Impatient to take on world markets, Electronic Liquid Fillers learned the hard way how to select an outstanding international sales force
Jeff Ake worried that Electronic Liquid Fillers Inc. (ELF) "was blowing it." The $14-million manufacturer of packaging systems, based in La Porte, Ind. , could not get its international sales effort in gear. As vice-president for sales and marketing, Ake knew there was a market for ELF's fillers, cappers, and labeling machinery. "We were positioned in the niche between the mom-and-pop-type operations and the big automated manufacturers, but we were struggling because we had no resources to manage that middle market," he recalls. "We needed sales reps. "
In the fall of 1989, with his appointment book scheduled with more than 100 meetings, Ake ventured overseas on an 11-nation recruiting trip. Eric Thorgren, ELF's international sales manager, had devoted most of the previous several months to checking through lists he'd obtained from trade offices of Indiana, the Indiana Department of Commerce, and the U. S. Department of Commerce. He'd lined up potential sales reps for Ake to interview. Seven months later Ake returned to headquarters, confident that he had agreements with 50 reps in 9 countries.
But the disappointing result of the grueling tour was a scant 12 reliable reps. Disinterest, inexperience, and a lack of understanding about the industry claimed more than 60% of those Ake had shaken hands with after a single meeting. In Korea alone 7 of the 15 reps disappeared within three months. "I was under enormous pressure to generate activity, and all 15 had promised more than they could deliver. When I later tried to check up on them, their phones were often out of order or their numbers disconnected. I left lots of messages on machines -- messages that were never returned," says Ake.
And, inexplicably, some nonproducing reps were demanding geographic exclusivity as a condition of their cooperation. How could Ake justify granting exclusivity to reps about whom he knew so little? "I didn't have solid background information to go on, and I didn't want to have to monitor every agent personally. I needed to see previous-performance results, and I wanted to identify potential capabilities. " For about a year he and Thorgren cast about for relief from their frustrating situation.
Until 1990, when they came up with the Representation Application Form (RAF). The RAF is an efficient and orderly information-gathering device that lets ELF find out what it needs to know about each applicant.
Interested agents, upon discovering ELF at trade shows or seeing the company's advertisements in packaging magazines, phone or fax in their requests to represent ELF. Thorgren's department overnights them packets of company information that include equipment spec sheets, press clippings about ELF, and the RAF. Nearly half bow out without responding; the other 50% submit completed forms. "It dictates seriousness," says Ake. "At this point we figure they know who we are and what we do. We begin developing a relationship and building a rapport with the more likely candidates. "
Thorgren confirms names, addresses, and phone and fax numbers before starting a file on each applicant. "Reps working for a direct competitor are screened out. We gent-ly thank them for their interest, and those reps who look particularly promising we call right away," says Ake. If everything adds up right, the applicant is registered as one of ELF's reps.
Registered reps are granted one-year account exclusivity for their prospective clients and leads. "We want to protect the reps, we want them to sell, and we want to reward them for their efforts, but the agent who gets territorial exclusivity is the agent who works hardest for it," says Ake.
It took two months for Ake and Thorgren to refine the RAF, and less than four months to streamline the system. Now ELF receives about 18 queries a month, and more than half of those prospective agents, recognizing the potential to earn a sizable income, approach ELF with job assignments already in mind. Once registered, agents check in regularly. "We have international tigers actively promoting our equipment. They get out there and make the sales," says Ake. Three years ago international business at the two-time Inc. 500 company accounted for 12% to 15% of sales; it now makes up 45%.* * *
Below is a sample form, with responses in italics.
REPRESENTATION APPLICATION FORM
Note: The following information is held strictly confidential.
1. Corporate or Company name:
2. Address: Street/Post office #City Sao Paolo Country/ProvinceZip/Post Code Country Brazil
4. Describe your core business representation of manufactures [sic] of equipments, machines and tools for industry
5. Form of organization: (Circle One) Sole proprietorship/partnership/ corporation (limited company).
6. Please list types of equipment (if any) you manufacture: only representation so far
7. Please list product lines and names of other companies that you currently represent:Company Name City/Country Sales Volume in $ Basf GermanyBelvac BelgiumFenco ItalyHandtmann GermanyPanasonic Japan
8. Total employees: 123 Total Salesmen: 5 Total service technicians: 4
9. Approximate company sales volume: $ first year
10. Trade/Business References in USA, if any:Company Name/Address/City/State/Zip/Phone/Fax
11. Bank References:Bank Name Address/City/State/Zip Phone Fax to be open Maiame
12. What specifically interested you about ELF? a) Very flexible m/c and short delivery time, potential marketb) it can attend wide sector (beverage, food, oil, chemical....)c) aggressive sales strategy
13. Do you have an interest in:Touring ELF-USA? yesseeing a demonstration trailer? yesTouring a trade show where ELF is exhibiting? yesOther:
14. Comments: As you can see in our profile attached, we are a quite new company. However our team have been working in the food industry sector for many years, including in representation office. So we believe we have the experience to fulfill your expectation.
Thank you very much for this information. Sincerely, Electronic Liquid Fillers, Inc.
International sales manager Eric Thorgren analyzes the form:
1-3. The government in Brazil is more cooperative about letting American equipment in, so we thought this rep looked like a good opportunity for us.
4. Mechanical aptitude helps in our business. If we see that someone is already selling industrial equipment, then we assume some mechanical knowledge and a higher chance of success with us. We do give consideration to people without that kind of background, however, if they show a record of, say, selling refrigerators to Eskimos. We have to spend a little more time familiarizing and training them, though.
5. Reps from small companies -- a five- or six-person show -- are usually a better fit for us. We've found that they check in with us more frequently and give us individualized attention. Some larger corporations don't assign a single person to represent ELF's products. With more than one person checking in with us, it gets confusing.
6. This is a sneaky question. Here's where we'd screen out anyone already working for a direct competitor. Most reps don't do any manufacturing, but we do occasionally get approached by people in related businesses. A stainless-steel manufacturer, for example, might be able to fabricate components for ELF and may be a potential customer for our products. We've bought from our agents, and they've bought from us. It's been mutually beneficial.
7. This shows us not only what levels of expertise and concentration we can expect, but also whether the applicant is with a reputable company. Many applicants are already selling complementary products, and that is attractive. If a rep has a customer base, then we'll gain that base. . . instantly. Reps who are selling millions of dollars' worth of equipment impress us a lot more than the guy who isn't selling anything. If this is blank, we wonder if that's because the applicant is just starting or whether he's embarrassed because his volume is low. Do low volumes mean a low likelihood of success at ELF? Usually. But not always, and that's why we ask question 9.
8. I'm pleased with these numbers. Although 123 employees is a lot, there is a nice balance of sales and technical staff. An agent with a technician on board who can help with replacement parts, for example, is a bonus.
9. We've noticed that the reps from companies that are just starting up and don't have much sales volume have been among the most successful. They don't promise the world unless they're sure they can deliver. Again, it's the small-company mentality -- individualized, personal attention -- that works best for us.
10. Most reps are selling local stuff, so they don't bother to list references. It's fine if they aren't working with other U. S. companies. They'll be devoted to us.
11. We're at no risk, because we do everything with letters of credit, and so we don't look into bank references unless the applicant wants to buy one of our product lines. If the agent does happen to have a bad credit rating, we'd probably think that the guy would be unlikely to succeed at ELF. Then again, maybe someone who's bankrupt would be more motivated to sell.
12. This is great. This agent has read our brochures and has recognized what separates us from the competition: flexibility, short delivery time, and an aggressive sales strategy. Every so often people use this space to tell us where they heard about ELF -- trade journals, packaging magazines, and the like -- and we use the information to optimize our marketing dollars.
13. We realize that not everybody can visit us here in Indiana, but if a guy doesn't even want to see our traveling demo trailer or tour a trade show with us, how serious can he be? We want to spend a half day with each rep, showing off and explaining our equipment line and sales procedures. The shows are important to sales, and we want prospective reps to understand that. Many of our reps choose to participate in trade shows with us. They share the advertising cost and put on their own demos for prospective clients, and those who translate our brochure into other languages really improve their chances for getting orders.
14. "Eagerly await your response" and "Please respond as soon as possible" are typical answers here. This rep's enthusiasm was real. In the year this company has worked with us, it's closed seven major deals. We've been pleased with its reps' motivation and their level of activity.