Amazon. Reps’ field sales specialists will transition from spending much of their time in face-to-face interactions and more of their time in digital face-time applications. Reps will also see total seamless integration of manufacturer and rep systems — quoting, ordering, order tracking, reporting, etc. This digital integration will take waste out of the electrical channel and reduce operating costs for both manufacturers and reps.
Customer Relationship Management (CRM) will become an integral part of the day-to-day operations of best-in-class reps. CRM software organizes, automates and synchronizes sales, customer service and marketing support for both current customers and prospects. CRM adoption is difficult for any organization, but as sales have migrated from the street to the office it’s unavoidable. During our manufacturer telephone market research, most participants said CRM tools will be a must for reps to “effectively democratize the sales process by bringing together a variety of roles and functions that currently operate in silos.”
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.