Long a staple resource in the electronics supply chain, the role of sales reps is changing and evolving… and continuing to be an important part of the process of procuring electronic devices.
We sat down with the newly appointed chief executive officer of the Electronic Representatives Association (ERA), Walter Tobin, to get his perspective on the role of reps in our industry.
EBN: The electronics industry has always had reps playing their parts. How do you see the role of these organizations evolving?
Tobin: The rep model has always been identified with outsourced work and a variable cost of sales model. Those are always the words you hear. We are trying to not use the word 'outsourced,' and instead are using the word 'insourced.' If it's outsourced, the reps are perceived as not really part of the company and that perception permeates throughout around the company. It sets the wrong tone, if you are going to market with reps. Those reps are your sales force.
You need to think of them as an integral part of your company. Let them see the same information that the direct sales people (e.g. major accounts sales folks) see. They should have factory badges when they go into your company. You need to let the industry know that your rep is your sales force. It's a subtle difference but it changes company mindset.
EBN: Tell us a little more about the value that reps bring to their component manufacturing customers.
Tobin: When using a rep, a variable cost of sales is the norm. That means that the reps don't get paid until they sell. In the past five to seven years, the CFOs in many organizations are having at least an equal voice with the vice president of sales and are involved in making independent decisions in some areas, such as reducing commission rates, taking accounts direct, reducing commission on legacy business, etc. CFOs need to better understand get a better understanding of the value of the reps. In some cases, the rep commissions are perceived inside the company as low hanging fruit. That's a HUGE mistake.
If commissions go up, it's seen as a negative because costs are higher, but in reality it indicates that the reps are selling more – a positive! They need to understand that reps give them a model where they don't have worry about headcount, training, or hiring and firing. There's an immediate ROI, and there's immediate productivity because they know the territory and all the customers from day one. That's the challenge: we have is to balance that line within the company between the sales leader and CFO and make sure both constituents understand the value the rep brings.
Further, reps bring synergistic selling and solution selling to their customers. If I call on customer as a direct sales rep from a component maker and see them today and tell them about products I have and call them three weeks later, they don't want to see me, since nothing has changed. If a rep goes in goes in with changes with three or four manufacturers, he can keep the fourth component maker (who hasn't had new products) top of mind with the customer during that meeting. They can do demand creation in a way that a direct sales force often cannot do.
EBN: The electronics market is flat and margins are tough. How can reps deal with this continued reality?
My sense is that, first of all, reps are here to stay. Reps are not going away and they need to be able to BETTER articulate the value proposition they have. They are in the territory and know top customers. Since there is often very high turnover at vice president of sales level, the reps need to be constantly updating the CFO and vice president of sales on their value proposition – helping them understand that the reps are the only constant that the manufacture has that can be counted upon.
At the same time, commission rates are being cut. When a component maker tries to do that, the reps have to be able to demonstrate the value proposition that they bring and not apologize for the commissions that they have earned. They get more time with the potential customer. They remain even as other things change and don't miss a beat with the customer. The rep gets up each day and thinks 'What can I do that's good for my customer?' It's a different mindset. When the rep cares about the customer, the suppliers automatically benefit.
— Hailey Lynne McKeefry, Editor in Chief, EBN
- Talking to a Rising Supply Chain Star: Christian Goehring, Avnet
- Ireland: a Lucky & Lucrative Electronics Manufacturing Destination
- Offering Support & Best Practices for Global Labeling
- EBN@C-Level: Looking at Electronics Distribution Trends with Avnet’s Gerry Fay
- EBN@C-Level: Arrow Electronics’ Tim Kolbus Talks About Supply Chain
- The Importance of Supply Chain Connectivity: A Conversation with RS Components
- EBN@C-Level: Talking with AMD’s Garry Christie About Indirect Procurement
- EBN@C-Level: Talking about Supply Chain with John Kern, Cisco