There's an inevitability in the world of the manufacturers' representative, and it is, for good or bad, the fact that at some point, the rep will lose a product line. Whether their fault or not, the loss of a line can be a drastic blow to a rep's business. The secret is in knowing how best to protect themselves from losing a line, but also positioning themselves so that losing a line won't be too devastating.

As said by more than a few reps themselves, if you don't have a plan in place upon losing a line, it's already too late. Most also would say that losing a line is rarely a surprise, and that the smart rep knows what their issues are, and why a manufacturer may be unhappy with their performance.

When considering the contingency plan for reps and their businesses, most believe in the adage, "Don't put all your eggs in one basket." If you depend too much on one line, losing that line could kill you. If you spread around your interests, and hold each individual line to a minimum percentage of your sales, then losing that line's sales can be recouped in other ways.

"You can't predict the future, but you can plan for it," says Harry Abramson, president of Electronic Salesmasters, Inc., a manufacturers' representatives company that covers six states, headquartered in Beachwood, Ohio. "The true measure of a rep is how he handles that challenge. The loss of a line is inevitable, due in part to mergers, acquisitions, conflicts, bankruptcies, politics and friendships.

"We strive to keep each product as less than 20 percent of a rep's sales, but in reality, most aren't higher than 13 percent. Most manufacturers' reps work with the philosophy that no line is more than 15 percent, and no customer is more than 10 percent."

"At all the NIRA conferences, we try to get the reps together to network, ask each other questions and discuss problems," says John Pittman, president of Pittman Industrial Marketing, a 32-year-old manufacturers' representative agency headquartered in Birmingham, Ala., and Chairman of the Board of the NorthAmerican Industrial Representatives Assn. "The discussion always comes around to product lines, and how big a line could, or should, be relative to their total sales. There is no set percentage agreed on in these discussions, but all agree that it shouldn't be too much of your business. Reps need to balance their product lines for their own sake.

"Manufacturers would probably like to see their percentage of a rep's portfolio at 60–70 percent of the agency's total sales, then they could command more of our time and scheduling. But in that rare case, if you lose that manufacturer, it's too late to fix anything."

It's no leap of the imagination to see where a rep would be put out by losing a product line, but most would contend that losing a line is rarely a shock.

The crisis of losing a line could come in various forms—the economic recession being a recent frontrunner of reasons.

A manufacturer could terminate a rep's relationship by placing a factory-direct salesperson in the territory. Building up a territory with a rep and then placing their own person in the area is surprisingly common, says Abramson.

"But in doing that, the manufacturer loses continuity," he says. "The manufacturers' rep is far more stable than a direct salesperson. Just by virtue of the numbers—direct salespeople average two years in the market, while a rep averages 10 years."

Other crises include the loss of key accounts due to companies moving, bankruptcy, market fallout, an acquiring company that has a direct sales force, and the diminishing manufacturing base in the United States.

"The rep should be trying to identify the key initiatives and objectives of the manufacturer, setting their goals and objectives by that, putting a plan in place, and executing that plan with the manufacturer's managers," says Pittman. "Reps lose lines from a lack of sales, a lack of communication, questionable product knowledge or inadequate market knowledge. But continued communication is very important."

Communication is key to a rep's business, and communicating with their manufacturer is key to their relationships. If one doesn't communicate with the other, it's logical that the relationship would falter.

"A good rep is a good businessman in sales, not a good salesman in business," says Abramson. "They understand their business, budgets, promote themselves and recognize the value of selling. The better they are, the less vulnerable they are to losing their standing, performance-wise or economically."

So the line is gone and the rep has a couple of options. One, replace the line with another, maybe even a competitor. Or two, increase the sales of their existing lines to recoup the loss.

"The best option would be to replace the line," says Abramson, "because the gestation for new business is longer than most reps think it is. It's just easier to replace than increase business."

Says Pittman, "If a rep is doing his job, he knows everyone in his business. He knows his competitors and their lines. The only way to recover is through networking."

Pittman and Abramson both agree that upon losing a line, a rep probably would call that line's competitor, not to take the line from the rep who currently sells it in that territory, but more to let it be known that they are available for other opportunities.

"Throughout the year, networking, discussions and dialogs with competitors can turn into relationships," says Pittman. "When you lose a line, that competitor may know another line the rep could grow with, or refer them to someone else."

When it comes to increasing business rather than going after another line, Pittman also has some hesitation.

"It depends on where in the life cycle potential lines are," he says. "If it's a mature line, it may be more difficult to grow. If it is pioneering, you could invest heavily without a return."

Of course, the whole situation can be avoided to some degree. So what are some actions that can be taken to prevent the loss of a line?

• "Backselling," states Abramson. "Tout your accomplishments to the principal, and tell them how good of a job you are doing. You sell product. Sell yourself to the manufacturer."
• Remind the manufacturer that you lose and win as a team, says Abramson. Provide constant communication on the territory, including updating them on customers moving in and out of the area. Create monthly activity reports so the manufacturer can see your progress.
• Establishing goals for the manufacturer specific to the customers.
• "Identify the barriers of the business, including any product issues, business issues or people issues with the account," says Abramson. "The rep has got the relationships. They know the culture, the drivers, what the customers are using, and the competition."
• But just in case, have a credit line, cushion or reserve fund that can cover operating costs for at least three months. Explains Abramson, "That will help until you can find a new principal, or build up your other lines."