Welcome back to another post in our series on working with sales representatives. Our first post in the series covered Sales Reps 101, giving an overview of sales representatives and the role they play in helping to grow your business. Today we’ll cover the pros and cons of independent sales reps.
- Sales reps handle securing all new wholesale accounts within a specific region or territory. This frees up your time to focus on other tasks.
- Sales reps have existing relationships with buyers at boutiques, hotel or hospital gift shops, etc. They know which of their clients will be the best fit for your products and their price point, and they know the personalities of those buyers and the right way to pitch your product line. Without knowing the buyer personally or having an established history with him/her, you could pitch your products in a way that isn’t of interest to the buyer. But the sales rep knows how to present the products to the buyer by highlighting whatever that buyer deems most important – this could be price, the way it compliments other existing lines in the store, or something else. The point is, the rep has that history with the buyer and has a much better chance to present the line in a way that increases the likelihood of it being picked up.
- Sales reps have the ear of buyers and they can come to you with suggestions for new products, ways to improve packaging to make it more retail ready, etc. This doesn’t mean you have to implement every suggestion, but the rep has their finger on the pulse of what buyers are looking for and you may be able to fill those needs.
- Sales reps are independent contractors, so you don’t have to pay taxes, withholdings, etc.
- It is pretty cost effective to work with a sales rep. You’ve got the expense of product samples and marketing materials, along with the time it takes you to train the rep on the unique qualities of your line, but that’s it. You don’t have to give sales-specific training – they’ve already got that covered.
- Being paid on commission means that you only pay the sales rep when s/he secures a wholesale order for you. No more paying an in-house sales person regardless of whether s/he is getting results.
- Sales reps are independent and not employees, which means you can’t (and shouldn’t try to) dictate which stores they call on and when. This may be a difficult adjustment, especially if you have control freak tendencies. But if you can lean into and appreciate the fact that they’ve taken sales responsibilities off of your plate, you can focus your energies elsewhere, such as adding in new revenue streams to your business model or ramping up production to accommodate the new orders they bring in!
- It can be difficult finding a rep with experience and strong relationships that is willing to take on your line, especially if it is new. You may go through a few reps before finding one that is a good fit for you and your brand.
- Sales reps represent multiple lines, not just yours. They won’t give 100% of their time to acquiring new accounts just for you. The Pareto Principle applies here as well – 20% of the lines they rep will bring in 80% of their income. There are ways in which you can help boost the chances of your line being a top seller for them, which we’ll discuss in another post. But realize that their time and focus is fragmented and although you think about your products 24/7, it doesn’t mean a rep will do the same.
- If you’ve signed a contract for a specific length of time and the rep isn’t producing for you, you may be stuck and unable to do much until the contract expires, especially if the rep isn’t willing to mutually terminate the contract early.
There are pros and cons of independent sales reps and it’s not a decision to jump into without some thought and planning. But it can be a good option for your business. Next in this series we’ll discuss whether or not you’re ready to work with sales reps.