New Year, New Sales Agent?
It’s the time of year when business owners and senior managers have some time out for reflection, on how trade has been over the past year and what 2018 will hold. For those companies who sell through an agent, distributors or their own sales force, often the thought of a new Sales Agent for the new one is a logical one.
However, there are many reasons why this could be a bad idea, as well as some reasons it could be a good one. But before we look at that its worth thinking about the Brand:Agent relationship from the perspective of the Agent or Distributor. We work with and are trusted by a large numbers of UK and global Sales Agents and from our perspective often Agents have a twin fear:
- On the one hand they worry that if they do too well, then the client will conclude the most efficient thing is to insource the whole sales operation and do the selling themselves. In this instance, the Agent loses the business.
- On the other hand the Agent worries that if they grow sales too slowly then the client will conclude that someone else (perhaps an in house team, perhaps a competitor) would be able to grow sales and margin faster. In this other instance, the Agent loses the business.
So from an Agents perspective, many have a mental model of an idealised ‘sweetspot’ of sales growth – which is fast enough in terms of sales, margin and listings to placate the client but not so fast that the client concludes they should do it themselves. So, being a successful Sales Agent can be a real challenge, walking a tightrope to retain the client and all the time grow their own business in tandem. Having set up over 30 successful Brand:Agent partnerships there are a couple of key pieces of advice that I wanted to pass on:
1. Don’t change Agents just because you can get a slightly better commercial terms elsewhere.
Changing horses in terms of Agents can be problematic – you brand is in their hands and there is a real cost to change and, try as you might to avoid it, you will lose sales momentum if you change. Granted it is easier to quantify your saving in commission than the unseen ‘lost sales’ that comes from the changeover but its just as much a real cost to you.
In addition, its not the case that the new Agent is automatically better than the last Agent. Your existing Agents have got you to where we are and perhaps a better tactic is to renegotiate the commercials you already have rather than make changes you might regret later.
2. Don’t change if the Chemistry is right, the effort is going in, but the results are thin, get along side the Agent and tackle the problem together
We’ve seen enough times that there can be a variety of reasons, related to currency, specific category dynamics, retailers, competitors or timing that no matter hard Agents try the doors don’t open. In that case a more fundamental rethink of the product proposition is usually in order and the Agent is able to give brands valuable feedback as part of this process.
In this instance, patience and a really honest assessment of the proposition and the options open to the brands is whats needed. Perhaps a refocusing meeting is whats needed, setting new adjusted mutual goals or investing in some more brand sales support will be whats needed.
3. Do Change when there is a lack of trust or clear competitive conflicts
Unfortunately as with other relationships, sometimes changing is the right answer. In cases where there has been a breakdown of trust or where there is a clear conflict of interest, then it is the best advice to change. The brand:Agent relationship needs to be open, free flowing and collaborative and trust issues are corrosive in this context.
We put together and help optimise many Brand:Agent relationships and our experience that the Brand:Agent relationship is a complicated one and when its an honest and transparent one characterised by mutual respect then it stands the maximum chance of succeeding.
Avoid knee jerk reactions or feeling like the grass is always greener, but place the quality of the relationship and trust at the centre of your business dealings and be prepared to walk away if you find over time that your Agent doesn’t value these aspects as highly as you do.
Are you looking for help with key business decisions? Or are you simply looking for information? HRA Global is an experienced FMCG consultancy with extensive experience of the Food and Drink industry. Email hamish@hra-globa.com, or call us on +44 (0) 1803 203387 for more information.
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