Bosch Security To Terminate 7 US Manufacturer Rep Firms

'get closer to the customer"

I.e. Share less of the profit coming form the customer. Not saying that is a bad thing, it's just business. But euphemisms always amuse me.

Have they identified which firms are being terminated?

Age old debate...reps vs. direct. Reps cost about 4-5% of gross field sales. Direct people cost 15% to 22% of gross field sales. Lots of MBA-type documentation of these numbers. But the other main value of reps is that selling synergistic lines drags them kicking & screaming into every market segment of their territories, during which strong relationships/partnerships develop. With a direct sales force, you will always have an empty territory, as field sales people get wooed away by bigger pay offers.

In a fast-changing product environment like ours, reps can very quickly get a manufacturer's new products and programs started, especially if those products touch the non-traditional elements such as IT, datacom, AV, etc. Direct folks have to start from scratch finding potential channels, and many just hang around the distributors, serving just the fulfillment side rather than the initiation side of the sales process.

If direct is really better than reps, there wouldn't be so many reps firms around.

Manufacturers often expect their sales channels to bail them out of poor/dropping sales situations due to years of slow product developement, failure to keep up with trends, and low cost competitors. A new management team is brought in, and their solution often is to fire the sales channel and try someting new, however ill-advised that might be. Rarely are the product marketing specialists and product developement people replaced. After a few years, upper management finds that the new sales team fails to perform to their expectations, having to deal with the same issues that caused sales to drop off in the first place. Then the cycle starts all over again, with new management and a new sales team.

Another paradigm change that favored reps was the increasing demand/requirement from their manufacturers to help drive business through the fulfillment channels by influencing end users. In the past few years, most succesful rep firms started adding marketing services to their sales efforts, to influence the verticals in their territories, and to produce detailed reports on both their efforts and the results. These verticals varied by territory, and no single national policy would adequately meet these requirememts. Reps in the Southwest might focus on the oil industry, in the Northeast, education and biotech, in the Northwest, it might be high tech. etc. As a result, a direct salesperson, under these conditions, has less time on the road, and more time doing reports.

Reps went from once-a-month report requiremnts to continuous updates to portals, requiring having multiple personnel in their firms in order to simultaneously sell and report.

As regards the cost comparisons previously mentioned...reps versus direct sales channels, the figures came from "Outsourcing the Sales Function". by Erin Anderson (The Wharton School) and Bob Trinkle (ERA), published by Thomson.