Dovetail 8

Dovetail 8
Suppliers of Products and Services Discover Rep Firms via Mutual Interest and Relationships with Target Customers and Key Accounts

Tuesday, September 18, 2012

You say Retainer and I say Sustainer

In this election year I expect to hear politicians and pundits practice re-phraseology. Some people re-phrase in order to distort a word or phrase for their benefit - done famously by the tobacco lobbyist in the satirical movie, "Thank You for Smoking."
From that movie comes the memorable line, "If you can argue correctly, you're never wrong." The premise is that you must control the vocabulary. But, re-phrasing is not always sinister. It can facilitate civil discourse of a polarizing or contentious subject.

Providing retainers to manufacturer's reps has been a contentious subject for as long as I can remember. Despite frustration on the part of Suppliers and Rep Firms, both sides remain at odds on this issue. Even the word "retainer" conjures a feeling of toxicity. A Rep Owner shared this experience, "...the CFO thinks he's giving away the company jewels and has unrealistic expectations of what the retainer gets him."

To make progress on this thorny subject, we need to substitute a benign word for retainer. I propose sustainer. Retain connotes possession, but sustain conjures an image of support and encouragement. In Supplier/SalesRep relationships, what do the two parties want to sustain in order to improve their performance and effectiveness? The consensus is: Effort, Commitment, Performance, Trust and Fairness.
One Supplier embodied those words with this pronouncement, "Regardless of the nomenclature, we have a pay-for-performance plan to defray the costs of a missionary territory until commissions can be generated."

I propose six sustainers for Suppliers and Rep Firms to consider when creating fair and prosperous business relationships: 1. Stipend to defray expenses;  2. Fee-for-Services;  3. Services Agreement (supplement Rep Agreement); 4. Incentive Stock Options; 5.Tiered Commissions that go UP; 6. Fair and Equitable Termination Agreement.

Please explain why a Rep Firm signs a 30-day termination contract with a Supplier whose product requires sustained design-in effort without timely compensation? I recommend Fee-for-Services which is the ultimate quid pro quo. SalesReps are compensated for services-provided at a negotiated fee. Payment is made at the time the service is provided.

With a new vocabulary and some innovative concepts, we can rally the Suppliers and Rep Firms to tackle this issue. We need to move from polarization to convergence, from convergence to consensus and consensus to solution.
From the comments that I received on this subject, an executive proposed a new term., "... no one likes to pay a retainer for anything. Shared Territory Development is money allocated to the Rep Firm to share in the costs of getting sales going."

The issue of retainers is often bitterly debated, but never tackled with the goal of finding a solution. Let's tackle this together. No one else seems to be working on it.

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