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The Sales Rep Dilemma

GDA Staff -- Gifts and Dec, 3/1/2011 5:20:56 AM

GHTA GHTA Conference attendees were asked: Can the evolving gift industry come together to redesign the role of the sales representative?

In the three-legged business model that the gift industry is based on - supplier, sales rep and retailer - it is perhaps the last of that trio that is both most misunderstood and most vulnerable.
     Much of the transition in the retail base of the industry has already occurred and independents, while reduced in numbers from the golden days, remain the backbone of the business in the absence of dominant real national chains. And while the names over the doors of some suppliers may have changed, but a diverse and ever-evolving vendor base remains a fact of life in the gift trade.
     It is the independent sales rep, however, who has seen his role change the most over the past decade and who is perhaps the subject of the most questions as to how he will evolve in the decade to come. Whether they are one-man shops or large regional or even national agencies, the sales reps arguably have the most to lose in the gift industry of the future.
     It was exactly that issue that was the subject of a presentation at the recent Gift & Home Trade Association national meeting. Randy Eller, the long-time industry stalwart who has worked both the factory and independent sides of the selling equation, offered up an opening salvo on the issue of the future of the sales representative in the business.
     Gifts & Decorative Accessories, in the interests of serving as the GHTA's forum for this dialogue, got in touch with Eller to reprise his presentation, offered here in a question-and-answer format that raises the key points he made to the GHTA audience.
     Gifts & Decorative Accessories: Give us some background on the situation now facing the industry and independent sales representatives.
     Randy Eller: For a long time, the independent rep was the only way a supplier could conduct business with a retailer. It was the original sales model. The rep was paid on commission and that was the manufacturers' investment.
     But then things changed. Along came toll-free phone numbers and then fax machines. More recently, it's been email, websites and social media. The manufacturer now has a menu of choices to deal with its retail customers and to produce sales, yet the expectations of the sales rep stayed the same.

G&DA: Which takes us to the situation today.

RE: Our sales model is out of sync with today's world. And it's out of sync with today's expectations. We have a situation today where both manufacturers and sales agencies are not satisfied with the results.

G&DA: So, what can be done about it?

RE: We have to create a business model that is a win-win for both manufacturers and sales agencies. To do so, we have to challenge manufacturers to see agencies as their "full-service solution" to their sales efforts.
We have to challenge both sales agencies and vendors to mutually agree on the definition of that term - "full-service sales agency" - and what it means to selling efforts.

G&DA: You don't see this as an "Usversus-Them" situation, right?

RE: Absolutely not. Both sides have to work together to manage not only the sales opportunities but also the cost of doing business.

G&DA: This is not the first time this industry has tried to address a problem situation before it was beyond solving, right?

RE: Right. I remember being at an industry meeting many years ago and there were similar questions brought up about the long-term role and viability of the independent specialty retailer. Everyone thought it was a subject that needed to be discussed, but the conversations quickly died out and nothing was ever done to address the needs of the independent store.
We need to make sure we do not repeat the mistakes we made as an industry when it came to solving the issues of the independent retailer.

G&DA: So, what happens next? What should the industry be doing to try not to make the same error?

RE: We need to engage each other in a productive dialogue on how to improve the business model. We have to determine the best way to move forward. Is that a committee? A white paper? Something else? How do we move forward?
The bottom line is that we need to ensure the continued, long-term health of sales agencies. The industry cannot survive without this function.

G&DA: You ended your presentation at the GHTA conference with a great quote from Henry Ford II. Can you share that again?

RE: He said, "Nobody can guarantee the future. The best we can do is size up the chances, calculate the risk, estimate our ability to deal with them and move forward."

G&DA: Randy, thank you for your time. Gifts and Decorative Accessories magazine readers are encouraged to get involved with this on-going discussion. Post your thoughts, comments and opinions on the Talkback tab at Giftsanddec.com and look for future articles on this subject throughout the year in the pages of the magazine.

GHTA Connect is a forum of the Gift and Home Trade Assn. For more information, visit www.giftandhome.org or call 877.600.4872.

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