Navigating the Manufacturer’s Rep Model: Balancing Mindshare, Messaging, and Market AccessNavigating the Manufacturer’s Rep Model: Balancing Mindshare, Messaging, and Market Access

Navigating the Manufacturer’s Rep Model: Balancing Mindshare, Messaging, and Market Access Transcript:

Jeff White: Welcome to The Kula Ring, a podcast for manufacturing marketers brought to you by Kula Partners. My name is Jeff White, and joining me today is Carman Pirie. Carman, how you doing, sir? 

Carman Pirie: I’m doing really well. I’m Jeff. I’m excited for today’s show.

Jeff White: Yeah, it’s a unique topic. I don’t think we’ve ever had a chance to cover it in over 300 episodes.

Carman Pirie: Exactly. And it’s nice when you, because there are a lot of very unique things that manufacturing marketers, industrial marketers encounter. And I always to other marketers… Like square peg, square hole, right? Like we’re talking exactly about one of those things. It’s very unique to this space. And yeah, so without further ado

Jeff White: Yeah. It’s a challenging topic and I’m looking forward to covering it. So joining us today is Sam Rajkovich. Sam is the Vice President of Market Growth and Development at Piovan North America. Welcome to The Kula Ring.

Sam Rajkovich: Thanks, guys.

Carman Pirie: Sam, it’s awesome to have you on the show.

Thank you for joining us today. I wonder if we could start with a bit of an introduction. Let’s hear a little bit more about you and how you ended up at the company.

Sam Rajkovich: So my background is primarily in sales and marketing. I got my start in the plastics manufacturing space outta college and worked in industrial manufacturing for more than 20 years. In that time, I’ve primarily been working and dealing in an indirect selling model, dealing with manufacturers’ representatives. So when you think about buying from a manufacturer, there’s typically someone in the middle of that process. So whether it’s a car and you’re buying from a car dealership or a mattress and you’re going to a mattress store, there’s always some intermediary somewhere in the middle of that sale.

And for our business, and a lot of manufacturers, they use a third-party reseller distributor called a manufacturer’s representative. And that’s that’s how Piovan Group goes to market, and a lot of other manufacturers go to market.

Carman Pirie: Really looking forward to unpacking that. But before we do, I wanna know a little bit about Piovan Group and what you all do there as well.

Sam Rajkovich: Sure. So, Piovan Group is a mid-size industrial manufacturing company. We’re primarily focused on the plastic manufacturing sector. We also have a heat transfer business for industrial heat transfer manufacturing. We’re about 700 million euros in revenue worldwide. And we’re comprised of about six different brands.

We also have a Food and powders division that’s growing in North America, but over 60% of our revenues come from the plastics manufacturing space.

Carman Pirie: Yeah, very cool. Yeah, manufacturer reps, you’re quite right. It’s quite ubiquitous in the space, although interestingly, not a lot of people talk about it.

I don’t know why that is.

Jeff White: Yeah, you’d hear more about distributors or, direct sales or other channels, but rarely this one.

Carman Pirie: Sam. It comes to like you say, dealing with that middleman, that manufacturing representative, what’s the biggest point of departure in your mind that what’s the biggest change that calls for as a result from marketers?

Sam Rajkovich: It’s a nuanced way of dealing with a third party because these manufacturers’ representatives don’t work for your business. They’re independent resellers, and so when you’re dealing with them, they carry a bundle of goods, a portfolio, and they typically refer to that as their line card.

And so they could carry three to 20 plus different manufacturers and complimentary products. And so as a manufacturer, you’re constantly fighting for their time and attention. So we call that timeshare and mind share. So how can we maximize the amount of time that we’re getting out of these manufacturers’ representatives, and also making sure that, while we might not be their most profitable brand.

We wanna capture as much of their attention and excitement as possible. So as a marketer, there’s a lot of challenges involved with that, and that could be whether you’re standardizing a brand message where when you have a direct seller, it’s easy, you can have a sales meeting and you can standardize a direct reseller message across your brand language.

When you have a third-party reseller it’s similar to the game of telephone where the message that you put in at one end of the game might come out sounding a little bit different at the other end. It’s, it offers a lot of unique challenges to a marketer.

Jeff White: I think not every, manufacturer uses independent sales reps in that kind of sales process. What do you think some of the advantages are of doing that over say having more traditional, direct or distributor-type relationships?

Sam Rajkovich: I think there are a couple of advantages. One is scale. Typically manufacturers’ representatives offer you a larger sales network that’s geographically diverse, so your manufacturer’s representatives are typically spread geographically throughout a region and offer traditionally more potential representatives per geographic area than what a brand could scale up on their own. The cost per full-time equivalent would be significantly lower using manufacturer’s representatives than direct sellers. That’s a significant advantage for manufacturer’s representatives.

Another one is that they’re a hundred percent commission-based resellers. In so many words, they eat what they kill. They’re only working on a commission basis, and you’re only paying them when they’re contributing to the bottom line.

Carman Pirie: Which is as you mentioned you’re fighting for Mindshare and for timeshare, you want to be top of mind for these reps amongst the other manufacturers on their line card.

But you also acknowledge that you may not always be the most profitable manufacturer that they represent. And for people who eat what they kill, as you say. I guess it the, how do you find the, what’s the secret sauce then in terms of getting mindshare and timeshare when you’re not the most profitable?

Is it more about being the most sexy than the most interesting? The person who’s bringing more innovation to the market? The best marketing message

Sam Rajkovich: Yeah, so it’s, it’s similar to any other marketing appeal. We try to be their emotional favourite. There are ways that you can create a message just like you would create a message for the market for a specific vertical.

We create a message for the manufacturer’s representative to try to appeal to them emotionally. So we create a brand story. That we can tell a new representative that makes an emotional appeal about the brand that connects. Unique benefits to the manufacturer’s representative might be somewhat intangible benefits that are non-monetary and tie the representative to the brand.

So things like we’re an Italian brand, so there might be some intangible benefits like, the top seller for a particular product might get a trip to Italy, for example, would be a promotion that was run by one of our brands previously. So there are some, unique and tangible benefits that you can promote your brands specifically to manufacturers, representatives that might be non-monetary or something that would be uniquely beneficial to a representative that might attract them to your brand or create loyalty over the long term.

Carman Pirie: That makes sense to me, and that having that Italian card in your back pocket doesn’t hurt at all. It’s a, it seems to me to be an interesting challenge, but at the same time, when you say, oh, manufacturing reps, they’re not employed by the organization, you can’t control what they say.

Therefore, it’s hard for them to expect them to message exactly as you might like. Man, I bet an awful lot of folks who have a direct sales organization see themselves in that comment just as much. It can be hard to get people to sing from that song sheet regardless of how tied they are to your organization.

Sam Rajkovich: Yeah. We spend a lot of time on messaging and we also spend a lot of time on technology we have a selling app that we use that has a lot of guided selling tools in it. So we try to teach and tell through videos, through guided selling videos and things like that. So if a rep is maybe less familiar with a particular product or application, they can watch a guided selling video before going into an account.

Those are ways we can shape a message or try to promote our internal brand language to carry it through all the way to the customer account.

Carman Pirie: Sam is it always the case in your world that the manufacturer’s rep brings the customer, or is it ever that you’ve built a relationship somewhat directly and you’re bringing the manufacturer’s rep in to connect the two after the fact?

Sam Rajkovich: So the primary benefit of the manufacturer’s representative is to generate leads for,

Carman Pirie: yeah, no question. Yeah.

Sam Rajkovich: And so 60% of all projects are brought to us by manufacturer’s representatives. 40% of the time accounts are coming back to us, whether it’s reoccurring business or evergreen accounts. But for 60% of that business, we’re relying on the manufacturer’s representative to develop leads and bring them into our business.

20, 30% of those leads are reoccurring business that has been developed by the manufacturer’s representative and now is reoccurring that’s coming back to us. Yeah, that makes sense to me. I guess, I have seen instances where sometimes that lead flow is a bit more of a two-way street.

Carman Pirie: Sometimes the brand attracting flow, but they still leverage their channel in order to activate the sale in some way. But it sounds as though it’s a little bit more one way in this instance, which makes sense. Do you if you don’t mind me asking, do you keep comping manufacturers reps after the first deal?

Sam Rajkovich: Yes, we do. In our business.

Carman Pirie: That creates some nice long-term glue for sure. But I’m assuming that’s similar across the category if you’re doing it.

Jeff White: Yeah. A question more, more of a theory and then a question I guess, but it would seem to me that if you’re working with a manufacturer’s representative who might have multiple brands on their line card that sell a similar product in a similar category.

You would be in effect, creating a small a less competitive environment than if it was just, everyone that competes in that category, right? Like it’s only the rep, the brands that the rep carries that you’re directly competing against. So I guess my question, if that’s accurate, would be, are you.

I’m assuming you know who the other brands in their portfolio would be. Are you benchmarking against them to try and differentiate yourself in some way within that pool? Or are you still looking at the total marketplace where you compete more broadly?

Sam Rajkovich: So the other brands that they carry have to be non-competitive with our brand.

So they’re complimentary products, so we might carry everything but a conveyor belt and then they add on a conveyor belt from another manufacturer and it rounds out their line card. I see. We benchmark our statistics against the overall industry and look at the overall industry as a whole and try to benchmark how we’re doing.

And there’s a. Industry association that provides statistics on how the overall health of the industry is.

Carman Pirie: It’s true. JI mean, there are instances where there is some overlap. Yeah. Manufacturing representatives do, typically look for exclusivity amongst the brands that they wrap, but then, in ensuring that exclusivity extends across all parts of the product portfolio isn’t always the case.

But, we’ve talked about some of the benefits being, more monetary and scale driven, and the challenges being that since they’re not tight to the corporation in some way, maybe it can’t be as corporately controlled or managed as tightly. What else stands out to you as as the bigger challenges for working through manufacturing reps?

Sam Rajkovich: We talked about how a manufacturer’s representative model will increase essentially your feet on the street. It increases the amount of people you have covering the overall region. However, it does also increase your selling cost over time because as your brand gets more successful and you get more market saturation and your market share increases, your total selling cost will increase because your percentage of commission is a fixed commission relative to the product line.

As we talked about your recurring sales are commissionable, at least in our model for the manufacturer’s representative over the long term. So that fixed percentage stays the same over the long term, which increases your selling cost as your market share increases. So there is a tipping point where you could make the case that a direct selling model over time would replace a manufacturer’s representative model.

There’s also a decline in manufacturers representatives, at least in the United States. I think that maybe the younger generations. Are more risk averse to that model because it is a commission based model. A hundred percent. It’s a, maybe a more risky business to get involved in. The contracts are typically 30 day contracts.

There’s a high risk associated with wanting to put yourself into a business like that. So typically the. The people that are engaged in manufacturer’s representative type businesses skew a little bit on the higher side of the age bracket, and we don’t see a lot of younger people entering in, or let’s say the next generation entering into the manufacturer’s representative market.

So there are a lot of risks, is it sustainable? Are the selling costs eventually gonna outpace? The ability for companies to replace that model with a direct selling model. So those are some of the risks associated with engaging in a model like this long term.

Carman Pirie: That’s fascinating. I mean, we see it across the board in B2B manufacturing that.

There’s a change. It really started happening during COVID when the kind of the retirements accelerated and all of a sudden a bunch of 60 year olds were replaced with 35 year olds that buy and think very differently. I hadn’t really thought about that through the lens of manufacturing reps before.

That does present a really interesting challenge if they’re not going to cycle through to a new generation that’s as connected in some way that your connection to the market dies with that channel.

Sam Rajkovich: Yeah, absolutely. And it’s a big risk to our businesses because we’re, today we’re dependent on that model for our success.

So it’s a risk, it’s something we think about and we talk about a lot.

Carman Pirie: Although I would have to think the case studies of people who have seamlessly transitioned from manufacturer reps to a direct sales model are few and far between. Yeah. That doesn’t come without some turmoil. Have you looked at other manufacturers facing a similar challenge that have addressed it in a certain way?

What are you seeing out there for solutions,

Sam Rajkovich: there’s there’s a few in our space that have transitioned and there are probably even more that have a hybrid approach where they use some regions where the manufacturer’s representative, some regions with direct sellers have a hybrid look at it.

And I believe the hybrid approach is more successful as an entry point. And has been maybe more sustainable in the midterm.

Carman Pirie: Are they doing the hybrid on a, is it a location based? So some locations are manufacturing reps where other locations are direct, or is it a tiered account kind of thing where all the tier one accounts go to our direct organization, but tier two, tier three go to the menu reps.

Sam Rajkovich: The ones I’m familiar with are both geographical and oriented around specific market segments. So they have some verticals that are, they’ll carve out a vertical and they’ll say, this one we’re gonna handle with a direct seller, and this one we’re gonna handle with manufacturers, reps, or direct sellers.

Jeff White: One of the challenges with this model, of course, is that you don’t necessarily have direct access to the prospects or the customers and are communicating through this channel. How are you thinking about that? And are you trying to harvest information about the market through the reps or do you do that in some other way?

Sam Rajkovich: So that’s a good point, is that with our brands, we have access to the customers once they become a lead, but there’s still a pool of essential prospects out there that are unknown to us and won’t be uncovered until they convert in some way. And to the manufacturer’s representative, all these prospects are known to them.

And that’s definitely a challenge and something that needs to be uncovered, but it definitely makes discovering new accounts a significant challenge for us in our marketing efforts and trying to do cold outreach, for example, to a pool of prospects. Those prospects don’t necessarily exist in our database, so trying to gain access to them is a significant challenge for our business.

Jeff White: Do you ever do that to try to warm up a group of prospects, without necessarily even knowing if your reps are connected to them in some way, shape, or form?

Sam Rajkovich: So we do a lot of marketing automation, but we do it more on the lead side with dead leads or cold leads as opposed on the prospect side.

Carman Pirie: Okay. Sam, as you think about some of the work that you’ve done with manufacturers, and representatives are there any kind of cooperative campaigns that kind of stand out to you? Things that you’ve done where you’ve worked a little bit more in direct partnership with one representative or you around a product launch or anything of that sort?

I’m just wondering to what extent is it some of it is I’m assuming a bit of a shared go to market approach and other times you’re just. Getting the items on the line card and letting the manufacturer’s rep do their work.

Sam Rajkovich: Yeah, that’s a good question. So we do some shared marketing with some of the manufacturer’s representatives, especially if we bring on a new representative and a territory.

Then we will do some outreach to the database of customers that we have on file. Typically what we’ll do is we’ll send out a promotion to the territory and we’ll carry along the contact information, probably a headshot and some other information about the manufacturer’s representative, and we’ll do I.

Some email campaigns around that database for a period of time to try to generate some interest with the promotion as well as some name recognition with the new manufacturer’s representative so that they have their contact information, they can put a name with a face and understand that there’s a new representative in the territory.

Carman Pirie: This is them jumping all over the place now. But when I think about that. Complimentary line card, weird question maybe, but when you look at your manufacturer’s reps across the board how different are there line cards from one to the other? Is it the instance where you’re being cooperative with a completely different set of brands and technologies in one rep than the other?

Or is there a lot of consistency and similarity in terms of solutions being brought to market?

Sam Rajkovich: So the brands themselves that they carry are. Probably pretty diverse across our representatives, but the categories that the brands serve are substantially similar. In general, if I think about one of our brands in particular, all of the reps carry, for example, an injection moulding machine, a robot, a conveyor belt line a lot of them carry maybe a magnet.

And a handful of other goods. So in addition to our product line while the manufacturers that they carry might all be diverse, they all follow the same general categories and they round out a line card of complimentary products,

Carman Pirie: it would still make the marketing quite complicated. It’s great that the categories are obviously similar, but then you think about how your brand comes to life as part of that solution.

It’s gonna be different with every rep in some respect.

Sam Rajkovich: It also adds an additional challenge that as we try to look for partners for it, in-person displays like trade shows and we wanna partner in a specific region and one manufacturer’s representative has one set of partners and another has a different set of partners.

And it’s hard to partner with one manufacturer and without offending another manufacturer. And you just wanna. As a ancillary product manufacturer, you just wanna be neutral and you wanna support the industry as best you can, but you also have a job to do as a marketer and get your name out there.

So it’s a complex task to serve the manufacturer’s representative in a branding environment like a trade show, but also serve these manufacturers that are complimentary to you.

Jeff White: It’s hard to be Switzerland all the time. Yeah, exactly.

Carman Pirie: Yeah. I could see that being a challenge. And it is I don’t know whether it just almost a force is a bit of a paralysis at some level, yeah. Sam, you’ve done a, I think, a really great job of summarizing for our listeners, a bit of the pros and cons of how to think about it. And candidly, the, I think the the challenge that you have with manufacturers, reps, people are still going to have with direct sales as they age out of the workforce.

I. Recruiting those new members of the sales team that want to live and succeed in that kind of eat what to kill sales environment is just as much of a challenge, I think for today’s manufacturers as it is for manufacturers, reps trying to find the next generation. So it’s interesting to to think about if you were starting today.

Would you go down the path of a manufacturer’s representatives, or would you start with a direct sales organization?

Sam Rajkovich: So I would probably still go down the road of manufacturer’s representatives, and I say that because of the speed to market I. So if I was, taking, let’s say another Italian brand and I was gonna enter the market in North America with $0 in revenue, I would still spin it up with manufacturers’ representatives because nothing could hit the market faster and give me stronger universal coverage across the United States with the maximum number of possible resellers on the street than manufacturers representatives, at least in my industry.

So that would give me. The most bang for the buck.

Carman Pirie: Fair point. And do you ever feel like they’re also kind of gatekeepers to the market in some way? Have you ever encountered that where you’re, you are trying to push, you’re trying to drive awareness, but in some ways, the manufacturer’s reps keep the prospects from you?

Sam Rajkovich: Yeah, and I think it’s important. One thing we haven’t talked about is that it’s important to have something like a rep council. So, whether you pull the principals or owners of the rep agency all together and form a rep council or nominate just a handful and make them your rep council to get strong feedback about what’s going on within the rep community and from the customers otherwise.

When you ask for feedback from the field, you’re really gonna get feedback directly about, what’s important to the manufacturer’s rep as opposed to important to the customer. So getting that direct feedback from a rep council is is critical feedback to try to discern, what’s the feedback of the reps and the rep network as com as opposed to the customer network.

Carman Pirie: Yeah, that makes sense to me. I. Tease that apart a little bit before we end the show. How frequently does your rep council meet? Can you tell us, give us some I insight into how you do that.

Sam Rajkovich: Yeah. We meet monthly.

Carman Pirie: Okay.

Sam Rajkovich: And it, it’s just an hour, but just an informal meeting to talk about any open issues or topics.

Carman Pirie: So nothing fancier than that. Yeah. Yeah. Pretty direct. Sam, this has been fantastic. I really appreciate you taking the time to unpack this for us. It’s an area where if you don’t work with manufacturers, reps, frankly, you just don’t know. So it’s nice for folks to get this information for you to channel out on it.

Thank you so much.

Sam Rajkovich: Yeah, my pleasure.

Carman Pirie: Thanks a lot, Sam.