Dear Stephen,
I am the President and owner of a mid-sized manufacturer in the contract furniture industry. We're roughly 50 million in revenue annually.
For many years, we were a "dealer line," but we have upped our product designs and are becoming more competitive in the A&D market. We find ourselves on RFPs with Arper and Vitra when ten years ago, that would never have happened. In other words, Gensler knows our name! Which is huge in our industry, as you know.
I am beginning to rethink our strategy and sense that 2024 might be the time to start hiring our own direct sales force. Until now, we've been using Independent Reps in all markets across the country.
My thoughts are that a direct sales force working just for our brand will be more focused on the customer as well as the dealer, and I'll be better able to manage them as direct employees!
With the independent reps, we're just one of several lines that they sell… Yet, in fairness to the independent reps – we would never have grown to the size we are now if they hadn't introduced us to some of the prestigious accounts we're selling to.
That's my dilemma – how to continue to grow. After all, the big manufacturers all have their own reps. So, for where my company is now, it seems like the right thing to do would be to hire my own salesforce. What is your advice?
Signed,
All Repped Up
Dear Repped Up,
Are you crazy?!
Let me correct you on one thing: the big companies do use independent reps as part of their distribution mix, with specific subsidiaries that they own. For instance: Steelcase, which owns Halcon and Viccarbe Habitat, uses independent reps to sell those brands. Haworth, another major manufacturer, which owns Tuohy, also uses independent reps to sell that product.
These major manufacturers with teams of strategic thinkers in leadership have discovered that the independent rep is the best-kept secret on how to build certain brands long-term while saving tons of cash on salaries and risky direct hires.
I've heard the old argument that your own direct reps give you more face time in front of the decision-makers because they have only one line to talk about, but there are a few issues with that today. Designers and dealers are not in the office as much, and they simply do not have time for in-person meetings and lengthy "lunch and learns" like they used to, and that makes it more important to know the right person to contact, and amplifies the significance of those existing relationships with the people who make the furniture decisions. And designers certainly don't need a rep to update the catalog because there are few catalogs anymore – everything is internet-based. If you want to invest in something, make sure you have a superior website and provide all the electronic design and specification tools.
So, once again, I will reiterate: Are you crazy?!
The common denominator of when to "go direct" has a lot to do with your revenue size and your cash flow status. There are also brands like OFS that use a combination of independent reps and their direct employees. It's not a formula where one size fits all. However, the overwhelming success of brands such as Davis, Andreu World, and Stylex tells me that independent reps have helped get these brands into the prestigious league they are in today. And never mind the prestige. What about the loyalty from the design firms and dealers?
Why does this work? Because the best independent rep companies that I know, all across the country, are primarily owned either by former executives or star salespeople from the major manufacturers. At some point in their career, someone in sales at Steelcase, Miller Knoll, or Haworth decided they wanted to leave the corporate grind, and instead of going to work for a dealer, they start or buy an independent rep group.
They bring the best of both worlds with them: they have elite training that they learned from the major manufacturer, an unbelievable Rolodex of contacts that they take with them, and they are delivering them, in a bow, to these smaller manufacturers that use independent reps. Companies like yours. Granted, not all independent reps come from major manufacturers, but nonetheless, they are loyal, hardworking, entrepreneurs that still deliver sales. That's how they earn money.
Then there's the cash flow factor: the independent reps aren't costing you a dime, except for the showroom space your product occupies, which is typically paid for by the manufacturer. So, with the economy in 2024 uncertain, and everything happening in the world today, I'll say it for a third time: I think you're absolutely crazy to think of going from the independent rep sales model to a direct sales force. My opinion is that the independent reps continue to be the backbone of the contract furniture industry.
Happy Holidays!
Stephen
#Arper #Vitra #Genlser #2024 #Halcon #Steelcase #ViccarbeHabitat #Haworth #Tuohy #Davis #AndreuWorld #Stylex #OFS #MillerKnoll