June 2013 Issue

The President's Message


Too Many Lines?

Almost every manufacturer thinks you have too many lines, but when do you have too many? What should an informed manufacturer expect?

We have all heard the old “share of mind – share of time” demand from our principals. Every company we represent wants more of our time devoted to their line.

This is a legitimate and honest reaction from hardworking, well-positioned principals who want to grow their business and ours. If the principals are delivering a solid combination of product, program and service, they will almost automatically get their fair share of time or more.

How Do You Review Your Line Card?

The list of lines that you represent needs constant analysis.

The first question is FIT? We are in the business of “synergistic selling”. Synergy means that our lines work together so that
1 + 1 = 3. By putting different lines into a well-constructed package we make our calls more efficient for our customers and for ourselves.

When lines work together there is real SYNERGY. As the representative of multiple lines, we provide exceptional value to our customers. When we have SYNERGY the customer sees how buying from several of our principals benefits them. They get better service by being more important to us, the reps, and they benefit from creating a one-stop-shop for themselves. They go directly to one place to handle customer service questions. They go to us and know that although their purchases from any one of our principals is not that large, overall they are a big customer to the Rep firm.

 

The Dollar Facts

The review of the line card becomes a matter of dollars. Your primary objective is commission dollars. Nothing else really matters. You have to focus on the commission dollars you earn currently or the potential of lines on your line card.

 

The 5% Rule

If all lines were exactly 5% you would have 20 lines. The fact of the Rep business is that there will be some dominant lines that comprise 75%-90% of commission income.

If you have a line card with 15 lines on it, the chances are that 5-7 of those lines will represent 80% or more of your commission income.

These are your bread and butter lines. These lines are your life blood. There may be one or two other lines that are more than 5%.Then there are other lines that provide 2% or less of your commission income.

 

Drop the Small Producers, Now!

The problem with continuing to carry small volume lines is that they hurt you in several ways.

First of all, whether you want to recognize it or not, these small lines take time away from your key lines. You can argue all you want and say they really don’t require any time and the small commissions help cover your costs, but the facts remain.

 

You Hurt Yourself

More than one Rep has told me that they finally recognized that the small lines do hurt them. The biggest way they get hurt is that the reps do not do the kind of job they should do for every line. Failure to perform for a line results in a sales manager who is unhappy with the Rep firm. In addition, sales personnel see that lesser performance is tolerated on some lines. This sets a very poor standard for your Rep firm.

 

Line Clean Up

More than one Rep has pointed out that cleaning up the line card and getting focused on the lines that are really productive makes an immediate difference. A secondary benefit is that although a sales manager of one of the lines you resign from may be hurt or insulted, when he or she thinks about your reasons and your honesty in resigning their line he will have respect for the way you run your agency.
You will not handle a line unless you can perform at your best for that line and every line on the line card.

Some time in the future one of those sales managers may change positions and have a line that can be a big producer for your firm. The sales manager you treated well and honestly will remember you and may well bring his new line to your door. Opportunity is created by managing your line card.

 

The Bottom Line

Your firm only gives top performance. If a line is not over 5% of your revenue, and has little chance to get to that level with in two years you will not do a great job for it. By being honest with yourself and your principals you build credibility inside and outside.

You also avoid wasting time on lines that will not rise to significant levels for your business.

 Focus and win. Good luck and good selling!


Thanks for listening.

Mike McGuire, CPMR, CFSP 
MAFSI President
Zink Foodservice Group
Columbus, Ohio

Mike can be reached at mikem@zinkmarketing.com or 800-492-7400.

  Members - Click to Read MAFSI Matters - June 2013   

 

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