You’ve made a great product – but who’s going to sell it for you?
As an industrial manufacturer, you have three options when it comes to your go-to-market model.
- You hire and train your own internal sales team
- You outsource sales to an industrial manufacturers’ representative (IMR)
- You take a hybrid approach that involves a bit of Option 1 and a bit of Option 2
But which model is best for you? What are the pros and cons of each option? How do you decide between the three? We sat down with Tom Haag, President of Kyocera SGS Precision Tools, to get his perspective.
Kyocera, an ISO 9001:2015-certified manufacturer of industry-leading round, solid-carbide cutting tools, pioneered some of the world’s most advanced cutting tool technologies, resulting from rigorous product, coating, and material testing within their Global Innovation Center.
Q. Can you describe your experience with hiring IMRs and direct sales reps?
“At Kyocera SGS Precision Tools, we have been enjoying a hybrid model for a couple of decades now. We have a direct sales team, and we also partner with industrial manufacturers’ representatives. What we find is that there’s really no hard and fast rule in any territory that determines which direction we should go. It’s really about who can most competently cover the territory for our company and best represent us the way we want to be represented.”
“We try to go to market with a sales team that can show up at the spindle and help determine cutter paths or CNC programs. So, any rep that represents us, whether that rep is an employee or an outsourced sales rep, has to have some level of technical competence. We can certainly train them to fine tune that competence, but there needs to be some level of competence in the first place.”
Sales Engineers Aren’t the Only Pool of Candidates
In the past, when Tom’s company went to market, they looked for sales engineers to represent them in certain territories. They looked for candidates with engineering backgrounds first and sales aptitude second. But they’ve discovered over the years that some of their manufacturer’s reps are extremely competent when discussing cutting tool applications. Sales engineers have technical knowledge, but oftentimes experienced IMRs have just as much knowledge.
Geography Plays a Vital Role
Tom’s experience is that a hybrid model works best in some territories because his internal resources only stretch so far, geographically speaking.
“The amount of geography that manufacturer’s reps can cover when they have more than one salesperson working for the organization makes a difference,” says Tom.
“Industrial Manufacturers’ Representatives can cover a territory much more economically than we can with our sales engineers alone. The one territory that comes to my mind is the Rocky Mountain States. There’s not a density of population. There’s not a density of industry. You have two or three key markets that you want to pursue, but you can’t afford a salesperson of your own in any of those key markets because of the immense amount of travel. So, you find a manufacturer’s rep that has a salesperson in each one of those key markets. Even though they’re representing products other than your own, the economics of it make sense.”
“The amount of geography that manufacturer’s reps can cover when they have more than one salesperson working for the organization makes a difference.”
– Tom Haag, President, Kyocera SGS Precision Tools
Q. What advice do you have for other manufacturers working with both IMRs and direct sales reps?
“Manufacturers must be transparent with their IMRs. Some manufacturers treat IMRs poorly because they’re not direct employees. They treat them like they’re not part of the organization—when they actually are. The more information they have about the manufacturer and the more information the manufacturer shares with them, the better off the rep is—and the better off the manufacturer is.”
Open and frequent communication is key, says Tom. For example, where product launches and product releases are concerned, some manufacturers worry about confidentiality. So, they don’t tell their IMR until the last minute about new initiatives. Then, with little notice, reps are expected to hit sales targets for a product they didn’t even know existed. The solution is to include IMRs as part of the important conversations.
Keep an Open Mind – But Do Your Homework
Some manufactures steer clear of IMRs because of a bad experience they had in the past. But just because you have one bad experience doesn’t mean that all IMRs are bad, says Tom.
“Do your research. As long as you’re learning with each engagement, you are staying ahead. And remember that the relationship goes both ways. Industrial Manufacturers’ Representatives also have to be selective about which Principals they work with. Once you build a long-term relationship, that’s when you see the most success.”
Relationships Are Vital
Back in the day, some manufacturers looked at IMRs as a cost. Once a rep got a territory up to a million dollars in revenue, some manufacturers would pull the account in-house. But what the manufacturers failed to realize was that the IMR, not the manufacturer, had the relationships: The strength of the relationship won’t transfer over just because the account does.
“Because they’re representing more than just one product, IMRs have a strong reputation with distributors and end users as well,” says Tom. “That’s one of the things that you learn as you go along. There’s really not a hard and fast rule about who should be selling into your territory. It might be your sales team. It might be an IMR. Or it might be a hybrid of both.”
“Because they’re representing more than just one product, IMRs have a strong reputation with distributors and end users as well.”
– Tom Haag, President, Kyocera SGS Precision Tools
Q. Which sales model do distributors and end users prefer?
Tom’s experience is that distributors and end users don’t care if his company’s product line is being represented by his own sales team or by an outsourced sales team.
What matters is competence and relationships.
“If a direct person calls on an account and they’re not competent at what they’re trying to accomplish with the distributor or the end user, then the distributor and the end user tend to avoid them,” says Tom. “We always tell our guys, ‘The best solution is to win a few.’ Once you win a few, they want you to come back to help win a few more.
“Whether that’s traveling with the distributor salespeople and getting a few orders, or whether that’s going to the end-user and improving their cycle times, we find that once you get a few wins under your belt, they invite you back, regardless of whether you are a direct sales rep or a manufacturers’ rep.”
Q. What do distributors look for in an IMR?
“Distributors look at collateral products that the IMR is already representing, and whether that fits the same customer base that they’re looking to pursue. If they have a good track record with that IMR already, a distributor might say, ‘OK, since Durrie’s now representing brand X and they’ve already done well with us on brand Y and brand Z, let’s take a look at brand X.”
The advantage of working with an IMR, according to Tom, is that an IMR helps manufacturers get their foot in doors where direct salespeople have neither the reputation nor the relationship with the distributor.
Industrial Manufacturers’ Representative vs. In-House: What Works for YOU?
Whether you decide to hire and train your own internal sales team, outsource sales to an industrial manufacturers’ representative, or use a hybrid model that involves a bit of both, there are pros and cons to each model.
In the end, what matters most is not your sales model, but knowledge of your territory, relationships with distributors and end users, and technical competence.
The right industrial manufacturers’ representatives provide all that, helping manufacturers penetrate new territories, grow their pipelines and increase revenue. That’s a win-win for all concerned.
Learn more about working with IMRs by discovering the 6 Things Manufacturers Should Look for in Independent Sales Reps.