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Reps Respond To High Gas Prices

Published August 15, 2008

BY MEGAN TOMPKINS

SAN FRANCISCO, CA—Retailers can expect fewer unannounced sales calls this season as outside reps scale back visits due to escalating gas prices.

With the cost to fill a tank now upwards of $75, independent sales representatives are feeling a pinch in their pocketbooks. Since outside reps aren’t reimbursed for travel expenses, the cost of gas cuts into their sales commissions.

“Most definitely it’s been an impact to me in my line of work; it’s impacted everyone who’s out traveling on a weekly or daily basis,” said Dan Jeffris, an independent rep in Northern California for eight brands including Louis Garneau, Magura, Ellsworth and Litespeed. “Independent sales reps have very little ability to impact commission structures or expenses.”

Reps said they would appreciate if manufacturers would increase commissions or offer a fuel surcharge stipend, but understand manufacturers are grappling with rising costs in their own businesses.

“The brands we’re representing also are being hit with higher costs. They’re not in a position to extend expense accounts or increase commissions. They’re sympathetic, but from a business perspective their hands are really tied,” Jeffris said.

“I just bear the cost and see lower margin or cut back in other ways,” he added.

To cope, reps are conserving gas by purchasing hybrid and fuel-efficient vehicles, lowering their speed on highways and reducing miles driven.

In addition, they’re being increasingly careful about how they spend their time on the road and who they visit, in some cases replacing visits with phone calls.

To do so requires closely scrutinizing travel plans, planning ahead and being more strategic.

“It’s definitely made us exact a certain amount of discipline,” said Rick Stoner, a partner in Stoner Andrews rep group, a six-person sales team that represents Thule, Princeton Tec and Timbuk2 in New England.

“We told our guys to be diligent about planning out a route, not just driving around willy-nilly. They had that discipline before gas prices spiked but it’s making us think more about how we travel. It’s also made us think about who’s going to go and why.”

Jan Statman, who represents seven brands including Princeton Tec, Ryders eyewear and SockGuy in Central and Southern California and Arizona, agreed.

“I’m just being more and more careful about what I do and what I drive to,” said Statman. “You just have to be smarter in the way you run your business today. I’m filling my tank up three times a week at $70 a crack. I can’t afford to be driving everywhere and back.”

Statman recently traded in his Toyota Prius for a Toyota Highlander Hybrid to fit more samples. The Highlander gets 25 to 26 miles per gallon.

Statman said he’s trying to keep driving to a minimum. He’s also spending at least one more day in the office each week instead of on the road.

CJ Bradbury, who represents Felt, Zipp and Pearl Izumi in New England, no longer drops in on accounts. Nowadays, if he visits a shop he has pre-booked an appointment.

“I have to make sure people are aware that I’m coming, that I have an appointment, and they have need of someone to come in and help them with their business,” Bradbury said. “The act of just dropping by to say ‘hello’ has vanished from my agenda.”

Bradbury added that dealers recognize the impact of gas prices and are willing to do more business over the phone, which he appreciates.

Jeffris said in the competitive Northern California market making fewer trips is not always an option, but he, too, is cutting back where possible.

“I’ve had to pull back on the number of visits I make to an account in a month. I’m in a situation with some of the brands where I can do that,” Jeffris said, adding that he’ll make up that visit with an e-mail or phone call.

Jeffris said he also has begun to focus more on servicing existing customers than opening new doors. “I’ve had to really curtail doing that drive time to set up new accounts,” he said. “I’m working more closely with dealers I know are solidly behind the brands I represent, and I’ve had to step away from the pioneer work I do.”

Although gas may be the most glaring expense increase, rep groups are seeing increases in other areas including shipping, postage and airfares and rental cars. Stoner said these combined costs could affect how reps service accounts in the future.

“I think there’s going to be a paradigm shift for reps,” Stoner said. “They’re going to have to be more efficient and thoughtful.”

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