From the Blog

Outsourcing Selling – Maximize Effectiveness with Rep Networks

outsourcing-selling-FABTECH-2016
By: Charles Cohon, Manufacturers’ Agents National Association, www.manaonline.org Some manufacturers pay their salespeople whether they sell anything or not, and also pay for their salespeople’s travel, entertainment, and healthcare. Other manufacturers only pay for performance. Commission is only paid when an order is booked and shipped. For the first group of manufacturers, sales is a fixed cost. Regardless of how much ends up being sold, and regardless of whether or not these sales services are effective, for these manufacturers sales expenses are a sunk cost. For the second group of manufacturers, sales is a variable cost. Sales expense is directly proportional to booked, shipped, and invoiced orders. Which of these manufacturers are you? And if sales is a fixed cost for you, how competitive can you be with manufacturers who sales cost is zero until an order is booked, shipped, and invoiced? Manufacturers in the second group whose sales cost is proportional to invoiced sales use manufacturers’ representatives, also known as manufacturers’ agents, to bring in orders. And these reps only get paid when the order ships. More on that topic in this two minute video: Although manufacturers’ reps are obviously a way to control costs, manufacturers who use reps discover more benefits than just cost control:
  • Reps who live in the territory for many years earn more customer trust than factory salespeople who fly in for the day or move briefly into a territory on their way to a promotion to another larger territory.
  • Reps whose line cards include complimentary, non-competing lines can put together a package that a single manufacturer can’t match.
  • Every time your rep gets a call some other product on his line card, he or she also gets an opportunity to promote your line.
  • Reps who have long histories in their home territories are local market experts and “know where the bones are buried.”
Of course, the best of these high-powered rep firm sales machines will be choosy about what lines to add to their line card, but in my 8 AM FABTECH presentation on November 18, 2016, I will share best practices on how to recruit reps, contract with reps, and manage reps for maximum productivity. Learn more here. Bottom line, your competitors use this cost-effective path to market, and if you want to be competitive in the marketplace you need a sales force who is on your side, but not on your payroll.  

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