Increase Your Sales by Using Independent Sales Reps

Why would I be interested in using Independent Sales Representatives?
Simply put, to achieve more sales, faster, and at lower cost than other methods.
While Independent Sales Representatives or Manufacturer’s Reps are not right for all circumstances, their outstanding advantages could be right for you. Especially, if you need to take your company into new markets or grow existing markets with a lower up-front cost.
What is an Independent Sales Representative?
An Independent Sales Rep, also known as a Manufacturer’s Rep, is an independent business composed of sales, marketing and customer service professionals, representing at least two related but non-competing products in a well-defined territory, and primarily compensated through commissions. The Principal can be a manufacturer, distributor, importer, or service provider.
An Independent Sales Rep is not the same as “inside” sales, showroom sales, or telephone sales. An Independent Sales Rep may use showrooms, trade shows or the telephone to interact with customers. But their primary focus is to work face-to-face with customers, often traveling to meet with them to show products and services, close sales, provide training and solve issues. Commonly, Independent Sales Reps carry complementary product lines and cover a territory suited to effective coverage of the account base.
What is a Sales Agency?
A Sales Agency, also known as a Rep Agency, offers a management structure and a team of two or more Independent Sales Representatives. Sales Agencies generally operate regionally. Just as in the case of an Independent Sales Rep acting in a solo fashion, sales agencies sell multiple product lines that do not compete with each other. Sales Agencies sometime have a provide showroom space as part of their services.
What is a National Sales Force?
A National Sales Force is the combination of any inside sales capability plus outside Sales Agencies plus Independent Sales Reps, along with administrative and support personnel who jointly cover a country. It is common to build up to a National Sales Force incrementally, with only one or more regions in the beginning. Expanding coverage to more regions, and eventually to a full National Sales Force depends upon success in the regional markets.
To what extent do manufacturers use Independent Sales Representatives?
According to the Research Institute of America, from 50 to 80 percent of U.S. manufacturers use Independent Sales Representatives, depending upon the industry.
How do I know if there are Independent Sales Reps or Manufacturer’s Reps in my industry?
Virtually every industry has Independent Sales Reps. For example: Agriculture, Mining, Utilities, Construction, Manufacturing, OEM, Wholesale, Distributors, Retail, Transportation, Information, Finance, Insurance, Real Estate, Rental, Professional Management, Administrative & Support, Waste Management, Educational, Health Care & Hospitals, Medical, Pharmaceuticals, Entertainment, Recreation, Hotel & Motel, Food & Restaurant, and Public Administration.
How does using Independent Sales Reps or Manufacturer’s Reps increase sales?
The major reason that Independent Sales Reps can increase sales is because they carry multiple lines. When more than one line is brought to the customer, sales can be made more effectively and at lower cost. The sale of one product can “trigger” sales of other products. With multiple lines, reps see more customers in their territory than inside salespeople. Thus a broader, better-defined customer base is created. The result is more sales and better market penetration.
What are the other advantages of using Independent Sales Reps or Manufacturer’s Reps?
* Principals can enter a new market quickly and cost-effectively. The Rep brings his existing customer base. The Rep knows his territory and has his own established network of both buyers and other Reps. For new companies who are still seeking to create their place in the market this feature is vital.
* One product sale can “trigger” other product sales.
* Reps are paid for results, leading to a highly motivated sales force.
* Sales costs are known.
* Provide better focus in their territory due to familiarity with local preferences. Reps quickly identify new product opportunities, whereas an inside sales force may take months or longer to make that identification.
* Reps have local acceptance. They are familiar to their customers and trusted by them. They often live in their community. So they have a vested interest in their products and customers, whereas inside salespeople may not.
* Provide more objective ideas for product improvement and more objective customer feedback on new products because they do not work for the Principal. Customers feel confident in sharing information with them about changes and opportunities in the market. Customers who would hesitate to bring valuable input directly to inside sales staff will openly share with Independent Reps, including both suggestions and criticism. This openness further motivates the Rep.
* Provide quick response to customer issues because of close physical proximity. Customers may also feel that it is easier reach the local Reps.
* Provide consultative selling, customer service, product demonstrations, product and sales training, sales analysis, credit reporting, market research, market development information, product quoting, and current product improvements, new product development, and participation in sales meetings, trade shows and conventions. Some may also offer showroom displays.
* Alert Principals to new developments in their territory that could affect their lines.
How does an Independent Sales Rep get paid?
The Independent Sales Rep typically is credited for all sales in his territory, and is paid the commission stated in a written contractual agreement, sometimes called a “Sales Representation Agreement.” Payment is due only after the sale is closed.
The Independent Sales Rep operates a independent business, with its own sales and administrative staff. This business is responsible for all related operating expenses, including staff compensation, employee benefits, advertising, auto, insurance, office equipment, taxes, technology, travel, and so forth. These costs must be paid out of the gross commission received by the Rep.