Using Independent Sales Reps; The Myths and Rewards
I know from first-hand experience that this topic tends to elicit a wide range of emotional reactions. In my 30+ year career I have hired, managed and fired both direct sales reps and independent ones. So, let me state up front that this post is thought-provoking not a verdict on ISRs (Independent Sales Reps) and whether you should use them or not. Like anything else in life, there are great ISRs and lousy ones. So diving right into emotions, here's my first recommendation: Before you spend a lot of energy and time complaining that your reps are not selling, answer the following:
- Do you have a full-time in-house function that is managing the reps?
- Do you have regular communications with your reps?
- What type of leads are you generating for your reps?
- How well trained are they?
- How often do you work with them in the field?
- Do you treat them is "outside" reps or part of your sales organization?
- Do you have a well defined commissions plan including addressing competitive-match scenarios etc.?
- If they're not working for you, why are they still around?
Each topic can be a lengthy blog post but I think you get the idea. It is easier to point fingers at something that isn't working than admit that it may not be working because you haven't managed it properly.
The main reason companies employ ISRs is the "Boots on the Ground" philosophy: the more the merrier right? WRONG!
The wrong type of ISRs can actually do more to damage your brand than help you by "geographic coverage". ISRs must be an extension of your sales team regardless of whether they are on payroll or not. You must hire, train, nurture and manage them just like you manage your in-house teams. As a matter of fact, your customer service team needs to know all there is to know about each rep, develop a relationship and have a real connection with them. When a CSR (Customer Service Rep) is on the phone with a prospect and can within minutes connect them to a "rep" there is no better win-win scenario.
The margin of error between winning or losing in business is literally seconds! How long will it take you to find " CNC machining in Plainview NY"? But imagine your prospect getting a call within a few minutes "Hi, this is Joe from Plainview Machining. We noticed that you were looking for someone to manufacture your part...." WOW, yes!
What I have seen in my career, sadly too often, is that when a "lead" contacts the company, there is a race to "grab" that lead either by a customer service rep who wants to "close" it herself, an in-house sales person for the same reason, or sometimes the owner who doesn't want to pay commissions to anyone.
Understand the "psyche" of ISRs: the more money they make selling your product or service, the more attention you're getting out of an average of 6-10 lines they represent. (Oh by the way, the number of companies on the line-card is a major factor in hiring ISRs in my book.
What you can not and should not do is hire ISRs only to consider them a threat to your profitability by avoiding giving them leads of paying commissions. "What do you mean by giving them leads? Aren't they supposed to make sales"? Another myth that needs to be debunked.
One of the byproducts of having sales reps is an expectation that ISRs will introduce you and sell to their industry contacts and connections. (to be safe, you must do due-diligence and confirm their fit). Remember, ISRs are human and as such they follow "the path of least resistance"; the line that is an easier sell gets the attention. So, it behooves you as the "principal" to give ISRs all of the tools they need that can facilitate a smooth sales process. By the way, while we're talking sales, how's your marketing? (what value to you offer compared to the competition, what are the benefits of using your products, what type of advertising are you utilizing, etc.).
You see, ISRs may be able to sell but they need to be an extension of your company in order to identify with your mission and value. Managing ISRs is critical, not policing them.
If this sounds like a lot of work, it is! Don't assume that having 30 ISRs all around the country means having 30 sales reps around the country. They will only become your reps when you earn a spot in their very busy day and more than a few zeros in their bank account.
Employing ISRs is very common. So is the mismanagement of them. I have exhibited in hundreds of trade shows in my career and many of my colleagues used ISRs. Naturally the hot topic of conversation was often like this:
"So how many reps do you have" ? "Oh, we have about 25 around the country and 5 in Europe" (with a big grin and fatherly pride) "Great, how are they doing"? "Don't even go there. They're not selling as much as they should" "So why do you keep them"? "I can't afford direct sales. At least this doesn't cost me anything. If they're not selling, they are not making money"
Note that last statement if you would. "It doesn't cost me anything" and "if they're not selling...they're not making money" ! Welcome to more myths and fallacies of ISRs. Wouldn't you be thrilled to pay a fortune in commissions rather than think you're ahead by paying nothing? "If you're not growing, you're dying"! There is zero business sense in paying zero commissions!
People, ISRs are out there and make a nice living. The fact that you are not paying them commissions does not mean they're starving. It simply means that they are NOT selling your products, and why you're resting on your laurels thinking that you have "coverage" all over the world that costs you nothing, your competitors are eating your lunch.
So you see, doing nothing about your ISRs and thinking that as long as "it costs me nothing" you're safe is bad business! If you're spending hours double-checking commissions before you sign checks, you're doing great! Keep it up - you're making money!
- ISRs must be an extension of your in-house sales team and treated as such.
- "Boots-on-the-Ground" means nothing unless they can win battles for you. You need to educate, train and connect with your reps. The more they know the higher their close rate
- Look forward to signing commission checks. Write a personal thank-you note on each one. Paying for performance is a great thing. The more you pay the better you're doing. If you're not growing, you're dying.
- If you're considering using ISRs, hire someone who can train you on how to manage them. Then, make sure there is someone in your company that is tasked with leading that group and is also given performance metrics himself/herself to ensure that you and your ISRs are performing.