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Survey finds variations in sales agent commissions.

Manufacturers' sales agents are paid by commission, and these rates are often seen as indicative of conditions within specific industries.

Every other year, the Manufacturers' Agents National Assn. (NAMA) surveys its members to determine the rates that are paid in the major business classifications. Results of the current survey show that commissions in some key fields are up from those paid in 1990. And, of course, some rates are down from previous figures.

However, considering the state of the economy, the increases are signs of healthy activity in diverse segments of the American marketplace.

Fields in which significant positive changes have been seen include automotive OEM, castings and forgings, maintenance chemicals, office supplies and equipment, retail consumer products, and safety and emergency products.

On the other hand, sectors that have experienced a decline in commission rates include arts and crafts, audio-visual products, import-export, machining equipment and services, photographic supplies, and toys, gifts and novelties.

It's especially important to note that these variations are, for the most part, rather small. Over the years, MANA has noted from its survey results that commission rates are always in a state of flux. The variations reflect not only overall national trends, but the effect of individual companies entering a market and attempting to build sales quickly with manufacturers' agents.

Comprehensive Report

The report based on the 1992 commission survey not only contains current two-year comparative average figures, but also a thorough set of guidelines for determining sales agency commission rates, fees and incentive programs. The report is based on input from agents as well as manufacturers who sell through agents.

According to comments made by MANA members for this report, the elements of a comprehensive agency compensation plan should be built on these components:

* Current and future sales. Careful forecasting is critical in creating an agency compensation plan. It may be important to establish rates that reflect goals keyed to planned corporate growth.

* Expanded market share. In today's competitive world, a share of the market is often a critical measure of success. An agency compensation plan should include ways to motivate agents to help you achieve your goals.

* Special agency services. Although the typical sales agency is compensated primarily by commission on the products it sells, there is often a need to pay it for other key services. For example, if products require installation, testing, calibration and maintenance, some additional form of compensation is usually called for.

According to compensation experts, most agency compensation plans that falter are those that fail to consider exactly what the agent is expected to do. It's simply not enough to hand an agent a price sheet and samples and send him or her into the field.

Without proper and mutually agreed-upon goals, a marketing program will lack focus, and will often end up with both parties accusing the other of the insufficiencies. Part and parcel of a program are the means by which agency performance will be judged, other than by sales volume.

It's important that agents are fully aware of their principals' priorities. Compensation programs that fail to include this information for the agents often lead to unfulfilled expectations.

Agents have told MANA that when they are kept informed of all marketing factors, they can perform as they are expected to. However, those who said their principals kept them in the dark were least happy with their lines--even when they were well compensated.

A Matter of Fairness

Agency compensation is a major part of the ties that bind manufacturers and agents together for the long pull.

Offer too little and you won't attract the kind of agents you want. Offer too much and you may find yourself in financial difficulty. In other words, the operative word for all concerned is "fair." Be fair to yourself and everyone else involved. That's the sum and substance of a good agency compensation program.

NAMA is a non-stock, not-for-profit educational association. Its members include nearly 10,000 manufacturers' agencies and manufacturers (involving some 65,000 marketing professionals) that represent virtually every product area.

For information on membership or to buy a copy of the report, write to MANA, PO Box 3467, Laguna Hills, California 92654-3467; phone 714/859-4040; and fax: 714/855-2973.
COPYRIGHT 1992 American Foundry Society, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Modern Casting
Date:Oct 1, 1992
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