How to Use Independent Sales Agents Effectively

The independent sales agent may be the answer for owner-managers who have problems with selling. In some cases, the problem may be that there are not enough prospects to justify putting a full-time sales force on the factory's payroll. In other cases, because of heavy schedules, the sales staff may be missing opportunities to cultivate new accounts.

This guide provides guidelines that should help the owner-manager of a small company to determine whether or not a sales agent is needed. Pointers are also given on how to choose an agent and how to work profitably with him or her.

If selling your product requires a salesman's or sales-woman's call, using an independent sales representative may be more efficient than having sales personnel on your payroll. Which is better depends on your situation.

Selling for others is the business of independent sales agents. They make their money by representing several clients on a commission basis. They solicit orders for clients in territories upon which they have agreed. Some agents have employees who help them cover a wide area.

The manufacturers, as a rule, ship and bill the customer directly. They set prices, terms, and other conditions of sale.

Sales agents go by various names. A few examples are manufacturer's agent, manufacturer's representative and "reps." The labels vary according to industry. Also, the marketing functions which agents perform vary from one industry to another.

Sales Representative Cost and Control

Whether it is better to use your own sales force (direct selling) or a sales agents depends mainly on cost and control. Which method is more economical for you? Which method gives you the control of your, marketing that you need?

When you add sales personnel, what do they cost? In considering this cost, you should include items such as the paperwork necessary to keep them on the road; fringe benefits, such as vacations, hospital and other insurance, which you provide.

On control, the question is: What degree of control do you need to achieve your sales objectives? When an agent represents you, the agent controls the approach to customers. In effect, they are your agent's customers rather than yours.

In many cases, such a relationship may be as good as, or better than, using your own sales force. For example, if your products are attractive to distributors and retailers, it may make little or no difference whether they buy from a factory salesperson or an independent sales agent. When it makes no difference, the owner/manager who insists on maintaining a sales force for the sake of ego may be kidding himself or herself. You may be paying too great a price for the satisfaction of saying, "I have my own sales force. They are my employees."

On the other hand, when products require a special personal touch or service, the owner-manager may need to control the entire selling job. You may need to build an image by training and coaching your own technical sales staff rather than by offering your products through a manufacturer's agent who cannot usually be expected to do this type of work.

The Selling Job

In considering whether a direct sales staff or an independent sales agent is better, examine your company's selling job. the questions that follow are designed to help you think about the various aspects of that job.

Territories

In a given geographic area, does your company dominate, or does it lag way behind, competition? How near are you to your estimated potential sales volume?

What is your goal for that specific territory? If you had the best sales force money could buy, could your goal be achieved? If you could get only mediocre employees, what maximum dollar volume would you set for their quota?

What is your present dollar volume in the territory? What does it cost to bring in that volume? Based on these cost figures, what would your cost of sales be for achieving your ultimate sales quota?

How many dollars do you have to invest to build up a, specific territory? Does this investment (for salaries, traveling expenses, and supervisory expenses) run over a long enough time period to enable even a mediocre sales staff to reach your objectives?

Selling

Is your selling mostly service selling? (Service selling often requires technicians who can explain equipment and processes to middle management.) Is your selling nontechnical? (This type of selling does not require detailed knowledge of equipment and processes.)

What are the selling practices in your industry? Is there a good reason why the industry leans a particular way? Or is it just a custom which no one has thought of changing?

Market Penetration

How well do you know the market you are trying to penetrate? Do you know it well enough to guide your sales personnel? Or will you be relying on them because of your lack of knowledge of certain territories?

How often must the trade be seen? Can one employee handle all the calls? Or will several employees be needed because the area or number of accounts are too big for one person to cover regularly?

How quickly do you want to penetrate the market? (Someone with a knowledge of the field and personal contact with buyers will, of course, obtain this penetration more quickly than new employees.)

Cost

What is your cost for executive and clerical personnel to manage a direct sales staff in all your territories? (Break this cost down by territories.) What will it cost for executives and clerical people to manage an agent?

If you maintain a training program for your sales force, what does it cost? Does it pay off in increased sales?

Compare the Two

The statements that follow are designed to help you consider the advantages and disadvantages of direct sales staff and independent agents.

Training

Direct Sales. Finding and training new sales agents can be time-consuming. Moreover, the cost can be high when employees quit shortly after they have received their training.

Sales Agents. With agents you can put them in the field quickly, and the training cost is nominal.

This article offers managing your business tips and Handle business advice. However, you are not ready to start your own business
until you've given any thought to handling it. A company is a continuous activity that doesn't run itself. As the supervisor
you'll have to set goals, decide how to reach those goals and also make all the necessary decisions. You will need to purchase or
create your product, cost it, advertise it and market it.

You'll need to keep documents, and determine prices. You will have to Control stock, make the right buying decisions and keep
costs down. You'll have to employ, train and motivate employees today or as you grow.

Setting Business Management Goals. Great small business management Is the key to success and good management starts with
establishing goals. Establish goals for yourself for the achievement of the many tasks necessary in establishing and managing your
business successfully. Be specific. Write down the goals in measurable terms and conditions of functionality. Break big targets
down into sub-goals, showing exactly what you expect to attain in the next two to three months, the subsequent six months, the
next year, and the next five decades. Beside each target and sub-goal set a specific date showing as it is to be achieved.

Plan the action that you need to take to attain the goals. While the effort Required to achieve each sub-goal ought to be good
enough to challenge you, it shouldn't be so great or unreasonable as to dissuade you. Don't plan to reach too many goals all at
one time. Establish priorities.

Plan in advance how to quantify results so you can know exactly the way Well you are doing. This is what's meant by"measurable"
targets. If you can not keep score as you move along you're very likely to lose motivation. Re-work your plan of activity to allow
for obstacles which may stand in your way. Attempt to foresee obstacles and plan strategies to stop or minimize them.

Buying. Skillful buying is an important essential of Managing a business. This is true whether you're a wholesaler or retailer of
product, a producer or a service company proprietor. Some retailers say it is the most significant single factor. Product which is
carefully bought is easy to market.

Deciding what to purchase means finding out the type, type, quality, Brand, size, color, fashion -whatever applies to your
specific inventory - that will sell the best. This requires close attention to salespeople, trade journals, catalogs, and notably
the preferences of your regular customers. Analyze your earnings documents. Even the manufacturer should view the issue through
the eyes of clients before determining what materials, components, and materials to buy.

Know your regular customers, and also make a Fantastic evaluation of the People you expect will become your clients. Just what
socioeconomic category are they? Are they homeowners or tenants? Are they searching for price, quality or style? What's the
predominant age group?

The age of your clients can be a prime consideration in Establishing a purchasing pattern. Young men and women buy more frequently
than many elderly people. They need greater, have fewer responsibilities, and spend more on themselves. They're more aware of
style trends whether in wearing apparel, cars or electronics. In case you choose to cater to the young trade because they appear
dominate in your area, your buying pattern will probably be completely different than when the conservative middle-aged clients
appear to be in most.

Study trade journals, newspaper advertising, catalogs, window Displays of companies like yours. Ask advice of salespeople
supplying you product, but buy sparingly from several suppliers instead of one, analyzing the water, so to speak, until you
understand what your best lines will be.

Finding suitable merchandise sources isn't simple. You may buy Directly from producers or producers, from wholesalers,
distributors or jobbers. Pick the providers who sell exactly what you need and can provide it if you need it. (Distributors and
jobbers are used by most business people for fast fill-ins involving factory shipments.)

You may distribute purchases one of many providers to gain more Favorable prices and promotional material. Or you may concentrate
your purchases among a small number of providers to reevaluate your credit issues. This may also allow you to become famous as the
seller of a certain brand or line of merchandise, and to maintain a fixed standard in your products, if you're shopping for stuff
for manufacturing functions.

When to buy is essential if your business will have seasonal Variations in sales volume. More inventory will be needed ahead of
the seasonal upturn in sales volume. As sales decline, less product is needed. This means purchases of goods for resale and
materials for processing must change accordingly.

At the start, how much to purchase is insecure. The best policy is To be frugal till you've had sufficient expertise to judge your
needs. On the flip side, you can't sell merchandise in case you don't have it.

To help solve buying problems, you should begin to keep stock Control records at once. This can allow you to maintain the stock in
equilibrium - neither too big nor too little - with a proper proportion and decent assortment of products, sizes, colours, styles
and qualities.

Fundamentally, there are two types of stock control - management in Bucks and control in physical components. Dollar controllers
reveal the amount of money spent in each product category. Unit controls indicate the number of individual items when and from
whom purchased by category. A good inventory control system can help you decide everything, from whom, when, and how much to
purchase.

Pricing. Much of your success in manage a business will depend on The best way to price your services. If your prices are too low,
You Won't pay Expenses; too high and you will lose sales volume. In both cases, you won't Earn a profit.

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