An Independent Sales Rep Agreement Defines Relationships
A mentor of mine once told me that sales agreements are the highest example of social engineering. While I may not concur that they’re the highest example, they certainly fill the roll of social engineering. An excellent sales person, and you certainly need a good one, will focus like a laser beam on what that agreement tells them to do.
Especially in the case of an independent sales rep. They are attempting to determine if your company or another will offer them a better return and what they will have to do to get it. All of the answers to those questions should be in the independent sales rep agreement. If the main points of the arrangement are absent then you are susceptible to things being handled through interpretation and nothing good usually comes from that.
So make sure that you have covered all your bases whenever you develop your agreements. The more you have spelled out the clearer your relationship is going to be with your independent reps. This is applicable to both the legal factors of the relationship and how and when they get compensated as well.
One of the critical things you have to do is make sure that you have matched your agreement with your company goals. If you are much more concerned with volume then pricing, then put a greater commission emphasis on bringing in profitable business. If you’re just compensating on volume then your reps will lower prices to improve volume. So know the mix of price, profit, target marketing, etc and relate that to your compensation goals.
I Need Sales Reps
This is nearly always an issue for an entrepreneur. But before you try and figure out how many more you need, make sure that the ones you have are maximizing the outcomes you are looking for. If you’re compensating your sales reps well and you have done a good job in selecting them, see if you can get more out of them before you look to add more people.
Many independent sales reps handle a great deal of different products. They usually also have existing relationships with clients that you might be interested in. That’s the good news and bad news. Because those relationships are so important to them, they’ll try to target the products that can get them the best return with their clients, and may even bypass your products if t don’t give them the easiest sale.
So be sure you know what is driving your sales team and where their priorities are. If you are not providing their customers with the best option for success, then you probably are not getting the most out of your current sales force and will end up with more people to manage and less return per person because of it.
So assuming you have handled that issue, the best place to find additional people is to ask your existing sales team. They tend to be well connected into the market and will know of people who might also be a good asset to your company. Another great source is potential clients. Ask them who they prefer to buy from and why.
Most companies will be happy to speak with you about something like that if you simply ask. It may also provide you with an edge should you hire the person they recommend. They’ve got a relationship with that individual and also now feel they also have a vested interest in your business since they helped you place someone.
Independent Sales Reps Vs. Employees
There are pluses and minuses to both types of sales people. The advantages of having an employed sales force is you have more control over what they do. This doesn’t guarantee results, nevertheless it does at least permit you to get more of their undivided attention. Independent sales people are just that “independent.” But, since you don’t have the costs connected with bringing them on board and paying salaries, it can save you front end expenses and keep your out of pocket down by only investing in actual sales.
This is where that independent sales rep agreement comes in so handy. If you have done your homework and know what to provide the market and designed a compensation program that makes it hard for an independent sales rep to look anywhere else, then you can direct a lot of their focus. Then what you have to do is make certain that they can make the most off their compensation by working with you.
If you layer on top of their compensation, steady on time delivery of quality products and solid customer support, your chances of holding on to and expanding your independent sales force are pretty darn good.
Scott Schreiber is a retired businessman who has over 30 years of successful management of turn around projects, Mergers & Acquisitions, Venture Capital work and senior sales and marketing management. Scott’s current mission is to help small business owners and entrepreneurs learn how to compete, grow and succeed in our current economy.
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