First, let me say there are no bad guys here, only good guys trying to work with each other.
I am sure you have all noticed how difficult it is to find good reps when it comes to selling PCBs and PCBAs. That is not to say there are no good reps out there but rather there are not many reps who are dying to represent our companies.
Being in the rep-finding and rep-managing business for many years, I have had a front row seat to this dilemma. Reps are in high demand right now. If I signed up every company that approached me about helping them find and sign reps, I would have a hundred clients around the world. It seems that every company I talk to wants me to help them get more sales reps. There is no shortage of companies looking for reps.
By the same token, there are good reps who would like to work with these companies. There are reps who like the PCB and PCBA industries. But they are not doing it for several reasons. Most reps, especially the very good ones, are more than just reticent to work with our industry.
Why not? If they would love to work with companies in our industry, and if the companies want to sign them, what’s the problem? Why isn’t it happening?
It all boils down to the rep-principal deal—the contract. The standard contract that most of the companies in our industry have been using is a terrible one for the reps. Here’s why:
- They wait too long, work too hard, and spend too much of their own money before they see a return on their investment. It can take up to three quarters of a year before they see any money. With all the prospecting, lead generation, surveys, site visits, and everything else it takes to win a significant customer, it can take a good six months before they book their first order. The principal has to build and ship the product and then wait up to 60 days to get paid. The rep waits another month minimum to get paid after that. It is not uncommon for the rep to wait 10 months (all the time working on the account) to get paid. Sorry for the vernacular here but that just plain sucks.
- They are not treated as equal partners. No matter how long a rep has worked with a principal, she is never treated as an equal partner. In fact, there is usually some resentment from the insides sales/customer service people who feel that they are doing all the work and the rep is reaping the rewards. Once a rep delivers a new customer to the principal, the principal’s team takes over to accommodate that customer. If they are doing their job correctly, a strong tie develops between the customer service team and their customer, often leaving the rep in the dust. At this point it becomes the principal’s customer and the rep is left out of the loop. This is not a bad thing in and of itself. But then everyone tends to forget who brought in the customer, and it is just a hop, skip, and a jump from “What have you done for me lately?” to “Why are we paying all this money to the rep when we are doing all the work?” They are forgetting who actually brought the customer to the company.
- In terms of the termination clause, most of our contracts have 30-day termination clauses. I’ve been in the middle of these negotiations. The rep must negotiate (i.e., fight like crazy) to get it extended to 90 days. So, the more successful she has been the more vulnerable she will be. Every good rep I talk to has a horror story of becoming too successful, to the point of being paid “too much money.” She is dumped by the company, leaving thousands of dollars behind. The only option is suing the principal, which takes thousands of dollars. As an independent contractor, the rep has neither the funds nor the stomach to do it. Don’t believe me? Call any rep you know and ask him or her about the time a principal dumped them for being too successful and making too much money.
These are the three main reasons why reps are not very excited to work with PCB and PCBA companies, and I get it. The world has changed, and the standard rep-principal contract has not. But now more than ever, it is time to seek a new way of working with our reps and completely revamp their contracts. Stay tuned because next week I will present some ideas for what new contracts should and (hopefully) will look like.
It's only common sense.
Dan Beaulieu is president of D.B. Management Group.