enLIGHTenment – The Lighting Industry Trade Publication

Does Size Matter?

Consolidation has forced smaller, niche-targeted rep firms to compete against large sales agencies that cover multiple channels. How much of a difference does manpower make?

Sometimes, that whole “bigger is better” idea is a no-brainer, like those gigantic cookies you occasionally treat yourself to at the mall. Then again, those little blue Tiffany & Co. boxes affirm the adage “Good things come in small packages.”

So when it comes to manufacturers’ rep firms, does the size of the agency really matter? The answer is: Maybe…and maybe not.

After speaking with various manufacturers’ reps nationwide whose agencies differ in size and scope, it seems that there is no definitive answer. While acknowledging that there are challenges for a small one- or two-agent firm, reps also pointed out the benefits that these individual agents bring to the table. Meanwhile, larger rep firms have their own set of plusses and minuses.

The answer lies in the people themselves and the relationships they’ve built with their customers and manufacturers. New sources of competition (i.e. online shopping) have shuttered showrooms in nearly every market and manufacturers are looking for new opportunities to extend their reach and market share.

Right in the middle of all this are the independent manufacturers’ reps whose connections extend from the factories to showrooms, designers, architects, builders, remodelers, and more.

ENLIGHTENMENT MAGAZINE: Is it possible for a small agency to meet manufacturers’ expectations?

Andy Burns, Elite Lighting: Yes, and I’ve “lived” on both sides. I believe it depends on your geographical market, the lines you represent, and the relationships you have been building. It also depends on each manufacturer, their current offering, and their expectations. Is the product specific for lighting showrooms or also for electrical distributors? Is it a designer-style line? What is the commission percentage?

It’s important to remember that even though today might not be the right time for a connection between the agent and manufacturer, the situation might be tomorrow or vice versa. Keep the doors of communication open.

Richard Alan, Richard Alan & Associates: There is definitely a place for smaller agencies, especially in rural or less-densely populated areas where a personal touch is always appreciated. Some of these smaller reps may be the only ones in their areas who represent a really hot product, or they may offer low prices that no one else can compete with.

EM: What are the advantages that smaller agencies can offer?

Kris Quackenbush, The Carlson Group: Small agencies are able to pivot faster and respond more quickly to customer and vendor issues/opportunities.

Andy Burns: Some small agents offer exceptional service and competitive pricing, promote themselves as a solutions provider, are easier to reach, very humble, and extend genuine thanks to those who do business with them.

Jon McMahan, KTR Lighting: There are lines that make reps, and reps that make lines. You can make an argument either way. It’s not necessarily the agency’s size; it’s their people.

EM: What are the benefits for larger agencies?

Jon McMahan: We have reps all over our territory, and they only have to drive two hours to get to their furthest account. This frees up so much more of their time to make more calls or take care of additional tasks. For a smaller rep in the same territory, it could be a full day’s drive to get to some of their accounts and they’re just not going to be able to see enough customers.

Our resources are deep, and we’re able to invest in tools that make us highly efficient — serious analytical tools that help us determine the best course to take at each step. We also cover 100 percent of our employees’ healthcare because we don’t want them worrying about managing/affording their benefits, and we outsource all of our books and payroll to a third-party accounting firm. It’s all about keeping our people focused and selling our products.

EM: Do you believe that manufacturers have a preference in the size of a rep agency?

Andy Burns: I believe they want to hire the agency that can generate the most sales for their brand. Is that a small agency that has five lines and will focus 75 percent of their time on that line, or the larger firm that has 15 to 50 salespeople who are focused on 150 lines (which means you’d have to be one of the agency’s top priorities to get your share of time)? Some manufacturers have a mixture of all sizes of reps; they pick the ones they believe are the best choice in each market.

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