Milestone Terminates All US Manufacturer Reps

By John Honovich, Published Dec 03, 2014, 12:00am EST

In a complete turn-around to a move started just a year ago, Milestone has terminated all US manufacturer representative firms.

In this note, we examine what happened and what impact this is likely to have.

Background

Manufacturer representative firms provide local sales and support teams to manufacturers, and are paid a percentage of all sales in their territories (in the 4 to 8% range). Rep firms typically 'rep' multiple lines - a camera line, a recorder line, an access control line, etc., etc. See IPVM's Directory of 100+ Manufacturer Rep firms.

Milestone started to add rep firms, for the first time, at the end of 2013 / start of 2014. These were in addition to Milestone's own directly employed sales and support team in the US.

Milestone Rationale

Milestone says they are doing this to support the open platform, explaining:

"This recent move is about focusing on Milestone’s strength, the open platform, for our 2015 marketing strategy. During 2015 you will see Milestone expanding investment in various field sales personnel, inside channel managers and field based distribution managers. Direct relationships with our partners is how we have been so successful in building the open platform into a solid base on which our partners grow their business and we will accelerate this in 2015. We will continue using manufacturers reps in the LATAM region, and for the U.S., we are re-evaluating how we use them and the products they can best support as part of our open platform strategy."

So evidently being owned by a camera manufacturer is not a detriment to being an open platform, but having US manufacturer reps are.

One concern of manufacturer rep firms is that they tend to favor their camera line in deals. For example, if a rep firm has Arecont and Exacq or Sony and OnSSI, they would be more likely to steer customers to use, respectively, Arecont and Sony, in deals with Exacq or OnSSI. Potentially, this could be a Milestone concern that reps would favor their camera partners.

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First Big Move for New CSMO

A few months ago, Milestone's long term CSMO quit to become CEO of Vicon. A month ago, he was replaced by an industry outsider. This becomes the first big move for him / his organization.

Sources indicate that the new CSMO did not want to use rep firms in general. Milestone spokesperson said they disagree with that claim.

Impact

Manufacturer reps make good sense for Milestone as they generate a small percentage of each deals' revenue (given that they do not sell cameras and are only starting to sell their own recorder boxes). Moreover, with the small to mid market (10, 20, 30, 40 camera deals), it is hard to justify a direct manufacturer employee's time or money to win such deals. This is where the local manufacturer representative provide value.

Dropping them wholesale seems imprudent, especially if, as they claim, will redirect those funds into hiring their own people.

Equally importantly, making such a big change, so quickly may spook the market and will likely earn the ire of the dozens of rep employees who are impacted and the numerous people they interact with on a daily basis.

What Do You Think?

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